Total Cost
A New
Travel Management
Paradigm
Travel Data Made Brighter
A Gillespie+Diio Venture
About Scott Gillespie
 Leading expert in corporate travel analytics,
travel procurement and Managed Travel 2.0
 Managing Director of tClara, a travel data
consultancy
 Speaker and trainer at travel industry events
worldwide
 Former Founder and CEO of Travel Analytics
(now part of SAP)
 Former AT Kearney principal and travel sourcing
leader
 Author, Gillespie’s Guide to Travel + Procurement
 MBA, University of Chicago
Setting the Human Resource Scene
• The U.S. workforce is getting older
– More travelers with age-related health conditions
• High performers deliver ~40-70% more profits,
productivity and revenue than average performers
– Road warriors are often high performers
• Voluntary turnover is on the rise; 91% of Millennials
expect new jobs within 3 years
– Road warriors seek and have more job options
• Replacing key talent is really expensive
– Estimated cost: 50-200% of annual salary!
3
High performers need plenty of freedom
Share of Top 200 executives rating factor as
absolutely essential
1. Values and culture
2. Freedom and autonomy
3. Job has great challenges
16. Geographic location
18 Job security (next to last)
58%
56%
51%
19%
8%
Source: McKinsey “War on Talent” survey of 6,000 executives from the “Top 200” in 77 large
U.S. firms from a variety of industries. 1998
4
Where we’re headed today
The Path Forward for Travel Managers
Quantifying Traveler Wear and Tear
The Total Cost Paradigm
The Need for a New Travel Paradigm
Four Major Travel
Management Paradigms
Pre-1995
Profit
Center
• Commissions
funded TM costs
• Limited cost
pressure or cost
controls
• Goal: happy
travelers
1995
2015
2030?
Transaction
Cost
Total
Cost
Total
Impact
• Recognizes
cost of traveler
wear and tear
• Includes HR
and travel budget
owners
• Goal: true cost
optimization
• Understands
how to maximize
a trip’s value
• Predicts best
use of travel
spend
• Goal: true
travel ROI
optimization
• Professional TM
practices
• Procurementled focus on
supplier pricing
• Goal: reduce
transaction
costs
6
After 20 years of professional travel category
management, best practices are well known:









Consolidate TMCs
Consolidate T&E card programs
Consolidate travel data and reporting
Apply strategic sourcing principles
Comply with duty of care
Procurement
Use KPIs and benchmarking
principles
80+ % online adoption
have led the
90+ % travel policy compliance
way
Focus on negotiated savings
77
Trip costs from suppliers depend highly
on the trip’s quality
High
Trip
Costs
Transaction Costs,
e.g., airfare, hotel
5 Star
Trip Quality
(Travel Policy)
1 Star
8
But tougher travel policies make
travelers take on more wear and tear
Human Cost, or
Traveler Friction
• Lost productivity
• Reluctance to travel
• Negative impacts on
recruiting & retention
•Traveler health, safety
issues
Transaction Costs,
e.g., airfare, hotel
High
Trip
Costs
5 Star
Trip Quality
(Travel Policy)
1 Star
9
Companies want the lowest total trip cost,
which is a truly optimized travel program
Human Cost, or
Traveler Friction
High
Total Trip
Cost
Trip
Costs
Transaction Costs,
e.g., airfare, hotel
5 Star
Optimal
Trip Quality
(Travel Policy)
1 Star
10
But procurement focuses on the
transaction cost because it is easy to
measure and fits their definition of savings
High
Trip
Costs
Transaction Costs,
e.g., airfare, hotel
5 Star
Trip Quality
(Travel Policy)
1 Star
11
HR’s goal is to minimize the human cost. But HR
has poor data, so HR costs often appear low.
Procurement wins, forcing tougher travel policies
High
Trip
Costs
Human Cost, or
Traveler Friction
Transaction Costs
5 Star
Trip Quality
(Travel Policy)
1 Star
12
The result?
Success is seen as constantly
lowering suppliers’ transaction costs
Call this the “Transaction Cost” paradigm
13
The transaction cost paradigm has
served the industry well, but now…
• Returns on travel management are small
and diminishing – and not sustainable
• Suppliers chafe at heavy focus on price
rather than value
• Transaction cost management offers no
strategic value, and
• It offers travel managers a limited career
path
The transaction cost paradigm locks
travel management in a low-value future
14
14
The corporate travel industry needs a
new paradigm – one that:
 Delivers quantifiable value to buyers
 Gains significant support from suppliers
 Brings important stakeholders into play
 Elevates the role of travel managers
The Total Cost of Travel paradigm
meets all these criteria
15
15
The key strategic goal
is reducing the
Total Cost of Ownership
• Procurement adopted
Total Cost of Ownership in
the ‘90s
– Fleet procurement
considers capital costs,
fuel economy,
maintenance and
insurance costs, and
safety ratings
We must
do the same
in travel
The Total Cost of Travel paradigm
Goal: Minimize the total cost of travel, including
quantifiable traveler wear and tear
Four Principles
1. Get budget owners to set traveler-related goals; e.g.,
recruiting, retention, health and safety, etc.
2. Get Procurement, Finance and HR to agree on metrics
for tracking costs of traveler wear and tear
3. Then travel managers provide travel strategy plans that
link to traveler-related goals
4. Monitor goals and total travel costs, and adjust travel
strategies accordingly
17
Quantifying Traveler
Wear and Tear
18
tClara quantifies Trip Friction®
Trip A
6-hour non-stop in
Business Class,
arriving home on
Friday afternoon,
after 2 nights away
300
Trip Friction
Points
Trip B
6-hour red-eye flight,
with a 4-hour layover,
connecting on a 2-hour
regional jet,
both legs in Coach,
arriving home on
Saturday morning,
after 5 nights away
19
Joe Road Warrior’s Last Year
Over 200 hours
in flight, 65%
done on
personal time
10 weeks
away from
home
More flight
hours on own
time than
annual
vacation time
Crossed
80+ time
zones
Source: tClara’s Trip Friction database
Trip Friction is clearly correlated
with higher road warrior turnover
Illustrative Traveler Attrition Rates
16%
10%
6%
3%
Low Trip
Friction
3%
Travelrelated
Turnover
Moderate Fairly High High Trip Very High
Trip
Trip
Friction
Friction
Friction
Friction
Source: tClara studies covering ~3,900 travelers from multiple clients over a multi-year period
21
21
Replacing executive
talent is very expensive
50% to
200%
of the
annual
salary
22
The
Path Forward
for Travel Managers
23
The Procurement Track
Step 1 – Measure what matters
What’s better than
price?
The Qualitynormalized Price
Hour
The Quality-normalized Price per Mile
United’s Price
per hour
$125
= $146/hr
86%
UA’s Trip
Quality
Delta’s Price
per hour
$120
= $156/hr
77%
DL’s Trip
Quality
Why is the quality-normalized price
a better KPI?
United’s Price
per hour
$125
Decrease this, or
= $146/hr
86%
UA’s Trip
Quality
This KPI
comes down
Increase this
Quality-normalized prices align key goals
• Buyers focus on reducing normalized
prices
– Negotiate on price
– Recognize quality differentiators
• Suppliers get rewarded for improving
quality
• Both sides can justify price increases so
long as quality rises faster than price
The HR Track
Step 1 – Find your road warrior attrition rate
1. Identify your road warriors in each of the last
3-4 years
2. Ask HR how many have left, and when
3. Ask HR to estimate the cost of replacing
these folks
28
The HR Track
Step 2 – Share findings with your big travel
budget owners
“We did some research. Your road warrior
attrition rate is about 16% per year.”
“HR says it costs about $100K to find and train
each one of those cowboys.”
“Are you OK with these costs?”
“If not, I have some ideas.”
29
With HR, help your EVP of Sales set
some road warrior goals
Retention
Recruiting
Reduce
road
warrior
turnover
from 16%
per year
to 8%
Reduce
time to fill
open road
warrior
positions
by two
weeks
Health &
Safety
Reduce
work days
lost by
road
warriors
by 10%
Productivity
Increase
sales
among
road
warriors
by 5%
How can the right travel program
help achieve these goals?
30
By developing robust travel policies
and travel cultures
Travel Policy Levers
• Cabin policy
• Connection policy
• Flight time windows
• Self-booking
• Ticket refundability
• Days advance purchase
• Preferred suppliers
• Ground transport policy
• Expense reimbursements
Travel Culture Levers
• Traveler recognition
• Day of week travel guidelines
• Time of day travel guidelines
• Trip duration guidelines
• Recovery days, time in lieu
• Trip hardship allowances
• “Back home” support,
personal concierge
• Booking, en-route support
• Expense report support
• Mobile app support
• Job modification, relocation
31
The HR Track
Step 3 – Prioritize your anti-attrition options
Rewards
and
Recognition
More
Comfortable,
Productive
Travel
Safer,
Healthier
Travel
More
Convenient
Travel
Less
Travel
Prediction
and
Intervention
32
The HR Track
Step 4 – Monitor your highest-risk road warriors
Number of Road Warriors
Who Quit
Forecast
Actual
Goal
50
40
30
20
10
0
Traveler
Risk Risk
Score Trend
D. Okamoto 10
Z. Pinkston
10
A. Eagan
10
B. Haapala
10
R. Lunn
9
J. Toon
9
R. Rollman
9
K. Maier
8
D. Kephart
8
Jan Feb Mar Apr May Jun Jul AugSep Oct Nov Dec
33
33
Measure strategic success with four KPIs
Trends in Our Total Cost of Air Travel
120%
Price per Hour
115%
110%
Quality Price per Hour
105%
100%
Trip Quality
95%
90%
85%
Road Warrior Attrition
Rate
80%
Jan
Feb
Mar
Apr May Jun
Jul
Aug
Thank you!
Contact:
Scott@tClara.com
+1 440.248.4111
Glad to connect on LinkedIn
Travel Data Made Brighter
A Gillespie+Diio Venture
Our Road Warrior Panel
Yvette Bradle, Business Analyst Senior
Specialist/Curriculum Program Manager, FINRA
Catherine Frymark
Senior Vice President, Corporate Communications,
Discovery Communications
Nick Weinberg
Senior Business Rental Sales Executive
Enterprise Holdings
36
• What’s the most stressful part of a typical trip?
• What would you most like to see changed about
your firm’s travel or expense policy?
• How much does your firm appreciate the amount of
traveling you do?
• IF you were interviewing for a job requiring similar
amounts of travel, how important would the firm’s
travel policy be?
37
How many of these statements ring true?
1. I spend too much time traveling
2. I often feel more stress than usual in the days before a trip
3. I worry about the impact of my traveling on my personal life
4. I often have little advance notice for my trips
5. I fear flying or traveling in general more than most people
6. I will likely be traveling more in the next few months than I have in
the last few months
7. I find it hard to keep up with my workload when traveling
8. I find it hard to maintain a healthy lifestyle when traveling
9. I doubt I could find a good job that doesn’t require a lot of travel
10.I would rather travel less often than travel more comfortably
38
Which options are most attractive?
Rewards
And
Recognition
More
Comfortable,
Productive
Travel
Safer,
Healthier
Travel
More
Convenient
Travel
Less
Travel
Prediction
and
Intervention
39
Which column matters
most to road warriors?
Travel Policy Levers
• Cabin policy
• Connection policy
• Flight time windows
• Ticket flexibility
• Days advance purchase
• Preferred suppliers
• Ground transport policy
• Expense reimbursements
Travel Culture Levers
• Day of week travel guidelines
• Time of day travel guidelines
• Trip duration guidelines
• Recovery days, time in lieu
• Trip hardship allowances
• “Back home” support,
personal concierge
• Booking, en-route support
• Expense report support
• Mobile app support
• Traveler recognition
• Job modification, relocation
40
Thank you!
Yvette Bradle, Business Analyst Senior
Specialist/Curriculum Program Manager, FINRA
Catherine Frymark
Senior Vice President, Corporate Communications,
Discovery Communications
Nick Weinberg
Senior Business Rental Sales Executive
Enterprise Holdings
41
Appendix
42
The U.S. workforce is getting older
U.S. Civilian Labor Force
Projections
Thousands
Source: U.S. Dpt. of Labor BLS
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1992
55 and older
25 to 54
16 to 24
2002
2012
2022
43
Voluntary turnover is on the rise
91% of
Millenials
expect to
stay in their
job less than
3 years
Chart: CompDataSurveys.com, Compensation Force
Quote: Forbes, Future Workplace, August 2012
44
High performers add great value
How much more does a high performer
generate annually than an average performer?
+40%
+49%
+67%
Increased
productivity in
operations roles
Increased profit
in general
management
roles
Increased
revenue in
sales roles
Source: Mckinsey “War for Talent, Part Two” 2001. Survey of 410 corporate officers at 35 large
U.S. companies
45
Workplace Awards Affect Turnover
• “Best Places to Work” rankings correlated(1)
– With less turnover among smaller firms
– With less turnover among younger workforces
Would your firm win a
“Best Place to Travel” award?
(1) Source: “Third Party Employment Branding: Human Capital Inflows and Outflows Following 'Best
Places to Work' Certifications”, Academy of Management Journal, July 2015. Study of 515 US-based
firms.
46