Do you know your true travel program spend? The figure that your travel agency provides may give you the cost of your flights, hotels and car rentals, but that doesn’t tell the whole story. See how a new approach to managing programs can help your organization capture, control and optimize total program spend, including significant hidden costs.
How do you calculate the cost of a travel program for your business? The likely answer is to look at the travel agency’s invoices for flight and hotel bookings, and car rentals. However, these channels often represent less than 60% of the total spend. In fact, according to data from TCG Consulting, the total cost of an organization’s travel program can be up to 64% above agency reports. The question is: how can you track all these sources of visible and hidden spend, and even more critically, how can you control and optimize them? Your true cost of travel can account for up to 12% of an organization’s overall annual revenues, so understanding, and capturing the actual spend is critical for every CFO.
Implementing a Total Cost of Ownership Approach
Calculating a program’s total cost of ownership (TCO) enables organizations to accurately capture and manage the true cost of travel programs. In addition to spend via approved booking channels, there are many additional areas to be assessed and integrated: travel bookings made outside of preferred channels and policy, out-of-pocket travel expenses such as meals and Uber rides, as well as other spend via corporate cards. A TCO approach also captures and manages previously “hidden” spend such as agency account management fees, cost of treasury, reconciliation, card and expense workflow processing, and internal administration fees.
Benefits of a TCO Approach
TCG Consulting’s data show that traditional sourcing-driven approaches are delivering annual savings of less than 3%, while TCO based approaches are seeing savings up to 23% on all visible costs and up to 35% on previously hidden cost areas.
Implementing a TCO approach can help CFOs to understand and control the total cost of their travel program, and can deliver a range of benefits such as:
- Reduce total spend
- Reduce bypass and spend outside of policy – improve compliance
- Improve the business traveler experience
- Reduce processing and workflow inefficiencies
- Expense submission enhancements – “giving back” time to users
- Enhance spend visibility and reporting to identify future opportunities – leading indicator patterns, policy violations, business unit comparisons, etc.
- Reduce cost of treasury and reconciliation
- Identify and reduce hidden fees and administrative costs
- Reduce organizational risk
- Increase organization’s ability to quickly scale program growth
To learn more about optimizing your overall travel and expense program spend, contact firstname.lastname@example.org.