The concept of ¡°total cost of trip¡± has intrigued me for years. In fact, I remember the notion being discussed twenty years ago when my career first started at American Express and the idea of understanding all the financial components of a trip is something that, for many organisations, has persisted over the intervening years.

Adam Knights is ATPI Group's regional managing director for the UK, France & Benelux. Connect with him...

• LinkedIn
• ATPI Group

Before I delve deeper into this subject, it is important to clarify why one might want to know the total cost of a trip.

Most customers these days have their core air and hotel expenditure pretty nailed down in terms of policy management. This is particularly the case for clients that have used TMCs for a number of years and have consolidated their expenditure domestically or globally. TMCs that aren¡¯t embracing NDC and the cheaper fares currently available might find themselves at odds with their customers, but broadly speaking the customers who want to manage cost tightly are doing so.

However, this approach leaves the ¡°non air and hotel¡± elements of a trip unknown, therefore posing a significant threat to the efficacy of a travel programme that is, in part, expected to control costs.

I believe that travel and procurement managers recognise this unknown area of the travel programme is the next frontier for them in terms of identifying cost savings opportunities. In simple terms, travel and procurement teams tend to have significant control over travel policy and the implementation and management of that when it comes to air and hotel spend. However, the same oversight is rarely extended to items such as transport from the airport, breakfast in hotels, client entertaining and hotel extras such as laundry, meeting rooms or on-arrival upgrades. This type of spend normally sits under an expense policy that in turn is authorised by a line manager who might have, for example, ten direct reports. Compare that to the travel or procurement team who manage the travel budget of the entire business and review the compliance of employees of similar grades across the whole company on elements such as airfare.

We combined data pertaining to hotels and airfares with data on the kinds of expenses discussed above and were amazed at the results of our analysis. As a TMC, we tend to travel on the cheapest industry fares and lowest hotel rates so there is little we can do to reduce our spend further. However, the truly remarkable ¨C but now seemingly obvious ¨C outcome of the analysis was the variation of the cost of domestic trips among people in similar roles or seniority.

For example, breakfast in a hotel in the UK now costs anything from ?15 to ?25. We discovered that people were often booking rooms with breakfast included (perhaps because our staff travel team assumed that was the requirement) and then submitting separate claims for breakfast at, say, Pret a Manger for around ?5. However, until we performed this analysis the expense and travel data was not easily visible. ??

Another significant area of difference was in transport to and from the airport, but we noticed it only when we compared the same trips for people across the business. Some people took an airport shuttle bus to the hotel or office, others got colleagues to pick them up and a final group always seemed to take taxis. In summary, a return taxi fare to our Aberdeen or Amsterdam offices came in at around ?50-?60, with breakfast costing around ?10. That is some difference on what are relatively simple and low-cost trips. The most interesting point though was that gaining visibility of this data allowed us to have some simple conversations that saved us a lot of money. Many people didn¡¯t even know about the shuttle bus and using our pre-trip data allowed us to link up colleagues across different teams who were set to arrive on the same flights (something admittedly companies could and should do anyway).

If you then consider the opportunity presented by looking at total trip costs when visiting clients, one can start to use the data even more intuitively. For example, the flight costs might be well managed but if the total trip costs inflate significantly then looking at it from a client profit perspective might enable you to make different decisions.

At an intellectual level, it makes sense to combine travel and expenses when thinking about the total cost of a trip. Following that thread, one might reasonably assume that ¡°travel and expense companies¡± therefore have a unique proposition. However, a very unscientific verbal survey at an ITM event three years ago confirmed what I was beginning to suspect. None of the corporate customers had any idea what their ¡°total trip costs¡± were at an individual traveller level. They all acknowledged that their provider cited travel and expense in the same sentence and that total cost of trip was something they had heard of, but admitted that, ultimately, they didn¡¯t have access to any ¡°total cost of trip¡± data.

I then started to wonder whether the product or concept actually already existed but that simply no one chose to use it.

There might be readers who are now thinking ¡°Yes we do that, what gave you the impression that we don¡¯t?¡±? As ever, there is always nuance and grey areas to anything. If you book your travel online, expense it via a corporate card and mandate the use of the expense management tool and a single TMC, then yes the total cost of trip probably does exist. However, travel management isn¡¯t always that simple, is it?

Many customers use lodge cards to invoice the large air elements of a travellers¡¯ expense. Others have their TMC invoice rail tickets centrally or billback hotels ¨C the biggest block to this is that not everyone books 100% of trips online. This last point is the most critical. Without 100% online adoption, the TMC needs to integrate their back-office system with the expense management provider. Even when that is done, the TMC also needs to ensure there is unique logic employed to suit the expense management company (such as a unique traveller ID to match the expense ID). When you then consider that expense management is a highly transactional business relying on little customisation but massive scale, it will not surprise you to know that they (the mega expense management companies) do not want to customise their solution to suit each TMC on behalf of their customers. Ergo, no total cost of trip.

So, what do we conclude from this? My personal view is that finance departments are unlikely to drive this beyond the expense processing benefits derived from an expense management system and possibly VAT re-claim benefits as something additional. However, procurement and travel management functions are driven by delivering cost savings ¨C among many other things, I know ¨C to the business. Indeed, most procurement teams are incentivised by bonus structures that are driven by savings. Therefore, it strikes me that being able to secure these easy wins is an obvious focus area. The next step is to ask your TMC/Expense Management Company/ Credit card provider when you can have it.