This corporate travel industry needs a better model for managing business travel costs. The Total Cost paradigm includes the costs of traveler wear and tear, which fundamentally changes the mission of corporate travel management.

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Managing The Total
Cost of Travel
A New Paradigm
Scott Gillespie
CEO
tClara

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About ScottGillespie
 Leading expert in corporate travel analytics, travel
procurement and Managed Travel 2.0
 CEO of tClara, a travel data consultancy
 Speaker and trainer at worldwide travel industry events
 Former Founder and CEO of Travel Analytics (now SAP)
 Former AT Kearney principal and travel sourcing leader
 MBA, University of Chicago

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Setting the Human Resource Scene
• The European and U.S. workforces are getting older
• Is voluntary turnover on the rise here? (It is in the U.S.)
• Replacing key talent is really expensive
• High performers deliver ~40-70% more profits, productivity
and revenue than average performers
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High performers need plenty of freedom
4
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
58%
56%
51%
19%
8%
1. Values and culture
2. Freedom and autonomy
3. Job has great challenges
16. Geographic location
18 Job security (next to last)
Share of Top 200 executives rating a factor as absolutely
essential

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Wherewe’reheadedtoday
The Path Forward for Travel Managers
Quantifying Traveler Wear and Tear
The Total Cost Paradigm
The Need for a New Travel Paradigm

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Four Major Travel
Management Paradigms
Transaction
Cost
1995>
Total
Cost
2015>
Total
Impact
2030?
Profit
Center
Pre-1995

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After 20 years of professional travel category
management, best practices are well known:
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 Consolidate TMCs
 Consolidate T&E card programs
 Consolidate travel data and reporting
 Apply strategic sourcing principles
 Comply with duty of care
 Use KPIs and benchmarking
 80+ % online adoption
 90+ % travel policy compliance
 Focus on negotiated savings
Procurement
principles
have led the
way
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Source
Transaction Costs,
e.g., airfare, hotel
Trip Quality
(Travel Policy)
5 Star 1 Star
High
Trip
Costs
Trip costs from suppliers depend highly
on the trip’s quality
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5 Star 1 Star
The simplistic
procurement view
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Transaction Costs
Trip Quality
(Travel Policy)
5 Star 1 Star
High
Trip
Costs
Good
Best!

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The result?
Success is seen as constantly
lowering suppliers’ transaction costs
This is the trap of
the Transaction
Cost paradigm
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Source: Scott Gillespie
Human Cost, or
Traveler Friction
• Lost productivity
• Reluctance to travel
• Negative impacts on
recruiting & retention
•Traveler health, safety issues
Why? Tougher travel policies make
travelers take on more wear and tear
Transaction Costs
11
5 Star 1 Star5 Star 1 Star
Trip Quality
(Travel Policy)
High
Trip
Costs
Source: Scott Gillespie

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Companies want the lowest total trip cost,
which is a truly optimized travel program
Total Trip Cost
5 Star 1 Star
Optimal
Human Cost, or
Traveler Friction
12
Trip Quality
(Travel Policy)
5 Star 1 Star
High
Trip
Costs
Transaction Costs
Source: Scott Gillespie

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The transaction cost paradigm has served
the industry well, but now…
• Returns are small and
diminishing – and not
sustainable
• Suppliers chafe at heavy focus
on price rather than value
• Transaction cost model offers no
strategic value, and
• It offers travel managers a
limited career path
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The transaction
cost paradigm
locks travel
management in a
low-value future
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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
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The Total Cost of Travel paradigm
meets all these criteria
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The key
strategic goal
is reducing the
Total Cost of Ownership
We must do the
same in travel

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Quantifying Traveler
Wear and Tear
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tClara quantifies Trip Friction®
6-hour red-eye flight, with a
4-hour layover, connecting
on a regional jet,
both legs in Coach,
arriving home on Saturday
morning,
after 5 nights away
Trip B
6-hour non-stop in
Business Class,
arriving home on Friday
afternoon, after 2
nights away
Trip A
300
Trip Friction Points
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Joe Road Warrior’s Last Year
10 weeks
away from
home
Over 200 hours in
flight, 65% done
on personal time
More flight hours on
own time than
annual vacation
time
Crossed 80+
time zones
Source: tClara’s Trip Friction database

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37%
20%
17%
15%
13%
9%
7%
43%
42%
43%
44%
41%
34%
25%
I sleep much better at home than I do when traveling
I find it hard to have a healthy lifestyle when traveling
I worry about the impact of traveling for work on my personal
life
Travel often causes me to be less effective during or right after
my trips
I find it hard to keep up with my workload while traveling
I occassionally get sick or need time off because I travel so
much
I get afraid during some of my trips
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Survey results: Road warriors show
strong indicators of travel friction
32%
43%
54%
59%
60%
62%
80%
tClara’s survey of 100 random business travelers who travel at least 3 nights a month, ages 25-65,
full-time employment, minimum $50K income per year. Conducted November 5th, 2015
Strongly agree
Agree

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10%
3610
I am or have recently been close to
being burned out on travel
46%
The eye-opener:
Are half of your road warriors at risk?
tClara’s survey of 100 random business travelers who travel at least 3 nights a month, ages 25-65,
full-time employment, minimum $50K income per year. Conducted November 5th, 2015
Strongly agree Agree

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Trip Friction is clearly correlated with
higher road warrior turnover
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3% 3%
6%
10%
16%
Low Trip
Friction
Moderate
Trip Friction
Fairly High
Trip Friction
High Trip
Friction
Very High
Friction
Illustrative Traveler Attrition Rates
Source: tClara studies covering ~3,900 travelers from multiple clients over a multi-year period
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Replacing executive
talent is very expensive
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50% to
200%
of the
annual
salary

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The Path
Forward
for Travel
Managers
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http://www.flickr.com/photos/nicolawhitaker/111009156/

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1. Get the HR Facts
• Identify your road warriors
in each of the last 3-4 years
• Ask HR how many have left,
and when
• Ask HR to estimate the cost
of replacing these folks
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2. Line management’s interest?

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3. Focus on business goals
Recruiting
Reduce time to
fill open jobs
by two weeks
Retention
Reduce
turnover
from 12% per
year to 4%
Productivity
Less wasted
time, more
and better
sleep
Health &
Safety
Reduce work
days lost by
10%
Among Road Warriors
Increase Sales by 5%

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Less or
Shared
Travel
Easier,
Safer,
Healthier
Travel
Hard
Trip
Bonuses
Recognition,
Rewards
Recruiting,
Retention
Analytics
Tiered Policies Travel Culture
4. Develop traveler-focused strategies
Traveler-specific
allowances
Traveler-focused
Strategies

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“Meanwhile, let’s talk about which of
your road warriors are about to quit.”
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0
10
20
30
40
50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Number of Travelers Who Quit
Forecast Actual Goal
Traveler Risk
Score
Risk
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
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The Wrap-up
• Our current travel management model is a dead end
• Senior management wants the lowest total cost
• Travel friction is costly and quantifiable
• Travel managers must now focus on business goals
• It’s time for the Total Cost of Travel model

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Thank you!
Scott Gillespie
scott@tclara.com
glad to connect on LinkedIn