January 2009 - Corporate spending on travel has increased dramatically during the past three decades of active travel management, but the breakdown of the spending by travel category has remained remarkably consistent over the years, according to multiple studies.
"State Of The Practice" found that about 42 cents of every T&E dollar goes to air travel, 24 cents to lodging and 9 cents to car rental. In 1991, an American Express survey found that air represented 41 cents of every T&E dollar, lodging 22 cents and car rental 8 cents. (
1) A decade later, an American Express survey found that air represented 45 percent of the T&E spend, lodging 17 percent, car rental 10 percent and meals 10 percent. (
2) The only great disparities between the Amex surveys and new
Procurement.travel research are in the breakdowns of meals, entertainment and other categories. The "State Of The Practice" groups meals and entertainment together and found it represented 14 percent of the T&E dollar, while Amex listed meals in the 1991 study at 16 percent and entertainment at 11 percent. That Amex study also did not show categories that were listed in this year's "State Of The Practice," such as airport transfers (4 percent), travel program management (about 3 percent), rail and other (2 percent each).
Among the smallest T&E spenders--those with less than $1 million, excluding meetings, in 2007--air represents just 39 percent of the pie. Meals represent a slightly larger (17 percent) share for this group, while numbers for hotel and car rental were the same regardless of size.
Source:
Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
Those with annual T&E of between $1 million and $5 million reported spending just over 46 percent on air, 22.5 percent on hotel and 10 percent on car rental.
The chart above reflects both the travel and meeting spend of respondent companies, and shows a significantly greater percentage of "not sure" on meeting spend. Companies still appear to be grappling with how best to manage meetings, as discussed in the
Meetings section.
Source: Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
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About 14 percent of respondents said their companies' 2007 T&E expenditures exceeded $60 million and were considered extra large groups in this report. Another 14 percent said 2007 T&E volume was between $15 million and $59.9 million, categorized as large, and 18 percent said their T&E volume was $5 million to $14.9 million, or medium. Finally, defined in this report as small spenders, 49 percent of respondents said their companies' 2007 T&E expenditures were less than $5 million.
Source:
Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
The chart above reflects the percentages of travelers, frequent travelers and corporate cardholders at the respondent companies. About 5 percent of respondents said their companies employ more than 100,000 people and another 5 percent pegged the total employee base between 50,000 and 99,999. About 17 percent said their companies employ 10,000 to 49,999, while 29 percent said employment was between 1,000 and 9,999. About 7 percent said their total employment was 500 to 999, while 13 percent said it was 100 to 499 and 22 percent said it was fewer than 100.
Source: Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
Source: Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
How Many People Does It Take?
Source: Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
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To procure, analyze and manage travel spending, respondents said their companies employed anywhere from one to more than 11 people. Nearly three-quarters of respondent companies employ just one or two people for all travel management and procurement responsibilities, 14 percent employ three to five people, 7 percent dedicate six to 10 people, and 7 percent have more than 11 people tasked with travel management.
Among the smallest spenders with less than $1 million in T&E spend, 94 percent employ just one or two people to manage travel.
At companies with medium annual T&E spend of $1 million to $14.9 million, 74 percent employ just one or two people to manage travel, while 16 percent employ three to five people, 6 percent employ six to 10 and 4 percent employ more than 11 people for the function.
Not surprisingly, the biggest T&E spenders employ the most people to procure and manage travel. At companies that spent more than $15 million on T&E in 2007, 46 percent said just one or two people managed travel, 23 percent said three to five, 17 percent pegged the headcount at between six and 10, and 14 percent said more than 11 people.
Return On Travel Spend
Just over half (53 percent) of respondents said their organizations measure T&E expenditures as a percentage of total expenditures. Only 16 percent of respondents said their organizations measure the return on invested travel dollars. But the response was most prevalent at respondents with small and large travel spend. Nearly 20 percent of respondents who measure the return on invested travel dollars reported T&E spend of less than $5 million, while another 16 percent of those who so measure reported annual T&E spend of more than $60 million.
But the practice wasn't exactly new. Of those measuring the return on their travel dollars, 42 percent said they began the practice more than three years ago. Of the rest, about half said they started such measurements one to three years ago, while the remainder said they had started only in the past 12 months. Finance executives, according to nearly 40 percent of respondents, were responsible for such analysis.
Finance is the company department that is most likely to analyze company expenditures and the return on investment (cited by 38 percent of respondents),
Procurement.travel research found. In fact, 16 percent said their organizations' chief financial officers most often dissect travel spending.
But travel purchasing and booking data today is studied by a variety of individuals within corporations, including finance (cited by 62 percent of respondents), procurement (39 percent), a CEO/COO or other senior executive (38 percent) and business unit heads (37 percent). Nine percent of respondents said sales departments examine travel purchasing and booking data, while 8 percent said security reviews it, too.
Meanwhile, half of those surveyed said their organizations benchmark or compare their travel data with other organizations. Even fewer (41 percent) benchmark travel data between internal departments. Among the extra large travel spenders, 80 percent said they benchmark travel with other companies and 66 percent said they benchmark between internal departments. Large spenders also are more likely to benchmark travel with other companies, but 60 percent of those respondents said they don't benchmark internally.
Sources of travel data vary widely, with most respondents reliant on reporting from their travel management company (66 percent), corporate card (65 percent), expense reporting system (58 percent), online booking system (56 percent) and/or suppliers (48 percent). Another 48 percent specifically cited central bill/ghost/lodge cards as data sources and 42 percent cited procurement cards. Global distribution systems and meetings management technology were among the least cited data sources, noted by only 30 percent and 23 percent of respondents, respectively.
However, among the extra large spenders, nearly half (47 percent) said they gather data from the GDS and 74 percent gather it from suppliers, along with the TMC, corporate card and expense reporting data cited by three-quarters or more of respondents with this spend size.
When it comes to examining the data, results indicate that a greater percentage (92 percent) of extra large spenders rely on corporate card data, followed by supplier reporting (87 percent), TMC and expense reporting data (both 86 percent) and online booking system data (79 percent).
Source: Procurement.travel August-September 2008 online survey of 473 qualified travel decision-makers
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Among those who said their companies do not gather or examine travel management data from specific sources, 44 percent said they would likely use corporate card data in the years to come, while 32 percent said they expect to use expense reporting or online booking system data. Just over 20 percent expect to use TMC data, 19 percent expect to use supplier reporting and 18 percent said they expect to use both procurement card and central/ bill/ghost card data. Only 23 percent said they expect to use meetings management technology data in the years to come, but among the extra large spenders, the percentage was 49 percent. Only 2 percent said they expect to use GDS data.
Results also highlight the continued challenges for many managers in obtaining and integrating data to better manage travel. Asked to rank the top three travel data integration challenges faced by their companies, 65 percent cited accuracy of the data, 63 percent said getting the data in a timely manner, 51 percent said reconciling the data, 42 percent said consolidating data from multiple systems, 32 percent said distributing data to internal managers, 23 percent said consolidating data from multiple countries within their companies and 22 percent said securing the budget for the integration effort.
