A Different Approach to Analyzing Auxiliary Spend

Travel & expense is the dark horse of the corporate travel management industry. Wait, what’s that? You’ve been paying attention to T&E your entire career? Of course you have. We aren’t talking about the big-ticket items here; it’s the smaller stuff that’s beginning to add up.

For the average business trip, flights and hotels account for about three-quarters of total trip costs. Ground transportation and auxiliary spending—meals, phone charges and so on—account for the remaining quarter.

A quarter is significant! It could lead to major cost savings and, in turn, to more successful business travel programs in the future. The sheer volume of different T&E data makes it challenging to process and manage, and interpreting it can be daunting. So how should travel managers or businesses go about understanding their auxiliary—and all—T&E spend more strategically?

1. Sort expenses into four categories, based on when and where they take place.

• Occurred while traveling

• Associated with a regular travel supplier: air, hotel, car

• Made through the travel management company

Differed from the travel management company amount recorded at booking

By categorizing in this way, companies can delve into where expenses occur and whether there is an opportunity for action to achieve significant savings.

2. Understand why each expense has been incurred analyzing the following additional factors.

• Type of service or product bought

• Overall spending behavior of the employee

• Context of the expense

While Step One offers a head start into T&E analysis with an immediate high-level view on where company dollars are spent, Step Two takes companies closer to the actions needed to reduce costs. These could be anything from evaluating your preferred suppliers and policy, adjusting the number of trips employees make, setting an expenses limit at the start of the journey or creating a virtual card with an agreed-upon limit.

Cost Breakdown of the Average Business Trip

If, for example, an increasing amount of T&E is being spent by regular travelers using on-demand car services, it might be time to consider how to integrate this new supply base into your program. Conversely, it may be time to re-educate travelers on policy and other negotiated rates.

By creating more awareness and taking corresponding action, companies will improve their own understanding along with their employees’ purchasing behavior and policy compliance and can negotiate new deals with suppliers.

With more information and insight, managers can better estimate the full financial impact of each business trip. This will guide finance, procurement and travel management professionals to an improved understanding of their whole travel program, which is long overdue.