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Finding the hidden costs of business travel offers biggest reward

Fred Saunier

Head of Corporate IT, Amadeus Asia Pacific

While most corporations target direct travel costs, it’s those hidden costs below the surface where you can make the most impact with the right booking technology.

Understandably, profitability through cost control is a major directive for business when it comes to travel. And most target just that. In fact, according to a recent study, of 590 organisations across 11 countries, 85% of corporations identified controlling direct costs as their number one priority. 

This is understandable, as direct costs make up 80% of a corporation’s total travel spend. But it’s not the full picture. Most notably, nearly half of those surveyed believe this type of direct cost-saving optimisation has reached a plateau; and they now need to look elsewhere for savings. 

In other words, business needs to look below the surface at the hidden travel costs if it’s to make an impression on its bottom line.

Yes, businesses have to control direct costs (related to the travel itself) such as travel agency transaction fees, negotiated rates, preferred low-cost suppliers, air tickets, hotel reservations, and restaurants. Indeed, there’s 20% of potential savings on this with the right corporate booking tool.

However, it’s those indirect costs that offer greater opportunities - a whopping 65% of potential savings in travel spend can be had by switching from manual to an automated travel and expense management system.

Rather than control these costs, business need to avoid the manual handling of travel expenses, such as manual search and book, manual errors, time spent creating and approving expense reports, and email exchanges.

It may be a smaller piece of the puzzle, but these hidden travel costs which are often overlooked can provide big savings.

So where do we start? One of the keys methods to curbing indirect costs is greater compliance. Companies with travel policy compliance rates of over 80% can achieve 23% lower total indirect costs per traveller than companies with low compliance rates.

It sounds simple but it is an area vastly underdone by most businesses. According to the study Managing Every Mile, while a formal travel policy is acknowledged as one of the most essential tools in controlling T&E spend, 95% of interviewees permit out-of-policy bookings. 

An easy fix to increase compliancy rates is having the right technology, which is easy to adopt and adhere to, and which can handle the complexities of today’s travel landscape. So you are both future proofing your travel program and providing your people with a premium user experience that saves them time and make their travel easier. 

Another key area in driving down costs is making the most out of your data. The same study suggested that business were falling short in this area, despite the fact that analytics is key to making both strategic and tactical travel management changes such as ‘spot buying’ and sourcing.

Eighty percent of those surveyed said they don’t have access to sufficient information to undertake strategic T&E sourcing. In its absence, workaround and manual effort is required to create visibility into both managed and out-of-program bookings. 

This shows that having the right automated expense management tool such as Amadeus cytric Travel and Expense can not only offer that visibility, but create greater opportunity to avoid those hidden costs. 

With Amadeus, the end goal is always the same - to help businesses get more mileage out of its travel dollar.

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