Discovering hidden costs will certainly be one of the most valuable contributions of the CWT Solutions Group, in terms of business travel optimization, in the coming years. It definitely sets a new approach to the ongoing discussions about savings and productivity.
If we take a look to the Spanish market, we will notice that the global spend in business travel has fallen significantly since 2008 and yet the total number of trips during the same period has increased on a quite solid basis. During the said period, Spanish companies and TMCs have done a tough job and have been able to implement efficient travel policies and achieve important savings in order to allow business travelers to travel more frequently and further but for less money. At the same time, return indicators such as the export activity have increased in similar terms (business travel is a driver of commercial activity and economic growth).
However, the more we travel the more we can be exposed to stress/friction and consequently to hidden costs. According to a CWT research, the average equivalent of such lack of productivity can amount up to 662$.
Although companies have to focus on cost optimization, the room for more cost savings is not unlimited. On the other hand as travelers are increasingly exposed to stress due to more frequent travel and strict travel policies, more hidden costs can rise.
Is it possible to find the balance between necessary savings, duty of care and productivity?
Spanish corporations acknowledge that they need to expand their travel budgets in order to ensure their presence in international markets. In fact, the figures for 2013 confirm a double digit increase in travel intensity in most of the long haul markets. But the most important decision, once acknowledged the value of business travel as an investment and a driver of economic growth, is to ensure maximum productivity. Corporations need to analyze where to eliminate hidden costs when possible, because it will both provide savings and “address their duty of care responsibilities”.
A recent research (2013) conducted by GEBTA Spain proves that in 22% of the cases analyzed the cost of inability to work is higher than the savings achieved while booking economy fares instead of a more expensive air ticket which provides adequate conditions for productivity and rest. Depending on the routes, and the traveler profile, the percentage can be of 75%.
The reason is simple, if we take into account the per hour cost of our travelling employees and compare it with the savings resulting from basic economy class booking, you will notice that in a relevant percentage of the cases, the hidden cost of having an employee sitting during hours on an airplane with too short pitch and room to work (which makes him totally unproductive) or even rest (to be fit and prepared for an important meeting, for example) is higher than the savings we may achieve.
According to another research conducted by GEBTA in collaboration with Vueling (2013) among Spanish business travelers, 23% of the individuals polled stated that they always work during a trip and 64% only do sometimes. When asked about the reasons, Spanish business travelers indicated that lack of space, “intimacy/or minimum confidentiality” and inadequate flight timetables, where the main obstacles that hindered them of working while traveling and that an improvement of travel policies (26%) could significantly enhance their productivity.
As in our office, we need certain conditions to continue working and being productive while we travel. Companies are interested in making the most of our time even when we are on a trip. The productivity approach is a new driver of cost savings that companies should not neglect.
Perhaps we’ll need to review travel policies, adapt them and put «exceptions where it makes sense», as Yvonne Moya from Unilever tells. Anyway, don’t forget that sometimes the cheaper option turns out more expensive!
(c) GEBTA, Marcel Forns. 2014