Why a Cost-Focused Travel Program May Not Be the Best Deal

Travel managers (TM) know full well that when the global economy took a nosedive during the 2008 financial crisis and many companies slashed their budgets, their department was one of the hardest hit. Even though we’ve come a long way since that dark age — with global business travel spend breaking a record and surpassing the US$1.2 trillion mark in 2016 — there are some TMs who still feel pressured to keep travel expenses as low as possible.

They may think they’re being savvy, finding ways to cut here and there, but what they likely don’t realize is that certain aspects of a stringent cost-savings approach — such as pushing travelers to book the least expensive hotel every time or find the cheapest airfare possible even if it means extra stops and an inconvenient departure time — aren’t all that smart.

As a detailed report sponsored by American Express Global Business Travel (GBT), the Airlines Reporting Corporation and tClara indicates, a cost-focused travel policy that prioritizes low travel expenses can lead to negative consequences in terms of traveler productivity, health, retention and trip effectiveness — all of which can hurt, not help the company’s bottom line.

The report, which was based on a survey of more than 750 business travelers, shows that road warriors in cost-focused programs have 22 percent fewer effective trips than their colleagues in traveler-focused programs, which concentrate on traveler productivity and satisfaction. Travelers in cost-focused programs also are twice as likely to experience symptoms of travel friction — the wear and tear of too much time on the road. Such symptoms include lack of sleep or reduced quality, difficulty maintaining a healthy lifestyle, stress and worry about the impact of work travel on their personal life.

All this traveler frustration may motivate the ones impacted the most — your frequent travelers — to be looking for a job at a company that offers better travel benefits.

So while a cost-focused approach may look better on your expense report, when you tally everything up, the numbers don’t quite work in your favor — especially when you take a closer look at the math and the cost of replacing a salaried employee.

The true cost

According to some studies, when you factor in recruiting and training expenses, finding a substitute can cost six to nine months of the employee’s salary.

And the cost of replacing a highly paid employee requiring specialized training climbs dramatically — it’s 213 percent of the annual salary, according to a report by the Center for American Progress.

To replace one of your top-performing road warriors? Well, there’s no calculation that truly can measure the loss of an employee who literally goes the extra mile for the company or the value of all the face time they’ve put in with clients, trip after trip.

As the report also pointed out, there may be indirect costs of a frequent traveler resigning, such as reduced team morale, decreased productivity and the loss of clients and institutional knowledge.

Not only can a traveler-focused program encourage road warriors to stick around, but it also can help to attract new talent.

“Creating the best possible experience for the traveler will ultimately drive program success,” Evan Konwiser, vice president of digital traveler for American Express GBT, said, noting that this industry shift toward a traveler-centric approach is driving “the redefinition of travel program pillars and KPIs.”

To get a read on how traveler friendly your own program is, take a look at your company’s road warrior attrition rate (which also can be a powerful tool in communicating priorities with senior management). If the number is not so favorable, it may be time to move toward a traveler-centric plan.

Their wish list

So what is it exactly they want?

The report identified several requests business travelers in a cost-focused program have, including: nonstop flights when available; the ability to fly premium economy on domestic flights; flying business class on flights longer than six hours; easier expense reporting; and reimbursement for airline lounge membership, TSA Pre✔® or Global Entry.

Really, what all of the above boils down to are things that will make travelers more productive — and what company leader wouldn’t want that?

Business travelers also want flexibility within a program. This can be done by giving them a variety of options for their accommodations, including short-term lodging alternatives like Airbnb™, or by being open to certain requests that will help them cope with travel burnout, such as paid time off or the ability to work from home after a long trip. You also might consider incorporating a “bleisure” travel policy, so your travelers can tack on leisure days to their business trip, if they so choose.

Even if you have taken clear measures to make your program more traveler friendly, don't assume your road warriors are happy. Find out for sure by soliciting their feedback through surveys and fostering open communication. After all, what better way to find out what will make your travelers happy than asking the travelers themselves?

Finally, if one of your frequent travelers does leave the company for a job that has better travel benefits, ask about the perks they’ll be getting and use it as an opportunity to learn how you can enhance your own program — so you can entice your other travelers to stay put!