Modernizing business travel will yield tens of billions in economic value, finds Amadeus co
Modernizing business travel will yield tens of billions in economic value, finds Amadeus commissioned study
Business travel is a top indirect spend area for many companies and could be challenging to manage efficiently without the right digital tools. Today’s fragmented approach means adherence to travel policies is irregular, ‘on-trip’ spend like meals and taxis are rarely managed, and a reliance on manual expense claims burden travelers, finance teams and managers with administrative tasks.
A new era in business travel is emerging to support hybrid working, with companies focused on how travel can deliver maximum value in this new environment. That’s why Amadeus commissioned experts from the Centre for Economic and Business Research (CEBR) to model the economic benefits should the industry apply the latest in end-to-end digital spend management technology.
Based on research with corporate travel and finance teams from large companies* in the US, UK, France, and Germany, CEBR’s work highlights the economic opportunities of digitally transforming travel and expense. According to the study, end-to-end digital spend management delivers economic benefits in two primary areas:
1) Productivity improvements for travelers, managers and finance teams from digitalizing expenses save 147 minutes per expense claim, equating to 188,000 full time equivalent employees and $20.6B in gross economic value across the four economies (equating to a tenth of the value added to the UK’s economy through manufacturing).
2) Direct travel spend efficiencies result in savings of $31.4B or 8.2% of direct travel spend made by large companies across the four markets. Savings are achieved through reductions in fraud and error, as well as more consistent application of company travel policies.
End-to-end digital spend management completely reinvents how companies pay, account for and manage travel. Rather than travelers paying and reclaiming, instead the traveler is provided with a virtual card containing a pre-agreed budget for the trip. The virtual card is stored on the traveler’s smartphone so they can easily pay with the company’s money while traveling. Not only does this mean travelers no longer need to submit expense reports but also that finance teams gain efficiencies in three key areas:
· Account, audit and reimbursement: with all spend made using virtual cards and running through the company’s own bank, the process of reconciling payments to bookings is automated. With a single source of spend data, corporations can apply new technologies like AI to automatically audit travel expenses.
· Control, budget and forecast: because travelers are provided with a virtual card for a pre-agreed amount, based on the nature of the trip, expenses are controlled in advance. Finance teams can accurately understand travel spend based on virtual card budgets already assigned, rather than trying to estimate the cost of travel at the end of the month.
· International VAT reclaim: with options to enrich payments data with specific line items from hotel and other receipts, finance teams no longer need to chase down specific information from travelers and providers in order to reclaim international VAT.
The historic expense and reclaim process, which relies on travelers paying with their own money, enhances scope for fraud, error and out of policy travel spend. By replacing employee payment methods with a virtual card for a pre-agreed budget, CEBR found that end-to-end digital spend management could save corporations $31.4B in annual direct travel spend.
Rudy Daniello, Executive Vice President, Amadeus Cytric Solutions commented: “This study makes a strong economic case for an end-to-end approach to spend management digitalization. Massive digital transformation is coming at exactly the right moment to answer the need for more efficient and intelligent business travel that companies can better justify, measure and control.”
Owen Good, Head of Economic Advisory, Centre for Economics and Business Research added: “Companies are expected to spend over $1 Trillion on business travel globally this year, according to estimates. The ability to better control this investment, by agreeing and enforcing pre-determined trip budgets, is likely to save large companies in our four markets of interest more than 8% in direct travel spend on average.”
Good continued: “In addition, with the potential to save more than two hours of time accounting for and administering each trip, using digital payments to remove the traditional expense process would unlock significant productivity gains. In the US, full utilization of E2E spend management would release 6.3% of all time previously focused on travel accounting and administration, allowing workers to pursue more productive tasks.”
A more detailed presentation of CEBR’s findings and the impact of end-to-end digital spend management is available in the associated report 'It's time to transform'.