Bob Papworth asks whether knowing the total cost of a trip makes any difference to the deals we do
In an industry so besotted with, and bedevilled by, acronyms, it is scarcely credible that TCOT - for 'total cost of trip' - has yet to enter corporate travel's lingua franca.
Admittedly, the mini-moniker has already been adopted by the US originated website Top Conservatives On Twitter (which ranks erstwhile vice-presidential candidate Sarah Palin as its third most interesting follower), but there's no law against stealing other people's initials. After all, if you Google 'SBT', you'll get a whole lot of information on Staffordshire bull terriers and precious little about self-booking tools.
Abbreviations and acronyms gain currency only because they constitute a shorthand version of a commonlyused phrase - and surely no-one can deny that total cost of trip has become one of the most talked-about travel topics of our cash-strapped recessionary times.
TCOT may be the buzz-phrase de nos jours, but there appears to be precious little evidence that corporates are actually doing anything about it. Ask any random selection of travel management companies (TMCs) how many of their clients actually analyse the bottom-line value of their trips and meetings - the return on the investment of their travel budget - and the answer will be dispiritingly low.
So, given that TMCs relentlessly promote themselves as being more than mere travel 'agents', should they become more closely involved in such analysis?
"We would love to," says Andrew Burch, business development manager at Hillgate Travel, "but the audience just isn't there. Procurement people aren't interested - they're only interested in price - and while we would happily go to the chairman or chief executive and present a report, you can't do that. For a start, it would have a big impact on your day-to-day contacts within the client organisation, not because they don't want us to go higher, but because they know there's no point. We are just a means to an end - it's not our job to question that 'end'."
There is also the little matter of entrenched travel patterns. If the client company has always held quarterly marketing meetings in Brussels, there is little imperative to question whether those meetings need to be quarterly, or in Brussels, or indeed to take place at all.
"There is a habit, and to be honest it's a difficult one to break," says HRG (Hogg Robinson Group) commercial director Chris Fry, "but that's where our data and our knowledge come in. We can give them the help they need to evaluate trips like that but, in the end it's up to them to make the decision. It comes back to this whole thing about where travel management sits. I believe it's our job to provide the data, but it's a management function [within the client company] to make the final decision."
To be fair to those of the much maligned procurement persuasion, Fry is convinced that they are becoming less cost-obsessed. "It varies from company to company," he says, "but there has been a noticeable shift away from 'cheapness' and towards 'value'. There is a far greater interest in end-to-end travel, and a far greater interest in cost-avoidance and, linked to that, CO2 avoidance."
Kaveh Atrak, American Express Business Travel's vice-president and general manager for the UK, Nordics and central Europe, suggests corporates are already kicking the habit-travel habit.
"The recession has been the death of the 'because we've always done it' attitude, which was in decline in many companies anyway, and companies have a keen eye on strategic management of travel and a greater focus on making the right trips for the right investment, weighing up the impact on the bottom line and the business opportunity," he says.
"Understanding the total cost of a trip is a vital part of optimising a travel programme and getting the best return on investment [ROI] - some decisions may be based predominantly on cost savings, which go directly to the bottom line, but others may not be so obvious.
A strategic travel programme doesn't necessarily mean one based just on cost, but can be enhanced with an understanding of the needs of the traveller and their business objectives." The big fly in that particular ointment, of course, is the traveller's tendency to confuse 'need' with 'want'.
With serendipitous coincidence, hotel communications and entertainment specialist Quadriga recently asked 1,000 UK business travellers whether, on the night before a morning business meeting, they would prefer to stay at home or in a hotel. The overwhelming majority - 86 per cent - went for the latter option but, crucially, 74 per cent of that majority said they did so because they enjoy the "me-time". Admittedly, the second most-quoted reason for choosing the hotel overnight was the ability to work without distraction, but the third-placed answer was the opportunity "to catch up with friends and colleagues over a drink or meal".
Of course travel managers have a duty of care, and that duty unquestionably includes keeping the customer satisfied, but there is little quantifiable ROI in running up a hotel bill just so the traveller can avoid curried leftovers, teenaged offspring and Desperate Housewives re-runs, and then indulge his or her taste for the odd late-night Glenmorangie.
Atrak has got that one - or one very like it - covered. "An overnight flight in Economy may look better than a Business Class flight on the bottom line, but if the business traveller is not at their prime in the following day's meeting, it could be detrimental to the business benefit of the trip," he says. Equally, he adds: "An indirect flight may be cheaper than a direct flight and can make perfect sense if you can get some additional business benefit from the stop, but consideration also needs to be given to whether the time implications are worth the cost savings."
Ever the iconoclast, Hillgate's Burch has another take on the whole question of TCOT which, he suggests, just could be something that the travel management community has come up with to counter corporate clients' complaints about TMC fees.
If one measures a transaction fee against, for example, the cost of a train ticket, no TMC is going to come up smelling of roses. However, if one takes into consideration the drive-time to the rail station, the car park costs, the platform-loitering, seat-finding and ticket-producing down-time, the cab fare at the other end of the journey, the waiting-in-reception bit, and then the whole process repeated in reverse, that same transaction fee begins to look rather more reasonable.
"I think 'total cost of trip' may be an issue for the travel management community, but I'm not so sure that it's an issue for companies," Burch says. "It could well be that this is one of those things where the travel fraternity sees it as a sort of defence mechanism against [criticism of] our fees."
There is also the nagging suspicion - although not one voiced by Burch - that major TMCs have hived off 'consultancy' services into separate profit-centred divisions. Companies that historically expected their TMC to come up with 'strategic' solutions now discover that there are separate teams of people - charging separate and not insubstantial sums of money - to produce reports and analyses what would once have been part and parcel of the same contract.
Wherever the data comes from, and regardless of the cost of acquiring it, Chris Fry believes that it no longer sits gathering dust in lever-arch files stashed away in cupboards frequented only by office cleaners and carried away Christmas party couplers.
"In our experience they [corporate clients] are now reacting much more, and much more effectively, to the information we give them," he says. "In the main, our clients will take that data on board, and it can and does lead to change within their organisations." That change is at least in part due to economic circumstance. In the past, when the going got tough, the tough simply cut their travel budgets - there was a headlong dash to the back of the plane, zero-star hotels saw occupancy levels rocket, and Ryanair's load factors headed north.
This time around, there is less fat to trim. "I really believe buyers have become a lot smarter," says Fry. "They have realised the importance of spending time having that conversation with the TMC, making sure they have got the right data, and then spending time analysing that data. Only then do you start to get that 'total trip' picture."
Amex' Kaveh Atrak highlights another consideration. "It's important to remember that time savings can be vital in the office as well as on the road," he says. "Online booking enables time savings in the office - travel bookers are able to make all their air, hotel, and even restaurant reservation arrangements all in one place, and synchronise it to the traveller's diary."
In other words, if anyone ever gets around to calculating the TCOT, there are behind-the-scenes back-office considerations to be taken into account, as well as the obvious upfront stuff.
Atrak goes on: "Travel management tools have, of course, evolved, taking advantage of technological advancements and aligning those with company and traveller needs. The advantage of this is that, combined with expert advice, a TMC can put forward a bespoke package which will help a company reach their business travel strategy goals."
The question remains, however: do clients effectively match their business travel goals with their business goals? Perhaps more to the point, are travel suppliers and intermediaries helping them to do so?
As a discipline, travel management has matured at an extraordinary rate.
However, it has also matured in a piecemeal fashion. Airlines have embraced the corporate market in ways which were unimaginable even 10 years ago. The status and importance of hotel booking agencies has improved beyond recognition. Evolvi and thetrainline.com have transformed the rail landscape.
Nevertheless, it remains the kind of pick'n'mix offering pioneered by Woolworths, and we all know what happened to them.
Later this year - hopefully within the next three months or so - KDS will be unveiling a new end-to-end solution that will make bees' knees look positively average. According to Dean Forbes, KDS's executive vice-president of worldwide sales and marketing, the new system (which has a name, which we're not allowed to reveal here, and which is now being beta-tested by three global organisations, which we're not allowed to name here either) will blow everyone's travel management socks off.
Forbes is a great believer that ROI is key ("My view is that it is absolutely essential, and that it is pretty much all we should think about," he says), though also worries that it is "one of those over-used romantic phrases" which receives more lip-service than real recognition.
"After all," he says, "nobody ever goes back after a business trip and asks what the actual return really was."
He has a point. And KDS's new top-drawer 'solution', which will offer cost-saving alternatives at the time of booking, will enable travel managers to demonstrate real, quantifiable per-trip savings on everything from taxis and car parks, through air fares and hotels, to expense processes.
What it will not do, of course - and Forbes doesn't pretend that it will - is evaluate that 'me-time', or recommend Teacher's blended over single malts.
TCOT may yet become an accepted part of the travel management lexicon, but that first 'T' - the 'total' bit - looks set to remain as elusive as ever. Clients don't appear to care, and TMCs are understandably reluctant to push, much less force, the issue.