citi summit t&e industry trends - citibank commercial may 2014 . 2 | t&e ... pnc bank,...

Visa Confidential

Citi Summit T&E Industry Trends Visa Commercial

May 2014

| T&E Trends| 2014 2 Visa Confidential

This presentation is furnished to you solely in your capacity as a customer of Visa Inc. and/or a participant in the Visa payments system. By accepting this presentation, you acknowledge that the information contained herein (the “Information”) is confidential and subject to the confidentiality restrictions contained in Visa’s operating regulations and/or other confidentiality agreements, which limit your use of the Information. You agree to keep the Information confidential and not to use the Information for any purpose other than in your capacity as a customer of Visa Inc. or as a participant in the Visa payments system. The Information may only be disseminated within your organization on a need-to-know basis to enable your participation in the Visa payments system. Please be advised that the Information may constitute material non public information under U.S. federal securities laws and that purchasing or selling securities of Visa Inc. while being aware of material non public information would constitute a violation of applicable U.S. federal securities laws.

Notice of confidentiality


Content Sources: Much of trends reported in today’s session come from the following Sources and is North American focused:

– BTN-Business Travel News

– GBTA BTI Outlook Q1 2013

– RPMG 2013 Corporate Travel Card Benchmark Survey Results

About RPMG Survey Respondents :

• In December 2012, the “2013 Corporate Travel Card Benchmark Survey” was released to 9,880 travel card program administrators at organizations that were either customers of one of 13 major card issuers, including Bank of America, BMO Harris Bank, Citibank, Comdata, Comerica, Fifth Third Bank, HSBC, JPMorgan Chase, PNC Bank, Scotiabank, SunTrust Bank, U.S. Bank, and Wells Fargo or members of either the National Association of Purchasing Card Professionals, the National Institute of Government Purchasing, or the Accounts Payable Network.

• 2,203 responses were received by February 28, 2013, for a response rate of 22.3%. All major travel card-issuing brands (American Express, Diner’s Club, Visa, and Visa) are represented in the survey response.

• 70% Respondents are from private sector large corporations vs 30% Public Sector (Govts, Schools, Municipalities)

Visa Confidential

General Economic and Travel Card Spend Trends


Business Travel Trends Integration, visibility and control are the main themes from Travel Managers

10% Percentage of overall company spend directed to

travel and entertainment*

Co. Size Trends**

Large

$100M+

Annual Revenue

Focused on ways to gain T&E visibility and control while providing employee convenience through integration

of travel and expense solutions-cost of paper based expense report vs travel card integrated report is $40:$23

Evaluating adoption of new solutions to streamline process for traveling employees (mobile)

44% have an integrated travel and expense solution-pre population of expense reports with travel card data

(21% gain since 2004); 6% of companies planning integration in 2014

Middle

$25M-$100M

Annual Revenue

Focused on cost effective ways to gain visibility and control over T&E spend

Evaluating integration of travel and expense management solutions. Needs are a slightly different to Large

market (have limited resources and require ease of integration, turnkey, and cost effective solution)

Smaller mid-market companies drawn to ‘open-booking’ concept, but still desire spend visibility

*Business Travel News 2013 Expense Manager Survey

51%

Percentage reduction in time to complete and

process an expense report when integrated to

travel solution**

Percentage of companies surveyed that indicate

visibility into T&E spend is key challenge*

Percentage of companies surveyed that expect an

increase in travel card spending through 2017**

**RPMG 2013 Corporate Card Study

44% 65%


Current Market Trends GBTA Reports Business travel and job growth trends are positive with significant growth projected in 2014 and beyond as the economy regains momentum

Job Growth Key Indicators

• 2.2 million jobs added in FY13

• 184,000 new jobs added each month

on average in FY13

• 3 new hires for every 1 layoff,

equivalent to pre-recession peak

Business Travel Key Indicators

• 2014 volumes projected to rise 1.7%;

Spend per trip will continue to rise

with a 6.5% increase ($286B)

• 2015 volumes projected to grow

1.6%; Spend projected to grow 6.2%

($304B)

U.S Private Employment Month Changes

GBTA BTI Outlook 2013 Q4


Expected Cumulative Growth of Travel Card Spending 2013 - 2017

Quick Points:

• Expected 5 yr

cumulative growth

17.7%.

• Corporate travel

growth should

outpace Public

Sector. 3.3%

6.9%

10.5%

14.8%

19.0%

1.6% 3.4%

5.1%

6.9%

8.7%

3.1%

6.4%

9.7%

13.7%

17.7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2013 2014 2015 2016 2017

Corporations

Government and Not-for-Profit

Total

Source: 2013 Corporate Travel Card Benchmark Survey, RPMG Research


Reasons for Increased Travel Spending

27%

28%

33%

38%

50%

58%

0% 10% 20% 30% 40% 50% 60% 70%

An increase in overall travel budget

An increase in the global use of travel card

An increase in the number of travel cards

An increase in the amount of traveling by employees

An increase in the cost of travel driven by market forces

An increase in business activity or volume

RPMG Travel Card Study 2013

Visa Confidential

Characteristics of High Performance Travel Card Programs


Achieving High Performance Organizational policy, internal processes, and program controls are fundamental components of the architecture of a Best Practice program.

Process

Control

Key Policy

Liability

RPMG Travel Card Study 2013


Core T&E Policy Drivers

Best Practice organizations have distinct preferences in four key card policy areas, including card distribution, types of payment tools, mandates for travel card use in utilizing travel card spending to generate discounts for airfare, hotels, and auto rentals.

Payment Tools

Card Distribution

Spend Visibility Mandate RPMG Travel Card Study 2013

T&E

Policy


Travel Card Mandates, Best Practice Organizations that Mandate Card Use

Quick Points:

• A policy that

mandates travel

card use for

business expenses

is an important

component of

“Best Practice”

card programs.

Does your organization

mandate travel card use?

If not, what hurdles exist

at your organization?

67%

78%

Needs Improvement

Best Practice



Spend Visibility, Best Practice

% of Organizations Reporting Travel Card Data was Important or Very Important to Discount Obtained

Quick Points:

• A wealth of spend

information is

consolidated when

travel cards are

used to pay for

travel expenses-

valuable to

obtaining discounts

from vendors.

Is your organization using

travel card data to support

discount requests?


0%

10%

20%

30%

40%

50%

60%

70%

80%

Airfare Lodging Auto Rental

72% 68% 74%

40% 45%

38%

Best Practice Needs Improvement


Liability Agreements for Travel Cards 2004-2012

Quick Points:

• Corporate

liability

arrangements

have become

increasingly

common in the

market.

56% 58%

63% 65%

71%

44% 42%

37% 35%

29%

25%

35%

45%

55%

65%

75%

2004 2006 2008 2010 2012

Corporate Liability

Other Liability



Checklist of Best Practices

Ensure optimal card distribution

Take full advantage of card-based payment options for travel

Mandate card use for all eligible categories of purchases

Use travel card data to enhance negotiating position with vendors

Revisit transaction and monthly spend limits to ensure maximum utility from the card program

Conduct regular training sessions for new cardholders and approving officials

Have a mechanism for of on-going communication for program changes

Liability structure can alter travel card usage

Provided by RPMG Travel Card Study 2013

Visa Confidential

Expense Reporting, Card Data Integration and Mobile


Importance of T&E Expense Management System Features

24%

26%

28%

36%

39%

42%

51%

58%

43%

4%

30%

11%

52%

21%

18%

57%

Mobile Capabilities

Auditing Automation

Online Booking Integration

Customizable Reporting

Receipt Imaging

Auto Violation Notices Sent to Users

Auto Violation Notices Sent to Managers

Prepopulation of Credit Card Data

Percentage of Respondents Indicating 5 (Extremely Important)

on an Ascending Scale of 1-5

For Company For Travelers

Source:BTN 2013 Expense Manager Survey (158 respondents)


Electronic Expense Reports Pre-Populated with Travel Card Data

% Pre-populated with Travel Card Data, 2004-2012

23%

27%

35%

43% 44%

20%

25%

30%

35%

40%

45%

50%

2004 2006 2008 2010 2012

Quick Points:

• Travel card data

integration into

expense reporting

solution continues

to grow.



Administrative Cost Savings Average Cost to Process Expense Reports

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

Electronic, pre-populated withtravel card data

Travel cardstatement used inplace of expense

report

Electronic, notpre-populated

with travel carddata

Paper-basedexpense report

processing

$22.88

$28.51 $32.29

$40.05

Fullest use of

expense

management

software reduces

transaction

processing costs by

43%



• Globally 6% of Airline Revenue (10% US) is generated from Ancillary Sales

• 2013 Global Airline Industry Revenue is project to be >$40B; 89% increase since 2008

• Enable Companies to better distinguish between reimbursable and non reimbursable expenses

• Airline Ancillary Data has typically not been distinguishable on card statements and has been difficult for companies to distinguish when assessing reimbursable expenses.

Airline Ancillary Data Airline Ancillary Data is defined as a customer selected transaction that is not included as part of the airline ticket sale


Mobile Technology The proliferation of Mobile technology is becoming a key enabler for the business traveler’s productivity


Collect information on

travel options

Review and approve

expense reports

Establish and manage

travel card account

controls

27%

47%

15% 17%

31%

5%

Best Practice Needs Improvement

26% of RPMG 2013 Respondents

currently review and approve expense

reports with mobile technology

Type of Device Use to Support

Mobile Interaction with Travel

Process

Laptop

Tablet

Phone

36%

60%

4%


Relation between Expense Reporting and Mobile Technology

Percent using mobile technology to review and approve expense reports


Quick Points:

• Adopters of

expense

management

systems that pre-

populate expense

reports with travel

card data are

notably more likely

to use mobile

technology to

review and

approve expense

reports. Other expense report methods Expense reports pre-populated

with travel card data

10%

47%


Technology, Data Integration and Mobile Checklist of Best Practices

Assess the impact of expense management software and the advantage of pre-populated expense reports with travel card data

Consider synergy of mobile technology with expense management and reporting to manage and expedite the travel expense process to support your travelers

Review the advantages of integrating booking data with expense reporting system to provide visibility into leakage


Key Take Away from Findings:

The challenge will be to provide flexible, innovative payment products and technology solutions to enable a convenient travel experience for the increasingly savvy business traveler, while also providing the travel manager increased control and spend visibility to achieve cost savings

Visa Confidential

Appendix


Understanding the Business Travel Lifecycle The Needs and Pain Points differ between the Business Traveler and Travel Manager

Book Pay Trip Reconcile Report Reimburse

Want a simplified consumerized booking experience: -Online -Phone -Mobile

-Global Acceptance -Mobile Receipt Capture -Convenience -Travel Alerts via Mobile

-Automation Card Spend data pre-population -Simple Receipt Capture

-Pre population of Spend Data -Mobile Access to Submit & Approve

-Timely Reimbursements with Direct Deposits

Flexible Payment Options with controls: -Corporate Cards -SUA/VAN -Executive Cards -Chip/EMV for Int’l -Pcards/One Cards -Centrally Billed Acceptance Spend Controls

-24/7 Acceptance

-No Decline Events

-Corp liability vs

Individual

-Derive Value

from travel

supplier

negotiations

-Effectively

Manage T&E

Policy

-Drive bookings

to lower cost

channels, OBTs

-Traveler Safety

(Care of Duty)

-Misuse and Abuse

Prevention

-Better Integration to

limit manual

intervention to

expedite financials

Analysis to effectively

manage:

-Employee spend

-Compliance

-T&E Policies

-Supplier negotiations

-Simplified and Integrated AP Process

-Distinguish between reimbursable and non T

ravel M

an

ag

er

Bu

sin

ess

Tra

vele

r


Most Important Benefits of Booking and Expense Data Integration

56% 53% 45% 39% 38%

Policy Compliance

Enhanced Data Accuracy

Ease of Expense Report Prep for

Employees

Identifying Booked to Expensed

Variances Supplier

Negotiations

BTN 2013 Expense Manager Survey


Mobile Spread of how organizations use mobile technology today

Percent of orgs that currently Use

Mobile Technology

Fortune

500

Large

Market

Middle

Market

Govt &

Non

Profit

Total

Sample

Collect info on travel options 31% 14% 16% 10% 17%

Make Payments for travel services 13% 9% 6% 5% 7%

Review & Approve Expense Reports 44% 33% 21% 16% 26%

Create & Manage Travel Card Account

Controls 12% 6% 7% 7% 8%

Future Plans for Mobile Technology

Organizations planning to adopt

mobile technology in next three years 45% 35% 25% 22% 29%

*Choices are specific to each query and numbers will not add to 100%

Source: 2013 RPMG Corporate Travel Card Benchmark Survey Results


About RPMG Study Respondents

By Type of Organization



Employee Travel Outside of North America

Quick Points: • Travel outside of North America for business purposes in common

among respondents, and particularly among larger corporations.

Fortune

500 Large

Market Middle Market

Government

and Not-for-Profit

Total Sample

Percent of organizations that have North American employees travel

abroad 89% 83% 65% 53% 70%

Average % of total monthly travel card spending conducted by

U.S./Canadian employees outside of North America (by organizations

that report employees traveling outside North America) 16% 15% 13% 16% 15%

citi summit t&e industry trends - citibank commercial may 2014 . 2 | t&e ... pnc bank,...

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