AI is set to reduce business travel demand by automating specific meetings and eliminating white-collar work, but smart CFOs could turn compression into opportunities. He advocates the use of “limited value-added” metrics to help businesses optimize their budgets by avoiding spending on low-value trips..
AI will reduce the demand for business trips. For CFOs, if your previous budget is no longer a reliable guide, the challenge is to optimize your travel budget.
Travel-centered AI
Expanding AI use cases on business trips will have plenty of bright spots, including better planning, easier booking, more personalization, faster and friendly chatbots, no-touch payments, automatic funding cost reports, and more. If everything goes well, these travel-centric AI applications will gain a spot in the business travel industry.
Everything is fine, but forgive the yawn. A slightly happy traveler and a slightly cheaper service cost will not move the needle at the strategic value of a business trip.
Zoom out now and consider the wider impact of AI on the business travel industry. The photo is dark for two reasons.
Task compression
AI automates many white-collar tasks that justify face-to-face meetings now. Think about information gathering, perspective sharing, integration, and what-If-If-Planning and Prioritization. What once required three meetings is achieved without AI-assisted research and agents.
Few face-to-face meetings result in fewer legitimate business trips and inevitably fewer travel volumes for travel suppliers.
Compressing jobs
The aging US workforce is projected to shrink by 8% by 2050 under a non-immigration scenario. Companies know that fewer jobs codes for less work – are essential for dealing with smaller talent pools.
Naturally, AI applications and agents are designed to reduce the need for white-collar workers. McKinsey's 2023 analysis showed that generative AI and related tools automate activities that account for 60% to 70% of employee time, putting a considerable number of white-collar jobs at risk. Ford CEO Jim Farley has recently gone further, predicting that AI could eventually replace half of the US white-collar work.
Since most non-essential business trips are done by white-collar workers, reducing this talent pool with AI agents means reducing the demand for business trips.
Optimists will say that a successful AI economy will ultimately increase the demand for new types of white-collar jobs, offsetting those lost to AI jobs-hungry appetites.
Perhaps, however, it is difficult to see how such AI-driven growth occurs at the roots of the pyramids of white-collar work.
CFO's dilemma
AI can significantly irreversibly reduce business travel. Myopic CFOs can reflexively cut their budgets by using AI-driven trip compression as an excuse not investing in more travel.
However, for long distance CFOs, the size of the travel budget is not a good metric. The real question is whether less travel can create more value. That's the dilemma. They impose dull cuts on their travel budgets or actively manage them to ensure that the remaining trips will produce extraordinary revenue.
This makes it essential to clearly distinguish between low value and high value travel. Pre-trip ratings, along with new CFO-centric travel metrics, are tools for pruning waste, protecting and even amplifying profits from your travel budget.
Optimizing your travel budget
CFO playbooks are easy. By redesigning travel policies, we optimize travel budgets so that all approved trips maximize the impact of travel budgets while meeting company financial and carbon constraints.
The key to optimizing your travel budget is to place dollar value such as marginal value added (MVA) on all future travel. Doing that, the less valuable trips quickly stand out.
Travel MVAs can be found by subtracting the estimated travel costs from the “red line” cost limit. The cost limit for the red line of travel is the answer to the question “What is the most likely thing this trip is costly and still gets approved?” Low value travel can be defined as having an MVA of less than $1,000.
In the future, AI will rigorously assess the need for costly and time-consuming meetings and meetings. Luckily, your travel budget can be optimized today without AI.
The fundamental results
TCLARA's early MVA optimization modeling shows the possibility of reducing travel budgets by a third and eliminating three-quarters of low-value travel. Most importantly, the optimized travel budget has resulted in a slightly larger overall MVA. Therefore, there will be fewer spending, lower emissions, higher value added, and no yawning.
Myopia CFOs are seduced to deposit these impressive savings in the bank and will not reinvest in more travel. Myopia CFOs use MVA metrics to achieve more valuable business goals by strategically reinvesting and relocating their travel budgets.
To your mark
AI will not expand business trips. It compresses it. The challenge for CFOs and travel managers is to randomize cuts or use them in programmes of valued carbon flock travel that prove their value.
The competition to truly optimize your business travel budget is now underway.
This operation was created in collaboration with the Travel Commission of Dime's Editorial Board.
