Close to a quarter of business trips are considered ‘low value’ and most of these trips can be predicted – and avoided – according to a new ROI framework formulated by travel consultancy tClara.

The Justified Business Trip model can reportedly determine the value of a business trip prior to travel and help travel managers maximise the return on investment by helping to prevent low-value trips.

The model purports to calculate the ‘net expected value’ of a business trip based on three variables: a trip’s maximum justifiable cost, the value of the traveller’s time and the estimated cost of the trip. This is then used to determine pre-trip ROI (net expected value divided by the trip’s expected cost and the traveller’s time value).

According to the company, the model can predict low-value trips with an accuracy rate of approximately 75 per cent, but the consultancy expects this to improve with “more and better” data.

“No one has figured out a credible, scalable way to calculate the post-trip ROI of a business trip. But we can – and should – estimate every trip’s expected ROI before the trip is taken,” said tClara founder and CEO Scott Gillespie, who was named among the people to watch in BTN Europe’s Hotlist 2023.

In a white paper released on Thursday (27 April), tClara detailed the model and revealed results of a study based on a 2022 survey of 407 US-based business travellers. The consultancy developed its model and applied the framework to the survey data. 

Among the findings highlighted in the study, standardised post-trip evaluation criteria revealed that low-value trips add only seven per cent of a trip’s total net expected value. The assumption is then made that reallocating travel costs from low-value to moderate- and high-value trips would increase a travel budget’s total net expected value by 26 per cent.

The model uses a standardised scoring system to assess the merits of travelling before the trip is taken and then assigns a post-trip value rating, which is a subjective value rather than a financial measure. Expected returns on business trips vary greatly based on each trip’s attributes, with a trip’s main activity and goal the most important factors. 

tClara’s analysis suggests that between 25 to 30 per cent of business trips could be eliminated with little or no economic loss to the company.

The white paper states that “old-school decision methods are no longer good enough” and with travel budgets under increasing scrutiny, both from a financial and environmental perspective, “low-value trips can and should be flagged before they are taken, leaving travel budgets to fund higher-value trips”.

In the report, tClara acknowledged that the Justified Business Trip model is vulnerable to abuse by ‘gamers’ – those who would provide unrealistically high estimates of a trip’s maximum justifiable cost – and stated that more accurate data about travellers’ compensation, trip costs, and time during the trip devoted to the trip’s goal would likely impact the net expected values and pre-trip ROI for many of the trips analysed in the study.