Business as usual? What Ramp's spend data reveals about the return to the office
As the world reopens, we see headlines everywhere deliberating the future of work. On one hand, you have the likes of Salesforce, Shopify, and Snowflake that are now permanently remote. At the other end of the spectrum, companies like Goldman Sachs are adamant that employees return to the office. Beyond the raging office debate, leaders must also consider how they’ll be approaching business activities that used to be done entirely in-person, like sales and business development.
To try and get a better fix on what’s happening on the ground, we decided to dig into the quantitative evidence we have at hand—customer spending on Ramp corporate cards. By segmenting millions of anonymized transactions our customers have made since the start of the year, we were able to see just how much spending on traditional business categories has recovered and where companies are making additional investments. The data below covers year-to-date transactions made by Ramp customers onboarded before Jan 1, 2021. Here’s a snapshot of what we discovered.
A different kind of spring cleaning in 2021
Based on our data, we’re calling it—the office is back and isn’t going away anytime soon. Our spend data shows that office managers had a busy spring as they prepared to open offices for the first time in almost a year or expanded capacity for the numbers working out of the office. Spending on offices jumped 26% in February and another 12% in April.
An even stronger indicator: spending on office supplies and cleaning jumped 28% in February and was up 47% in March. In fact, spend on office cleaning spiked 46% during the week of March 21, indicating this was the week that re-opening began in earnest. Since April, the total spend in these categories has remained stable, suggesting activity in the office has plateaued or reached a new normal (there, we said it!).
What does this mean for the other activities that are typically wrapped around office life? For one, catering services are making a comeback. Looking at the top 3 catering merchants used by our customers, we see significant jumps in how much Ramp customers spend with them in April and May. As catering starts up again, there’s been a corresponding decrease in spend on the 3 biggest food delivery services in our dataset (Uber Eats, Doordash, and Postmates).
T&E roared back in March
Business activities outside of the office have also rebounded. With all the shelter-in-place orders enacted in March 2020, spending on T&E simply wasn’t an option for most of us this past year. But what a difference 12 months makes.
Spending on flights was already growing strongly at the start of the year—we saw a 56.2% increase in transaction value between January and February. But business spending on flights took off (sic) during March when the dollar amount increased by 125% compared to February and again in May, when it climbed another 43%.
We see a similar trend at play with ground transportation. Spending in this category increased strongly in February (+28%) but roared back in March (+131%) before settling back to something approaching a new normal in April (32%). This trend of strong but more modest growth continued into May (20%).
In-person business activity is accelerating
With business travel back on the agenda, it’s little surprise that spend on lodging has also started to recover, with increases in monthly spend of 48%, 35%, and 46% in February, March and April respectively.
This past year, Airbnb’s share of lodging spend grew as people increasingly sought out Airbnbs over hotels as safe, alternative workplaces. In the post-pandemic era, Airbnb has knocked out premier hotel chains as the top preference for business travelers, accounting for over half the lodging spend by Ramp cardholders in April alone. Hotels.com is the second most popular vendor in the category.
Interestingly in May we started to see larger 5-figure transactions with individual hotels and chains, suggesting Ramp cardholders aren’t just spending on essential business trips but are starting to travel in groups and organize events in hotels. Despite the proliferation of virtual tools last year, many companies are resuming in-person interactions to nurture key relationships.
The strongest sign that business is not just reopening offices but getting back to a sense of normality is the strong growth in entertainment spending over the first 5 months with a significant spike in May. What looks like a tentative return to face to face, after-hours interactions with teammates and customers is becoming stronger as the summer kicks off.
Vendors that have benefited most from re-opening
The top ten merchants by dollar value on Ramp didn’t change significantly due to the size of their spend but there were some interesting winners from offices re-opening.
Freelance marketplace Upwork attracted a significant increase in spending when we compare the top vendors for January and February of this year to those in March and April. There was a 56% jump in spending suggesting that many businesses availed of flexible resources as offices re-opened or simply kicked off projects that had been put on hold during the pandemic. LinkedIn spend also increased in the same time period by 36%, suggesting that HR teams are doubling down on recruiting efforts overall.
There was a general uptick in spending on vendors whose services are primarily delivered in the office—think catering, air conditioning, and the like. For example, food distributor Labatt Food Services saw spending by Ramp customers increase 10x in March and April.
Ramp customers are also starting to spend with vendors whose services depend on people being out and about. Clear Channel Outdoor advertising is an example of a major beneficiary with a 154% increase in spending on its services for the months of March and April compared to the preceding period.
Overall advertising vendors continue to be the biggest expenses for customers, with total advertising dollars continuing to rise, and Google and Facebook dominating. They’re followed by vendors in General Merchandise (think Amazon), SaaS / Software, and Professional Services and Shipping (FedEx and UPS are the behemoths).
Redefining business as usual
The office hasn’t vanished, but certainly “business as usual” has taken on a different look since the start of 2020. As you think through what the future of work looks like for you and your team, take time to evaluate the business activities we all used to take for granted. Fresh ways of working have emerged in the past year. It’s worth considering which of those practices should be retained in the new world.
This is the first in a series of reports based on completely anonymized spend data on the Ramp platform. At Ramp, we believe in the power of data to help everyone reach financial fitness.