As business travel expenditures nose upward, companies are realizing that better cost-management methods can make a difference
US. Corporate travel expenditures rocketed to over $143 billion in 1994, based on American Express’ most recent survey on business travel management. Private-sector employers spend an estimated $2,484 per employee on travel and entertainment, a 17 percent increase over the past four years.
Corporations are realizing that even a savings of 1 percent or 2 percent can translate into millions of dollars added to their bottom line.
Savings of that order are sure to get management’s attention, which is a requirement for this type of project. Involvement begins with understanding and evaluating the components of T&E management in order to control and monitor it more effectively.
Hands-on management includes assigning responsibility for travel management, implementing a quality-measurement system for travel services used, and writing and distributing a formal travel policy. Only 64 percent of U.S. corporations have travel policies.
Even with senior management’s support, the road to savings is rocky-only one in three companies has successfully instituted an internal program that will help cut travel expenses, and the myriad aspects of travel are so overwhelming, most companies don’t know where to start. “The sector of traveling relies on data,” says Steven R. Schoen, founder and CEO of The Global Group Inc. “Until such time as a passenger really sets foot on the airplane, they’ve [only] been buying information.”
If that’s the case, information technology seems a viable place to hammer out those elusive, but highly sought-after, savings. “Technological innovations in the business travel sector are enabling companies to realize the potential of automation to restrain and decrease indirect [traveling] prices,” says Roger H. Ballou, president of the Travel Services Group USA of American Express. “In addition, many businesses are embarking on quality programs which include sophisticated process improvement and reengineering efforts designed to substantially enhance T&E management processes and reduce indirect costs.”
As companies look to technology to make potential savings a reality, they can get very creative about the methods they employ.
The Great Leveler
Centralized reservation systems were long the exclusive domain of travel agents and other industry professionals. But all that changed in November 1992 when a Department of Transportation ruling allowed the general public access to systems such as Apollo and SABRE. Travel-management software, such as TripPower and TravelNet, immediately sprang up, providing corporations insight into where their T&E dollars are being spent.
The software tracks spending trends by interfacing with the corporation’s database and providing access to centralized reservation systems that provide immediate reservation information to airlines, hotels and car rental agencies. These programs also allow users to generate computerized travel reports on cost savings with details on where discounts were obtained, hotel and car usage and patterns of travel between cities. Actual data gives corporations added leverage when negotiating discounts with travel suppliers.
“When you own the info, you don’t have to return to square one every time you choose to modify bureaus,” says Mary Savovie Stephens, travel manager for biotech giant Chiron Corp..
Sybase Inc., a client/server software leader with an annual T&E budget of more than $15 million, agrees. “Software gives us unprecedented insight to how employees are spending their journey dollars and better manage to negotiate with travel service providers,” says Robert Lerner, director of credit and corporate travel services for Sybase Inc. “We have better access to data, quicker, at a real-time surroundings, which is predicted to bring us big savings in T&E. Now we have control over our travel information and no longer have to depend exclusively on the airlines and agencies.”