As business travel NetWork Posting expenses nose upward, companies realize that better cost-management techniques can make a difference.
According to American Express’s most recent survey on business travel management, the US. Corporate travel expenses rocketed to more than $143 billion in 1994. Private-sector employers spend an estimated $2,484 per employee on travel and entertainment, a 17 percent increase over the past four years.
Corporate T&E costs, now the third-largest controllable expense behind sales and data-processing costs, are under new scrutiny. Corporations realize 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 project type. Involvement begins with understanding and evaluating T&E management’s components to control and monitor them 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. One in three companies has successfully instituted an internal program that will help cut travel expenses. The myriad aspects of travel are so overwhelming that most companies don’t know where to start. “The industry of travel is based on information,” says Steven R. Schoen, founder and CEO of The Global Group Inc. “Until a passenger sets foot on the plane, they’ve [only] been purchasing information.”
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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 industry are allowing firms to realize the potential of automation to control and reduce indirect [travel] costs,” says Roger H. Ballou, president of the Travel Services Group USA of American Express. “Besides, many companies are embarking on quality programs that include sophisticated process improvement and reengineering efforts designed to improve T&E management processes and reduce indirect costs substantially.”
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 travel patterns between cities. Actual data gives corporations added leverage when negotiating discounts with travel suppliers.
No More Tickets
Paperless travel is catching on faster than the paperless office ever did, as both service providers and consumers work together to reduce ticket prices for business travelers. Perhaps the most cutting-edge of the advances is “ticketless” travel, which almost all major airlines are testing.
In the meantime, travel providers and agencies are experimenting with new technologies to enable travelers to book travel services via the Internet, e-mail, and unattended ticketing kiosks. Best Western International, Hyatt Hotels, and several other major hotel chains market on the Internet. These services reduce the need for paper and offer better service and such peripheral benefits as increased efficiency, improved tracking of travel expenses and trends, and cost reduction.
Out There
Consolidation of corporate travel arrangements by fewer agencies has been a growing trend since 1982. Nearly three out of four companies now make travel plans for their business locations through a single agency, instead of 51 percent in 1988. Two major benefits of agency consolidation are the facilitation of accounting and T&E budgeting and leverage in negotiating future travel discounts.
A major technological advance that allows this consolidation trend to flourish is the introduction of satellite ticket printers (STPs). Using STPs enables a travel agency to consolidate all operations to one home office and still send all necessary tickets to various locations instantly via various wire services. As the term implies, the machinery prints out airline tickets on-site immediately, eliminating delivery charges.
What’s the Price?
Fred Shaffer, transportation manager for Hewlett-Packard and a strong advocate of the net-pricing system, has pioneered the concept of fee-based pricing with travel-management companies under contract with H-P. He states that H-P, which spends more than $528 million per year on T&E, plans to have all air travel based on net-fare pricing. “At present, we have several net fares at various stages of the agreement,” he says. “These fares are negotiated with the airlines at the corporate level, then trickle down to each of our seven geographical regions.”
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.
No More Tickets
Paperless travel is catching on faster than the paperless office ever did,s business service providers and consumers work together to reduce ticket prices for business travelers. Perhaps the most cutting-edge of the advances is “ticketless” travel, which almost all major airlines are testing.
Out There
Consolidation of corporate travel arrangements by fewer agencies has been a growing trend since 1982. Nearly three out of four companies now make travel plans for their business locations through a single agency, instead of 51 percent in 1988. Two major benefits of agency consolidation are the facilitation of accounting and T&E budgeting and leverage in negotiating future travel discounts.
What’s the Price?
Fred Shaffer, transportation manager for Hewlett-Packard and a strong advocate of the net-pricing system, has pioneered the concept of fee-based pricing with travel-management companies under contract with H-P. He states that H-P, which spends more than $528 million per year on T&E, plans to have all air travel based on net-fare pricing. “At present, we have several net fares at various stages of agreement,” he says. “These fares are negotiated with the airlines at the corporate level, then trickle down to each of our seven geographical regions.”
