VideoAccording to The Yankee Group, a Boston-based research firm, spending on business travel booked over the Internet or corporate intranets will soar from an estimated $236 million last year to $945 million this year, then to $2.7 billion next year, and to almost $10.4 billion in the year 2000.
Companies that make frequent trips to the same destination often trim travel costs by negotiating volume discounts with airlines and hotels. Many big outfits, like Tenneco Inc., qualify by signing on with a travel agency corporatewide — in the Greenwich, Connecticut, company's case, with Rosenbluth International of Philadelphia. (Rosenbluth says its client base has surged by more than a third in the last six years, to more than 2,000 firms.) Tenneco CFO Robert Blakely says that's only one dimension of a broader plan "to reduce individual trip costs as much as 40 percent by ordering tickets more than a week prior to the travel date." There is "direct and immediate enforcement of this policy" through budget management — and compensation incentives for progress.
Smaller businesses without such clout are exercising more ingenuity in cutting costs, too. Some small-business owners run their businesses on corporate credit cards with frequent-flier mileage benefits so they can collect the mileage for business trips.
The Roselle Park, New Jersey, advertising and marketing firm Hercky Pasqua Herman says that booking air travel two or more weeks in advance and including a Saturday stay can cut airfare costs by as much as 50 percent. And Eric Baxter, executive vice president of Hewins/Carlson Wagonlit Travel notes that an $1,800 nonstop roundtrip fare from its Portland, Maine, base to the West Coast would plunge to $500 with one stop and a weekend return.
As airlines continue working overtime to avoid giving business travelers too many breaks, however, bargains are harder to find. "Employees may book early," notes Susan Clement, travel manager of insurer Unum Corp., which is also based in Portland. "But we found that if they're not staying over a Saturday night in many of our city pairs, there aren't any advance-purchase fares in existence for business travelers, where two years ago there might have been."
And weekend stays open age-old questions of worker resistance. "How do you convince road warriors — employees who spend two to three days a week on the road — to spend additional time away from home?" Altschul asks.
Avoiding nonstop flights, one other potential cost-reduction device, also must be weighed carefully. Airlines often erase the cost differences here, too, says Unum's Clement. And even when fare savings are available, other less-tangible costs come into play. With the toll multiple stops can take on travelers, "sometimes you just have to look at the fact that time is money."
Travel Agents: Pros, and Cons
Shopping for travel agents now can pay off as never before. Once, the commission structure created something of an incentive for agents to book client business at high fares. But when airlines began slashing agents' commissions a few years back — and companies started looking to economize within the travel budget — suddenly, many agents started pinning their survival on competition and the ability to deliver services cost-effectively. Today, more companies are negotiating commissions with travel agents, and even the new breed of online travel services finds it often can't top what is done by the most entrepreneurial agents. By using the Internet, though, companies can, theoretically, find the best fare and eliminate commissions altogether.
A significant level of savings can be achieved in the handling of expense reports, as many companies have learned from reengineering efforts. An average expense report costs $36.46 to process and takes an average of 55 minutes to create and review. Reimbursement takes an average of 22 days. But companies that streamline their processing procedures can better those metrics markedly. Those companies spend an average of $7.91 to process a report and 15 minutes to create and review it, and clip the creation-to-reimbursement cycle to 3 days. Among the techniques employed by the companies to reduce back-end costs are fully automating the creation and audit of expense reports, substituting sampling for 100 percent audit of reports, warehousing receipts electronically, and reimbursing employees through direct deposit.
In IBM Corp.'s remarkable reengineering effort of the last few years, the Armonk, New York, giant slashed total costs per travel-and-entertainment form from $15 to $3.25 between 1993 and 1995. In capturing CFO magazine's 1996 REACH Award, IBM said part of its secret was in viewing the employee as a customer — and aiming to please that customer in every way possible, while still paring the cost of serving him or her. Last year's REACH winner, EDS Corp., in Plano, Texas, ended a system that once had employees channeling reports through 18 separate accounts-payable departments.
Merrill Lynch & Co. used an automated expense reporting system from Captura Software Inc., in Bothell, Washington, to achieve significant savings, according to Heidi Evenson, Merrill's vice president for investment banking. "Under the paper-based system, it could take more than three months for expenses to make it into our accounting system," she says. "So in public offerings, where you have a 90-day window to settle final expenses, we were missing getting reimbursed." Now, the lag is less than five days.
Reader Comments» Post a comment