As business travel expenses nose upward, companies are realizing that better cost-management techniques can issue
US. corporate travel expenses rocketed to more than $143 billion in 1994, according to American Express’ most recent survey on business travel management. Private-sector minibus hire manchester employers spend about $2, 484 per employee on travel and entertainment, a 18 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. Enterprises are realizing that even a savings of 1 percent or 2 percent can translate into quantities added to their bottom line.
Savings of the particular order will definitely 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 sixty-four percent of U. S. enterprises have travel policies.
Even with senior management’s support, the trail to savings is rocky-only one in three companies has successfully instituted an internal program that will help cut travel expenses, and the myriad areas of travel are so overwhelming, most companies don’t know the place to start. “The industry of travel is based on information, inches says Steven Third. Schoen, founder and CEO of the Global Group Inc. “Until such time as a passenger actually sets foot on the planes, they’ve [only] been purchasing information. inches
Well, information technology seems a viable destination 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 overpower and reduce oblique [travel] costs, inches says Roger L. Ballou, director of the Travel Services Group USA of American Express. “In addition, many companies are starting quality programs offering sophisticated process improvement and reengineering efforts designed to drastically improve T&E management processes and reduce oblique costs. inches
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 Nov 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 enterprises insight into where their T&E dollars will be spent.
The software tracks spending trends by interfacing with the businesses database and providing access to centralized reservation systems that include immediate reservation information to airline carriers, hotels and car rental agencies. These programs also allow users to generate computerized travel reports on benefits with exactly where discounts were obtained, hotel and car usage and patterns of travel between cities. Actual data gives enterprises added leverage when fighting discounts with travel suppliers.
“When you possess the information, you don’t have to go back to pillow one every time you change agencies, inches says Linda 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, confirms. “Software gives us unheard of visibility into how employees are spending their travel dollars and better leverage to negotiate with travel service suppliers, inches says Robert Lerner, director of credit and corporate travel services for Sybase Inc. “We have better access to data, faster, in a real-time environment, which is expected to bring us big savings in T&E. Nowadays we have control over our travel information and no longer have to depend exclusively on the agencies and airline carriers. inches
The cost for this allowance depends on the quantity of business. One-time purchases of travel-management software can run from under $100 to more than $125, 000. Some software providers will accommodate smaller users by selling software piecemeal for $5 to $12 per arranged trip, still a significant savings from the $50 industry typic per transaction.
No more Tickets
Paperless travel is catching on faster than the paperless office ever did as both companies and consumers work together to reduce ticket prices for business travelers. Possibly the most cutting-edge of the advances is “ticketless” travel, which almost all major airline carriers are testing.
Meantime, travel providers and agencies are trying out new technologies to allow 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.
Dennis Egolf, CFO of the Veterans Affairs The hospital in Louisville, Ky., realized that the medical center’s decentralized location, a quarter-mile from the hospital, made efficiency difficult. “We were losing production time and things got lost, inches he says. “Every memo had to be hand-carried for approval, and we required seven different copies of each travel order. inches As a result, Egolf tried an off-the-shelf, paper-reduction software package designed for the federal government.