Base Tendriling Travel Expenses

Because business travel expenses nose area upward, companies are noticing that better cost-management techniques can make a big difference

US. corporate travel expenses rocketed to more than $143 billion in 1994, according to North american Express’ most recent review on business travel management. Private-sector employers spend an estimated $2, 484 every employee on travel and entertainment, a 17 percent increase over the previous four years.¬†

Corporate T&E costs, now the third-largest controllable expense behind sales and data-processing costs, are under new scrutiny. Companies are realizing that even a savings of just one percent or 2 percent can translate into millions of dollars put into their bottom line.

Cost savings of these order are sure to get management’s attention, which is a need for this kind of job. Involvement commences with understanding and evaluating the components of T&E management in order to control and monitor it more effectively.

Hands-on management includes setting responsibility for travel management, implementing a quality-measurement system for travel services used, and writing and releasing a formal travel insurance plan. Only 64 percent of U. S. corporations have travel policies.

Despite having mature management’s support, the street to savings is rocky-only one in three companies has successfully instituted an inner program that will help cut travel expenses, and the myriad facets of travel are so overwhelming, normally 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 such time as a voyager actually sets foot on the plane, they’ve [only] been purchasing information. ”

Well, information technology seems a feasible destination to hammer out those elusive, but highly desired, savings. “Technological innovations in the business travel industry are allowing businesses to realize the potential of automation to regulate and reduce indirect [travel] costs, ” says Roger H. Ballou, president of the Travel Services Group USA of American Exhibit. “In addition, many companies are embarking on quality programs including superior process improvement and reengineering attempts designed to substantially improve T&E management processes and reduce indirect costs. inches

As companies look to technology to make potential savings a reality, they can get very creative about the strategy they use.

The Great Leveler

Central reservation systems were long the exclusive domain of travel agents and other industry professionals. But everything changed in November 1992 when a Department of Transportation ruling allowed the general public use of 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 businesses database and providing get to centralized reservation systems that provide immediate booking information to airlines, hotels and car rental organizations. These programs also allow users to generate advanced travel reports on cost savings with details on where discounts were obtained, hotel and car use and patterns of travel between cities. Actual data gives corporations added leveraging when negotiating discounts with travel suppliers.

“When you own the information, you don’t have to get back to square one whenever you may change agencies, ” says Mary Savovie Stephens, travel manager for biotech icon Chiron Corp.

Sybase Incorporation., a client/server software innovator with an gross annual T&E budget of more than $15 million, agrees. “Software gives us unprecedented presence into how employees are spending their travel us dollars and better leverage to negotiate with travel service suppliers, ” says Robert Lerner, director of credit and corporate travel services for Sybase Inc. “We have better entry to data, faster, in a timely environment, which is expected to bring us big savings in T&E. At this point we have control of our travel information with out longer have to count exclusively on the organizations and airlines. ”

The charge for this privilege is determined by the quantity of business. 1-time purchases of travel-management software can run from under $100 to more than $125, 000. Some software providers will accommodate smaller users selling off software piecemeal for $5 to $12 per booked trip, still a significant financial savings from the $50 industry norm per transaction.