Pack the Frugality
Companies are sending their employees on the road again. But with travel costs almost back to where they were before the recession, companies are trying various tacks to control spending.
About a fifth of business travelers operate under mandated travel programs, which require them to use the airlines, hotels and car rental companies their employer has chosen, according to the Global Business Travel Association Foundation’s Global Business Traveler Study 2012, sponsored by Concur.
Roughly a third work for a company that has no preferred travel vendors, the study found. The rest, almost half of business travelers, fall in between — their employer encourages them to use specific airlines, hotels and car rental companies, but does not mandate it.
But beyond trying to keep more direct control over travel costs, companies are turning to other methods to hold down their travel bills, including use of videoconferencing equipment, reserving rooms at less expensive hotels and reducing the number of employees sent to meetings. Even per diems, which had disappeared almost a decade ago, have come back, said Bjorn Hanson, divisional dean of the Tisch Center for Hospitality, Tourism and Sports Management at New York University.
Travel prices peaked in 2007, then fell the next two years. They began to rise again in 2010, Mr. Hanson said, and are expected to continue to increase this year by about 4 to 6 percent, depending on the sector and the region.
But even with higher costs, business travel has come back. “The market actually recovered from what it lost in 2009 by the end of 2011, almost,” said Lorraine Sileo, vice president of research for the travel market research firmPhoCusWright. The total corporate travel market in the United States — defined as corporate travel revenue from airlines, car rentals and hotels — grew to $90.7 billion in 2011, up from $72.4 billion in 2009, though still not back to the $98.3 billion of 2008, according to PhoCusWright. Revenue is expected to grow by 6 percent this year to about $96 billion, and another 4 percent next year.
“Cost-cutting,” Ms. Sileo said, “continues to be center stage for corporations.”
To keep a closer eye on spending, some companies have created individual profiles in their online booking systems. “If you try to do something outside of policy, the system will kick off a message to your manager,” said Christa Degnan Manning, director of research for American Express Global Business Travel. Or your profile may not allow you to book a business-class airline seat.
Many companies negotiate discounted rates for airline tickets, hotel rooms and rental cars through a corporate travel agency or directly with travel companies by promising them a certain market share. If too many airfares, hotel rooms or rental cars are booked outside these so-called preferred suppliers, the suppliers may be reluctant to negotiate as low a rate in the future, said Jay Ellenby, president and chief executive of Safe Harbors Business Travel Group, Bel Air, Md.
Negotiated room rates, for example, can include amenities like breakfast and Internet access, so when comparing them to the rates marketed directly to consumers, “it’s important to distinguish rate versus value,” said John R. Hach, senior vice president for global product management at TravelClick, an e-commerce service provider in New York. Cost differences can be misleading, he said. The fare on a mobile device may appear to be lower, but it may, for instance, be for a nonrefundable ticket. Or the cost listed on a car rental Web site may not include the collision and theft coverage provided in the corporate rate.
But even as companies try to hold the line on travel spending, they are also seeking to avoid being seen as too strict. “You have to be kind, gentle and still be educating,” said Jim McMullan, global travel manager at Research Triangle Institute in North Carolina.
“You want the place to be viewed as a good place to work,” Mr. McMullan said: “I’m not here to stop your travel. I’m here to ensure you spend the travel money wisely.”
Ms. Degnan Manning of American Express agrees. “Corporations want to be seen as supporting employees not just about cutting costs.”
One of the ways some corporations (and the federal government) sweeten travel for employees is to allow them keep their loyalty points, including frequent-flier miles and hotel points. “They’re a big deal,” said Steve Simmons, who works out of San Francisco as assistant vice president for strategic alliances with Cognizant Technology Solutions, and logs more than 100,000 miles a year with trips to India, Europe and throughout North America.
Some corporations require employees to book travel through the corporate booking channel. Hewlett-Packard , for instance, has about 300,000 employees worldwide, and about a third of them travel for business, said Maria Chevalier, global director of travel and meeting services for the company. With an annual travel and entertainment budget of $1.3 billion, H.P. uses its large volume of airline tickets and hotel and car rentals to secure negotiated rates. Travel companies guarantee to match a fare or rate if a traveler finds a lower one with the same airline, hotel or rental car company, Ms. Chevalier said. Though value for dollars spent is important, “travelers’ safety and security comes first,” she said. Corporations want to be able to track their employees in the event of a natural disaster, terrorist attack or other emergency.
Rather than imposing penalties, some corporations are rewarding travelers who stick to policy. H.P. and Coca-Cola , for example, have begun using computer game techniques to encourage compliance with corporate travel policy. Employees who earn high scores for following the rules may even bring that score to their performance review. “It’s another data point to reinforce that you’re a good employee,” Ms. Chevalier said.
Corporate travel experts suggested these ways to comply with typical corporate travel policies:
¶ Book in advance, preferably 14 days, and select a negotiated airfare.
¶ Accept the fare that the company’s online booking system suggests, said Tom Ruesink, owner of the Ruesink Consulting Group in Burnsville, Minn.
¶ Book business class only if permitted by the company and only for the allowed length of a nonstop flight, typically more than eight or 10 hours.
¶ Know your company’s policy before you book through your mobile device.
“Some companies are very strict,” said Henry H. Harteveldt, co-founder of the Atmosphere Research Group, an airline and travel industry analyst based in San Francisco. “If you book outside policy, and you do not get permission, you run the risk of not being reimbursed.”