Foundation Tendriling Travel Expenses

As business vacation costs nose upward, firms are acknowledging that much better the link cost-management procedures could make a variance

US. company journey expenses rocketed to much more than $143 billion in 1994, in accordance to American Express' newest survey on small business travel management. Private-sector companies spend an estimated $2,484 for every worker on journey and leisure, a seventeen p.c improve over the past four decades.

Company T&E costs, now the third-largest controllable expense behind sales and data-processing costs, are under new scrutiny. Corporations are realizing that even a savings of 1 per cent or two % 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 type of project. Involvement begins with understanding and evaluating the components of T&E management in order to control and monitor it additional effectively.

Hands-on management includes assigning responsibility for travel management, implementing a quality-measurement system for vacation services used, and writing and distributing a formal travel policy. Only 64 p.c of U.S. corporations have vacation policies.

Even with senior management's support, the road to savings is rocky-only one in three businesses has successfully instituted an internal program that will help cut journey charges, and the myriad aspects of journey are so overwhelming, most organizations don't know where to start. "The industry of journey is based on information," says Steven R. Schoen, founder and CEO of The Global Group Inc. "Until such time as a passenger actually sets foot on the plane, they've [only] been purchasing information."

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 enterprise journey industry are allowing firms to realize the potential of automation to control and reduce indirect [travel] costs," says Roger H. Ballou, president of the Vacation Services Group USA of American Express. "In addition, many providers are embarking on quality programs that include sophisticated process improvement and reengineering efforts designed to substantially improve T&E administration processes and reduce indirect costs."

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 vacation 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 journey reports on expense savings with details on where discounts were obtained, hotel and car usage and patterns of vacation between cities. Actual data gives corporations added leverage when negotiating discounts with vacation suppliers.