Foundation Tendriling Travel Fees

As company travel costs nose upward, firms are knowing that better cost-management procedures can make a difference

US. corporate travel accommodation  costs rocketed to much more than $143 billion in 1994, according to American Express' newest survey on business enterprise vacation administration. Private-sector businesses devote an estimated $2,484 per staff on vacation and enjoyment, a 17 % maximize over the past four decades.

Corporate 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 p.c or 2 per cent 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 administration in order to control and monitor it more effectively.

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

Even with senior management's support, the road to savings is rocky-only one in three providers has successfully instituted an internal program that will help cut travel bills, and the myriad aspects of journey are so overwhelming, most organizations don't know where to start. "The industry of vacation 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 company 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 corporations are embarking on quality programs that include sophisticated process improvement and reengineering efforts designed to substantially improve T&E management processes and reduce indirect costs."

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

"When you own the information, you don't have to go back to square one every time you decide to change agencies," says Mary Savovie Stephens, vacation manager for biotech giant Chiron Corp.