Like the nose to the top business travel costs, the company realized that a better cost-management techniques can make a difference

U.S.. corporate travel costs skyrocket to over $ 143 billion in 1994, according to a survey of American Express’ most recent trip in business management. Private sector employers spent approximately $ 2,484 per employee on travel and entertainment, increased 17 percent over the last four years.

T & E cost the company, now the third largest controllable costs through sales and cost of data processing, is under new supervision. Companies realize that saving even 1 percent or 2 percent can translate into millions of dollars added to their bottom line.

Savings to be 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 more effectively.

Hands-on management responsibilities include the assignment of travel management, implement quality measurement systems used for travel services, and write and distribute an official travel policy. Only 64 percent of U.S. companies have travel policies.

Even with the support of senior management, is a rocky road to savings-only one of the three companies have successfully instituted internal programs that will help cut travel costs, and the myriad aspects of the trip is so strong, most companies do not know where to start. “The travel is based on information,” said Steven R. Schoen, founder and CEO of The Global Group Inc. “Until now, passengers actually set foot on the plane, they [only] be informed purchase.”

If that happens, information technology seems a decent place to accomplish that elusive, but highly sought after, savings. “Technological innovation in the business travel industry that allows companies to realize the potential of automation to control and reduce the direct [travel] costs,” said Roger H. Ballou, president of the Travel Services Group USA American Express. “In addition, many companies are starting a program that includes quality improvement and advanced process re-engineering effort designed to substantially improve T & E management process and reduce indirect costs.”

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

Great leveler

Centralized reservation system has long been the exclusive domain of travel agents and other industry professionals. But all that changed in November 1992 when the Department of Transportation decision to allow public access systems such as Apollo and SABRE. Travel-management software, such as TripPower and TravelNet, soon sprang up, giving the company insights into T & E where their dollars are spent.

The software tracks shopping trends by interfacing with corporate databases and provide access to a centralized reservation system that provides information directly to airline reservations, hotel and car rental agencies. The program also allows users to generate a computerized trip report with details on cost savings where the discount earned, hotel and car usage and travel patterns between the cities. Actual data that companies provide added leverage when negotiating with suppliers of travel discounts.

“If you have information, you do not need to go back to square one every time you decide to change the institution,” said Mary Savovie Stephens, manager of travel biotech giant Chiron Corp.

Sybase Inc., client / server software leader with a T & E’s annual budget of more than $ 15 million, agreed. “Software gives us unprecedented visibility of how employees spend travel dollars and better leverage to negotiate with suppliers of travel services,” said Robert Lerner, director of credit and corporate travel services for Sybase Inc. “We have access to better data , faster, in real-time environment, which is expected to bring us great savings on T & E. Now we have control over our travel information and no longer have to rely exclusively on agents and airlines. “

The cost for this privilege depends on the volume of business. One-time purchase of travel-management software can be run from under $ 100 to more than $ 125,000. Some software providers will accommodate the smaller user with software selling piecemeal for $ 5 to $ 12 per trip booked, is still a significant savings from the industry norm of $ 50 per transaction.

No More Tickets

Paperless travel is catching on faster than the paperless office never did well as service providers and consumers work together to reduce fares for business travelers. Perhaps the most cutting-edge of progress is the “ticket” journey, which almost all the major airlines testing.

Meanwhile, travel providers and institutions are experimenting with new technology that allows travelers to book travel services via e-mail and internet unattended ticketing kiosk. Best Western International, Hyatt and several other major hotel chains in the Internet market. This service reduces the need for paper and offer better services and peripheral benefits such as improved efficiency, tracking the increase in travel costs and trends, and cost reduction.

Dennis Egolf, CFO of the Veterans Affairs Medical Center in Louisville, Ky., realized that the decentralized location of the medical center, a quarter mile from the hospital, making efficiency difficult. “We lost production time and things get lost,” he said. “Every memo should be done hand for the approval, and we need seven different copies of each for the trip.” As a result, Egolf try off-the-shelf, paper reduction software package designed for the federal government.

The software allows hospitals to manage on-line travel, per diem allowances of tracking and calculating the cost to generate cash and voucher reimbursement authorization. The software also allows hospitals to keep the account running costs of travel and travel budget remaining.

“Today, for all practical purposes, the system is paperless,” said Egolf. This software has helped hospitals reduce document processing time by 93 percent. “The original goal is focused on the management of employee travel without a paper,” he said. “We have achieved that goal, partly because of the efforts of staff and partly because of the accuracy of the software.”

By investing only $ 6,000, the hospital saved $ 70 per employee travel and saved nearly half the budget of $ 200,000 T & E through paper reduction program.

Out There

Consolidation of travel arrangements by bodies corporate that fewer have become a trend since 1982. Nearly three out of four companies are now making travel plans for their business locations via a single agent as opposed to 51 percent in 1988. Two major benefits of consolidation agency accounting and budgeting is the facilitation of T & E, as well as leverage in negotiating future travel discounts.

A major technological advances that allow for the growing consolidation trend is the introduction of satellite ticket printer (STP). Using STP allows travel agents to consolidate all operations in a home office, and still send all tickets that are needed for various locations directly through various wire services. As the term implies, the machine prints a plane ticket in place immediately, eliminating shipping costs.

For London Fog, STP blessing. London Fog annual T & E budget’s more than $ 15 million divided equally between two locations in Eldersburg, Md., and New York City. Each location purchasing the same number of tickets, so the same access to tickets from their bodies is a must. With the STP in two of their locations, both office services company with one institution in Baltimore. Each office has direct access to tickets and still managed to save by not having to pay the cost of courier and express mail which can range up to $ 15 for each of more than 500 tickets per purchase per year.

T the annual Conde Nast Publications’ & E budget of more than $ 20 million is allocated among the locations in Los Angeles, San Francisco, Chicago, New York and Detroit. Since 1994, travel arrangements have been handled by a centralized agency, the Advanced Travel Management in New York City, by installing the STP in each of the five locations. In addition to increased efficiencies due to consolidation, Conde Nast now has the ability to change travel plans at any time and have a new ticket in hand immediately.

Actual benefit is that the machines are owned and managed by a travel agency., So there is no cost to the company. Because the major costs involved, however, STP remains an option only for the main ticket buyers. “STP is a viable option in this process for each location are buying more than $ 500,000 per year on tickets,” says Shoen.

As the average plane ticket 43 percent of corporate T & E costs, the savings obtained through the use of various technologies has been dramatic. For example, the company’s ability to collect and analyze tendencies of their own journey has led to the creation of net-cost of the purchase-price negotiations between the corporation and an airline to buy tickets that do not include additional fees commission, override, transaction costs, agency fees and other discount transaction.

Although most U.S. carriers openly declared that their firms do not negotiate discounts below the published market prices, American Express survey on business travel management found that 38 percent of U.S. companies have access to, or already implemented, negotiated a discount airline. Availability and regulatory mechanisms vary greatly by carrier.

What Price?

Fred Swaffer, transportation manager of Hewlett-Packard and a strong proponent of net-price system, has pioneered the concept of cost-based prices with the travel-management companies under contract with HP. He stated that HP, which spends more than $ 528 million per year on T & E, plans to have all air travel based on net-cost pricing. “At this moment, we have some net price at various stages of the deal,” he said. “These tariffs are negotiated with the airline at the corporate level, then drip into each of our seven geographic regions.”

Frank Kent, Western regional manager for United Airlines, agreed: .. “United Airlines volume discounts that participate in the company, such as bulk purchase of tickets, but not the net price I have not seen a single clean-tariff agreement that makes sense for us We’re not opposed, but we do not understand now.”

Kent emphasizes, “Airlines have to approach a company with a strategic long-term relationships rather than discounts. We want to see ourselves not only committed to the corporation involved.”

Like the nose to the top business travel costs, the company realized that a better cost-management techniques can make a difference.

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