Foundation Tendriling Vacation Fees

As business read this  vacation costs nose upward, providers are noticing that greater cost-management approaches may make a big difference

US. company vacation charges rocketed to more than $143 billion in 1994, according to American Express' newest study on business enterprise vacation administration. Private-sector businesses shell out an approximated $2,484 per personnel on vacation and entertainment, a 17 % enhance in the last 4 years.

Company T&E costs, now the third-largest controllable expense behind sales and data-processing costs, are under new scrutiny. Corporations are noticing that even a savings of 1 p.c or 2 p.c 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 journey services used, and writing and distributing a formal travel policy. Only 64 percent of U.S. corporations have journey policies.

Even with senior management's support, the road to savings is rocky-only one in three corporations has successfully instituted an internal program that will help cut travel charges, and the myriad aspects of journey are so overwhelming, most businesses 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 business travel industry are allowing firms to realize the potential of automation to control and reduce indirect [travel] costs," says Roger H. Ballou, president of the Journey Services Group USA of American Express. "In addition, many businesses 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 firms 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 travel 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 cost 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 travel 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, journey manager for biotech giant Chiron Corp.

Sybase Inc., a client/server software leader with an annual T&E budget of much more than $15 million, agrees. "Software gives us unprecedented visibility into how employees are spending their vacation dollars and superior leverage to negotiate with journey service suppliers," says Robert Lerner, director of credit and company journey services for Sybase Inc. "We have superior access to data, faster, in a real-time environment, which is expected to bring us big savings in T&E. Now we have control around our travel information and no longer have to depend exclusively on the agencies and airlines."

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

No Far more Tickets

Paperless travel is catching on faster than the paperless office ever did as both service providers and consumers work together to reduce ticket prices for company travelers. Perhaps the most cutting-edge of the advances is "ticketless" travel, which almost all major airlines are testing.

In the meantime, journey providers and agencies are experimenting with new technologies to enable travelers to book vacation services via the Internet, e-mail and unattended ticketing kiosks. Best Western International, Hyatt Hotels and several other major hotel chains market on the Internet. These services reduce the need for paper and offer greater service and such peripheral benefits as increased efficiency, improved tracking of travel expenses and trends, and value reduction.

Dennis Egolf, CFO of the Veterans Affairs Medical Center in Louisville, Ky., realized that the medical center's decentralized location, a quarter-mile from the hospital, made efficiency difficult. "We were losing production time and things got lost," he says. "Every memo had to be hand-carried for approval, and we required seven different copies of each travel order." As a result, Egolf tried an off-the-shelf, paper-reduction software package designed for the federal government.