Base Tendriling Journey Expenses

As company travel costs nose upward, firms are realizing that superior cost-management methods can make a big difference

US. company journey expenses rocketed to much more than $143 billion in 1994, according to American Express' most up-to-date study on small business vacation management. Private-sector employers expend an approximated $2,484 for every employee on vacation and entertainment, a seventeen % enhance in the last four yrs.

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 this link p.c or 2 percent 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 much more effectively.

Hands-on administration includes assigning responsibility for journey administration, implementing a quality-measurement system for vacation services used, and writing and distributing a formal vacation 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 corporations has successfully instituted an internal program that will help cut journey bills, and the myriad aspects of travel 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 vacation industry are allowing firms to realize the potential of automation to control and reduce indirect [travel] costs," says Roger H. Ballou, president of the Travel 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 providers 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 vacation reports on value 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 journey suppliers.