Foundation Tendriling Travel Bills

As small business villas to rent  journey expenses nose upward, businesses are realizing that better cost-management tactics might make a variation

US. company travel expenses rocketed to more than $143 billion in 1994, according to American Express' most up-to-date survey on company vacation management. Private-sector companies expend an approximated $2,484 for every employee on vacation and amusement, a 17 percent improve in the last 4 decades.

Corporate T&E costs, now the third-largest controllable expense behind sales and data-processing costs, are under new scrutiny. Corporations are acknowledging that even a savings of 1 percent or two 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 more 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 journey 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 organizations has successfully instituted an internal program that will help cut travel expenses, and the myriad aspects of vacation are so overwhelming, most companies 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 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 Travel 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 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 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 price tag 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, vacation manager for biotech giant Chiron Corp.

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

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

No Extra 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" vacation, which almost all major airlines are testing.

In the meantime, vacation providers and agencies are experimenting with new technologies to enable travelers to book travel 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 vacation fees and trends, and price 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 journey order." As a result, Egolf tried an off-the-shelf, paper-reduction software package designed for the federal government.