Base Travel Expenses
Companies are realizing the importance of cost-management strategies as business travel costs rise.
US. According to American Express’ latest survey on business travel management, corporate travel costs soared to $143 billion in 1994. The average private-sector employer spends $2,484 per employee for travel and entertainment. This represents a 17 percent increase in the last four years.
T&E costs for corporates are now under scrutiny. They are the third largest controllable expense after sales and data processing costs. Even a 1 percent or 2 percentage savings can add millions to a corporation’s bottom line.
Management will be interested in savings of this order, as it is an essential requirement for this type project. To manage and monitor T&E more effectively, you must first understand and evaluate the components.
This involves managing travel operations, including assigning responsibility, creating a quality-measurement system, writing and distributing a travel policy, and monitoring the performance of travel services. Only 64% of U.S. companies have travel policies.
Even with the support of senior management, the road to savings can be difficult. Only one third of companies have successfully implemented an internal program to reduce travel expenses. The myriad aspects that travel entails are so complex, many companies don’t know where they should start. Steven R. Schoen is the founder and CEO at The Global Group Inc. He says that “the industry of travel is based upon information”.
Information technology is a good place to find those rare, but highly desired, savings. Roger H. Ballou is the president of American Express’ Travel Services Group USA. He says that technological innovations in business travel allow firms to harness the potential of automation to reduce indirect costs. “Many companies are also embarking on quality programs that include process improvement and reengineering efforts to significantly improve T&E management and lower indirect costs.
Companies can be very creative when it comes to the technology they use to save money.
The Great Leveler
Centralized reservation systems have been long an exclusive preserve of travel agents and industry professionals. All that changed when the Department of Transportation granted public access to Apollo and SABRE systems in November 1992.
This software monitors spending trends and connects to the corporate database. It also provides access to central reservation systems that allow for immediate reservations to hotels, airlines and rental car agencies. The software also allows users to create computerized travel reports that include details about where discounts were obtained, how many cars and hotels they used and travel patterns between cities. Companies have more leverage when it comes to negotiating with suppliers of travel services for discounts.