Basic Travel Costs

Business travel costs upward, companies recognize that better cost management techniques can change the situation

US. corporate travel costs rose to more than $ 143 billion in 1994, according to American Express's latest survey on business travel management. Private sector employers are estimated to spend $ 2,484 on travel and entertainment for employees, a 17 percent increase over the past four years.

Enterprise T & E costs now have the third largest adjustable cost behind sales and data processing costs and are under new control. Companies recognize that savings of up to 1 percent or 2 percent can be converted to millions of dollars, which is added to their end result.

Save your order will certainly give the management's attention to this type of project. Involvement begins with understanding and evaluating the components of T & E management to better control and track it. Craft Management includes the definition of travel organization responsibilities, the introduction of a quality measurement system for travel services and the writing and dissemination of formal travel policy. Only 64 percent of American companies have travel policies. Even with the support of top management, the road of savings is rocky, only three companies have successfully created an internal program that helps reduce travel costs and countless travel aspects are so overwhelming, most companies do not know where to start . "It is based on the information of the travel industry," says Steven R. Schoen, founder and CEO of The Global Group Inc. "While a passenger does not actually drive, they bought 19459006."

If that is the case, information technology seems to be a viable place to take advantage of these neglected but highly sought-after savings. "Technological innovations in the business travel industry enable companies to assess the potential of automation in regulating and reducing indirect costs [travel]," says Roger H. Ballou, president of American Express Travel Services Group USA. "In addition, many companies are launching quality programs that include sophisticated process development and reengineering efforts that significantly improve T & E management processes and reduce indirect costs."

can be very creative about their methods.

The Great Level

Central reservation systems were for a long time the exclusive areas of travel agents and other industry specialists. But this changed in November 1992 when the reign of the Ministry of Transport allowed the public access to systems such as Apollo and SABER. Travel management software, such as TripPower and TravelNet, immediately emerged, allowing companies to gain insight into the cost of T & E.

The software tracks publishing trends with corporate database and access to centralized booking systems that provide instant booking information to airlines, hotels, and car rental agencies. These programs allow users to make computer travel reports on cost savings, detailing discounts, hotel and car usage, and traveling between cities. On the basis of actual data, companies increased leverage when negotiating with suppliers.

"If you own the information, you do not have to go back to the box every time you decide to change agencies," says Mary Savovie Stephens, travel biotechnology giant Chiron Corp.

Sybase Inc., a client / server software leader with annual T & E budgets over $ 15 million, agrees. "Software shows unprecedented visibility into how much money people spend on travel dollars and make better use of travel service providers," says Robert Lerner, director of credit and corporate travel services at Sybase Inc. "We provide better access to data in a real-time environment that is expected to result in great savings in T & E, we now manage our travel information and not depend on the agency and airlines alone."

the privilege depends on the volume of business. One-time purchase of travel software ranges from $ 100 to more than $ 125,000. Some software vendors are able to deliver smaller users by packing software from $ 5 to $ 12 for a seized trip, but still have a significant savings from the industry's $ 50 industry standard. as in a paperless office, both service providers and consumers have worked together to reduce ticket prices for business travelers. Perhaps the most advanced progress is the "ticketless" journey tested by almost all major airlines

In the meantime, travel agents and agencies are experimenting with new technologies that enable passengers to travel on the internet, email and unattended ticketing kiosks. Best Western International, Hyatt Hotels and many other major hotel chains on the Internet. These services reduce the need for paper and offer better services and peripheral benefits such as increased efficiency, better tracking of travel costs and trends, and cost cutting.

Dennis Egolf, Financial Director of Louisville Veterinary Affairs Center, Ky., He realized that the decentralized health center, a quarter of a mile away from the hospital, made it more difficult. "Production time has been lost and things are lost," he says. "All reminders were submitted for approval and we requested seven different copies for each travel order." As a result, Egolf tried a paper reduction software package for the federal government.

The software allows the hospital to travel on-line, daily contributions and calculations for the production of cash advances and the granting of refund vouchers. The software allows the hospital to keep track of its travel costs and the remaining travel budget. "Today, for all practical purposes, the system is paperless," says Egolf. With this software, the hospital reduced the processing time of the document by 93 percent. "The original goal was to provide workers with unmanned, paperless handling," he says. "We achieved this goal, partly thanks to the staff's efforts, partly due to the accuracy of the software."

With just $ 6,000 in investment, the hospital saved $ 70 for each employee trip, half $ 200,000 of the T & E budget through the paper cutting program.

Out There

Establishing corporate travel arrangements with fewer agencies has been growing since 1982. business plans deliver travel plans through a single agency, compared with 51 percent in 1988. The two main advantages of agency consolidation are the facilitation of accounting and T & E budgets and the impact of negotiating future travel benefits.

Significant technological progress enabling the consolidation trend to thrive is the introduction of Satellite Ticket Printers (STP). Using STP, the travel agency unifies all the operations in a home office and instantly sends all the necessary tickets to different locations via various fixed line services. As the term suggests, the machine will immediately print the tickets on the site, eliminating delivery fees.

For London Fog, STPs are a blessing. London's $ 15 million annual T & E budget is distributed equally between Eldersburg, Md. And New York. Each venue purchases the same number of tickets, so their agency must have equal access to ticket sales. The STP at two locations, the company supplies both offices with a Baltimore agency. Each office has access to instant tickets and is still able to save it as it does not have to pay for courier and express fees, which can reach up to $ 15 each each with more than 500 tickets per purchase every year.

Conde Nast Publications & # 39; The $ 20 million annual T & E budget is located in Los Angeles, San Francisco, Chicago, New York and Detroit. Since 1994 travel arrangements have been handled by the New York Advanced Travel Management centralized agency, with STP installing at all five locations. As a result of the consolidation, Conde Nast is able to gain momentum for consolidation and is able to quickly get to know new exchanges. travel agency, so there is no cost to the company. However, due to the large expense, STPs will remain only for larger ticket buyers. "STPs are a viable solution in every location that buys more than $ 500,000 a year," says Shoen.

Given that airline tickets account for 43% of the company's T & E costs, the technology has become dramatic. For example, companies have been able to collect and analyze their own travel trends between the company and an airline, creating net fees for the purchase and negotiation of tickets that do not include commissions, overruns, transaction fees, brokerage transaction fees and other discounts

Although most US carriers publicly announce that they do not negotiate corporate discounts below published market prices, American Express's survey on business travel management found that 38 percent of companies have access to or have already implemented negotiated airline concessions. The availability and the mechanics of these measures differ greatly from the carrier.

Fred Swaffer, a leader in Hewlett-Packard's delivery and a net pricing system, has proven to be a pioneer in the award-based pricing concept with HP's contracted travel agents. He claims that H & P, which spends more than $ 528 million a year on T & E, plans to make air travel based on net fare. "There are currently several net prices at different stages of the agreement," he says. "These fares are negotiated with companies on a corporate level, then on our seven geographic regions."

Frank Kent, West Regional Manager of United Airlines, agrees that "United Airlines takes part in a corporate volume such as purchasing bulk tickets but not net pricing, I have not seen a net charging agreement that makes sense We are not against it, but we do not understand it now. Airlines are dealing with long-term strategic relationships with companies, not just discounts, corporate travel costs increased to more than $ 143 billion in 1994, according to American Express's latest business travel management survey. Private sector employers estimate $ 2,484 they spend on travel and travel and entertainment, a 17 percent increase over the last four years.