A Way To Go
Get Your Corporate Travel off the Ground
By Hilary Ingoldsby Whitesides
June 2, 2009
So many places to go and people to see, but less money to do it with. While the global economy demands business travel, it also demands leaner travel budgets. Both demands seem more essential than ever to ensure business success, but how do you do more with less in the corporate travel department? Experts say avoid unnecessary costs, and be patient with the economic business cycles.
Inevitably, some businesses are cutting travel to save money. A recent survey by the Association of Corporate Travel Executives (ACTE) showed that at least 33 percent of business managers plan to reduce corporate travel expenditures during 2009.
“There has been a sizable cutback in business travel during the recent economic downturn. We’ve seen many of our clients reduce their business travel budgets in the 20 to 25 percent range,” Christopherson Business Travel President Mike Cameron says. “I’ve spoken to many of my associates who own travel management companies around the country. They’re all seeing about the same percentage reductions.”
Mike Davidson, vice president and general manager of Hess Corporate Travel manages Morris Travel’s corporate customers and also says he has witnessed the same trend. Davidson says his company focus is on educating its clients about cost-effective travel and subsequently, has gained new clients despite economic troubles.
Both Cameron and Davidson say there are a few practices that are key in keeping corporate travel alive during times of financial trouble.
Many companies are practicing what Cameron calls “cost avoidance” by simply avoiding travel not deemed as essential. For example, many businesses are using Web conferencing to conduct meetings, thus, allowing employees to participate without traveling to a central location. Some are sending just one employee to a business meeting out of town, and having the employee brief the rest of the staff on the meeting upon their return. Others are taking shorter trips. Many are canceling incentive trips—a trend Cameron believes is linked to recent portrayals of incentive trips in the banking industry. But for many businesses, traveling less simply isn’t a viable option.
While Cameron says corporate travel always takes an early hit in an economic downturn, there are ways businesses can travel and save money. Davidson agrees, saying the simple key is better planning. For example, Davidson says buying a last minute airline ticket is expensive and changing the day or time of the flight last minute is extremely costly. Many businesses simply fall prey to the rules and regulations and lose a lot of money doing so. “Last minute changes just eat up funds,” he says.
Davidson also reminds clients to utilize funds from cancelled flights. When cancelled in advance, many airlines let you reuse your funds within 12 months, but many businesses forget and spend money to re-purchase a flight later instead of using the remaining funds. Cameron says downsizing travel standards is also effective. While some might be accustomed to flying first class and staying at five star hotels, a great deal of money can be saved by flying coach, staying at moderately priced hotels and renting smaller cars.
And now more than ever, Cameron and Davidson urge clients to search for good deals. Hotels are dealing with vacancies they’ve never dealt with before, Davidson says, and are willing to give cheaper rates to fill their rooms. Cameron says car rental agencies are also dealing with a surplus inventory and are, therefore, cutting prices. Now is a good time for businesses to renegotiate contracts with travel vendors, or find new vendors completely.
According to the ACTE, there’s never been a better time to shop around when it comes to corporate travel deals. ACTE reported 63 percent of travel managers have approached their travel vendors for renegotiation mid-term with 67 percent reporting the hotel industry having the most proactive response to the economic climate.
Last, but not least, businesses need to be patient and smart. “Business cycles come and go,” Cameron says. “The successful companies are the ones who can respond quickly without affecting the value they provide to their customers. They will be stronger when things turn around and it will.”