Amex Survey: Global T&E Spenders Tighten Policy

<B> Amex Survey: Global T&E Spenders Tighten Policy</B>

By Amon Cohen

While companies are implementing tighter travel policies and controls, they still could be doing a lot more to optimize efficiencies and savings.

These are the main findings of an American Express Global T&E Expense Management Survey of 611 leading companies located throughout the world.

Activities at which companies remain poor include communication of policy and negotiating supplier programs. Given the nature of its business, it is not surprising to see Amex also suggest that corporations would benefit from global travel agency consolidation and from issuing corporate cards to all travel and entertainment expense incurrers.

American Express has conducted worldwide T&E surveys before, but with different methodologies and sample bases, so the current report is short on historical perspective. This will be rectified with more consistent benchmarking from now on.

Even so, it is clear that T&E looms increasingly large in the budgets of major companies as they globalize their businesses. T&E expenses represented an average 7 percent of total operating costs for the respondents. The figure was 6 percent in the United States, but more than 7 percent in Europe and almost 10 percent in Latin America. Five years ago, it was 3 percent for British companies, which now are estimated to spend $40 billion on T&E, compared with $30 billion in 1994. German spending in this period has seen an even sharper compound growth of 10 percent, from $39 billion to $60 billion.

Worldwide, 36 percent of respondents' employees travel on business. Airfares account for 44 percent of T&E spend and hotel expenditure for 24 percent. Meals and car rental weigh in at 15 and 5 percent, respectively. North Americans spend 40 percent of their T&E costs on domestic air travel, compared with a survey average of 28 percent, and only 7 percent on international air. Europeans spend 11 percent on domestic and 32 percent on international.

In spite of spending millions of dollars on T&E, only 46 percent of the companies surveyed have a travel manager, either full- or part-time. In those that do, 32 percent of travel managers are part of the corporate administration team, although a growing number (29 percent) are in finance. The figure is even higher for North America, where 40 percent are in finance. Worldwide, 14 percent are part of the purchasing department and 8 percent report to human resources.

An intriguing 2 percent of the sample outsource their travel management to third parties. ''This solution may well become more widely adopted as companies extend their outsourcing arrangements,'' the report said.

Amex believes travel managers are not empowered sufficiently by their companies. The survey found that only 28 percent of supplier negotiations are led by travel managers, as are 25 percent of travel bids, 24 percent of policy formulation and monitoring, 14 percent of corporate card administration, 8 percent of expense management processing and 21 percent of group travel management. However, since these figures include companies that do not employ a travel manager, they almost can be doubled for those that do.

Even so, there are clearly areas where travel managers could become more involved and make a difference. A glaring example is group travel, where individual departments take responsibility in 31 percent of cases. ''The travel manager should take the lead in managing group travel, using his or her knowledge to negotiate the best packages and achieve volume discounts,'' the report said.

Amex further recommended that corporate card programs be administered in partnership between the travel manager and finance, and the travel manager should take the lead in supplier negotiations and managing travel bids. On the other hand, finance has responsibility for expense processing at 66 percent of respondents, and this is where it should be, according to Amex. ''Some companies allow the travel manager, administration or individual departments to have a key role, which may result in lower efficiency and unnecessary paper flow,'' said the report.

Efficiency is at least improving in the realm of T&E policy. More than four-fifths (83 percent) now have one, although given that all the survey respondents are large national or global companies, it is eyebrow-raising to consider that 17 percent do not.

However, companies that do have policies are undermining their efforts by failing to communicate them properly. Everyone responsible for arranging and approving travel should be on the distribution list, said Amex, yet only 42 percent of arrangers and 44 percent of approvers actually are.

Critical opportunities also are being wasted in vendor negotiations: Only 62 percent of respondents have an air program. Figures are better for the hotel segment (80 percent). Supplier programs are not always enforced either, with 21 percent of companies taking no special steps to ensure that travelers actually use them.