Nonprofit Contractor Squeezes Hotel, Expense Policies

Successes with its hotel program and expense reporting policy have helped one mature travel program gain additional savings in the teeth of a recession.

As a not-for-profit government contractor, the Mitre Corp. had in place an already-tight travel spending policy that severely limited premium class travel and required hotel room costs under government per diem rates. Even before the economic downturn, Mitre started trimming its travel costs by stepping up communications to promote fiscally responsible travel and implementing a series of changes that gave management and the company's travel and procurement team greater insight into traveler spending.

"It has been the way for our 50-year history," Mitre senior manager of business and employee services Paul Schnizler said. "Falling in line with the cost controls that have been in place for decades has always kept us more on the conservative side of travel spending." Yet, Schnizler saw other opportunities to reduce costs.

One such opportunity was in the preferred hotel program, in which properties are required to give Mitre travelers government per diem rates and last-room availability.

In 2007, the company implemented an expense approval process in which employees had to provide a reason and obtain management approval to pay a rate higher than per diem for a hotel room. Since that process began, booking costlier than per diems decreased by 62 percent, saving the company more than $500,000, Schnizler said.

On top of that, the economy has enabled Mitre to add more properties to its preferred program. "When the economy was booming, that was a hard deal to negotiate," said Schnizler. "In today's economy, not only are we getting that at many properties, we've had some upscale properties—the Hiltons, the Marriotts—offering below per diems."

Successes with the hotel program helped Mitre surpass last year's goal of reducing travel spending by 10 percent, an objective senior management announced in January 2009. For the full year, the company reduced its travel bill by 13 percent compared with 2008. Mitre's annual total travel spending is about $35 million and is 90 percent domestic, according to Schnizler.

With management requiring more timely data to aid in budgeting and tracking expenses during the downturn, the company last summer set a deadline for expense reports to be filed in its home-grown expense reporting system no later than 21 days after the completion of a trip. Beyond 21 days, management endorsement is required. After 30 days without an approved excuse, the company stops processing the expense reports and withholds reimbursement, a "rare" occurrence, according to Schnizler.

"You have to work at taking out the surprises," he said. "If you have a whole bunch of employees who save up a lot of expenses and submit them all at once at the end of the year, here you are thinking that you are tracking well and, surprise, you're not."

Schnizler, who also manages the company's reimbursement and corporate property departments, is considering replacing the proprietary expense tool with a third-party system because it lacks integration with online booking tools. "To modify it to the point where it could compete with other products in marketplace is probably more than we want chew off," Schnizler said.

In a nonmandated environment, the company has an 85 percent online booking adoption.

Schnizler also reaped savings by renegotiating the company's corporate card agreement. The request-for-proposals process was conducted with a manager from Mitre's procurement department, through which the travel department reports. In addition to Schnizler, the travel team consists of a travel manager and a support specialist who manages Mitre's hotel program, travel website and the onsite travel agents at the company's Bedford, Mass., location.

Mitre stayed with its incumbent card provider after it agreed to lower fees and maintain its rewards program, which Schnizler said "had a significant impact on the bottom line."

With a goal for travel costs next year not to exceed 90 percent of what they were in fiscal 2007-2008, the company now is implementing a demand management policy in which travelers will be asked to provide reasons why videoconferencing or other travel alternatives cannot be used for a trip at the start of the online or off-line booking process.

Schnizler said the company has 100 to 150 videoconferencing units throughout its locations, which include its four federally funded research and development centers.

Much of the success of the travel policy and process changes is a result of the travel team's communications efforts, which have become more robust in the past several years.

Schnizler holds monthly meetings for a 97-member "travel guru" group made up of travel arrangers and managers who help communicate changes to the company's 2,500 travelers.

In December, the travel team added an area to its travel website that spotlights savings efforts and lets travelers submit suggestions on how to reduce spending. By the close of the submission stage, the site had 2,000 page views and employees posted 43 suggestions and 319 comments. Some suggestions included upgrading the expense reporting tool and improving microphones in videoconferencing facilities.

Employees now are voting on which suggestions to implement.