Survey: Policy Restrictions, Biz Travel Spending Rising

Consistent corporate pressure to control costs during the past few years has provided an environment in which travel managers have been able to tighten travel policy and business travelers generally have complied, as demonstrated by the results of a survey released by Carlson Wagonlit Travel late last month.

With 54 percent of travel managers reporting that their corporate travel policies have grown more restrictive over the past three years, 70 percent of both travelers and travel managers said travelers are very familiar with policy. As the industry embarks on a period of recovery, 34 percent of traveler respondents said they anticipate traveling more in 2005, and 60 percent of travel managers expect corporate travel spend to increase in the year ahead. With business travel spending on the rise, policy enforcement now poses an increased challenge to travel managers. Only 53 percent of travelers said they understood there to be ramifications to regular rogue booking, such as diminished reporting capabilities, decreased corporate rate negotiating leverage and nonreimbursement of travel expenses.

Responses to the survey, tabulated by Washington, D.C.-based firm KRC Research, came from 1,200 North American business travelers and 300 travel managers drawn from industry association, rather than Carlson Wagonlit client, lists.

Jack O'Neill, chief operating officer of CWT North America, noted that firming travel policy is in keeping with the evolution of the industry. "Over the past couple of years, we've seen a softening of the economy, a maturation of how airline contracts are administered and more focus on squeezing as much savings as possible out of the travel management programs. They kind of all blended together," he said.

As travel programs have grown more sophisticated, O'Neill said, policy maturity becomes a natural development. "There are not a lot of people waking up in the morning saying, 'Gee, we've got to get a travel management company in here.' It's been done. It's kind of the ongoing evolution of managing the business as smartly as you can."

Robin Buzzeo, director of corporate travel for New York-based Taro Pharmaceuticals, said she is part of the trend toward implementing more restrictive corporate travel policies. In anticipation of new and potentially significant costs, Buzzeo said she has just finished tightening minor program elements and gray areas through a rewrite of the Taro travel policy, now in place.

"Things that were not specifically spelled out are now being a little bit more defined. Auxiliary costs, usage of telephones, usage of telephone cards, Wi-Fi—things that were maybe not in existence when we did the last rewrite, up-and-coming things that could potentially cost the company something or be a liability, but have not been addressed in the policy," she said.

While 70 percent of business travelers surveyed reported booking out of policy less than five times a year, roughly a quarter of respondents cited traveler loyalty programs and preferred hotel property issues as the main reasons for noncompliant booking behavior.

"One of the biggest opportunities that we see for our clients," O'Neill said, "is to be more ambitious and frankly more aggressive about bringing hotel bookings into the program. Typically, on average, 40 percent to as much as 50 percent of hotel bookings for a lot of our customers, and I imagine it's the same for many of our very capable competitors, are done outside the travel transaction itself."

As policies grow more restrictive, enforcing compliance becomes more of a challenge. Twenty-eight percent of travel managers polled in the CWT survey reported that "being the bad guy with travelers and making them abide by the company travel policy" is the most challenging aspect of the job, making it the leading cause for complaint among respondents. While policing increasingly restrictive policies may be tedious for some, others take a less-authoritarian approach to enforcement.

Judy Bauer, vice president for global strategic sourcing of travel at JPMorgan Chase, implemented a more stringent travel policy this month, following the company's merger with Bank One last year.

"My role as travel manager is to put in guidelines that drive people's behavior to optimize on savings and reduce costs, use our programs, drive our market shares, all that. That's my goal. Holding their hands and making them do it is not my job. I think they do feel it's mandatory because we say to them, 'fine, don't use the lowest logical airfare, there'll be exception reporting.' "

Jerry Pantalone, president of Boston-based consultancy Strategies Unlimited, said that a key driver of policy formulation and enforcement is the point a company is at in its growth cycle. "A company is like a child. It starts off and the growth is really rapid, it reaches maturity and then its growth level is on the decline. It doesn't mean they're shrinking yet, it just means that if they're growing at a 20 or 30 percent clip a year, they reach a peak and then on the downward slope they only grow 5 to 10 percent a year," he said. "For probably six, eight or 10 years, since the dot-com bust, we haven't seen the fast-growing companies. There's a general tendency for companies to be more conservative or more rigid in enforcing their policies precisely because of where their companies are in the growth cycle."