Armed with scalpels and axes, corporate travel buyers today are facing up to their toughest challenge--cost containment--according to a major survey by Procurement.travel. The quarterly magazine, a sibling publication to Management.travel, published its special " State Of The Practice" issue this week in conjunction with Business Travel Executive. [Detailed results will soon be posted online.]
Nearly two-thirds of 473 travel decision-makers surveyed online in August and September cited costs as their greatest among several listed concerns related to managing travel. Forty-three percent indicated they were most concerned about "controlling rising costs," 12 percent cited "balancing the need to travel with cost" and 9 percent cited "reducing the cost to manage travel." But results also show that buyers continue to worry about executive support for travel programs and objectives, cited by 13 percent of all respondents. For those who manage travel and entertainment budgets of $5 million to $14.9 million, executive support of travel programs was the second-greatest concern after controlling rising costs.
Nearly three-quarters of all respondents said their companies' T&E expenditures rose in 2007 from 2006. More than half expected 2008 T&E costs to rise again and 56 percent expected the line item to grow even further in 2009.
The special issue presents results from the 473 travel decision-makers--as well as additional research and findings from more than 70 other studies, reports, articles and presentations--to provide an overview of who is managing what pertaining to corporate travel, how and with what resources. The magazine queried travel buyers about the volume of their travel spend, number of travelers, scope of their responsibilities, reporting structure and use of tools ranging from online booking and expense to meeting planning.
About 83 percent of respondent organizations were headquartered in the United States, 8 percent in Europe, 5 percent in Canada and 3 percent in Asia-Pacific.
The "State Of The Practice" found that about 42 cents of every T&E dollar goes to air travel, 24 cents to lodging and 9 cents to car rental. This breakdown is similar to findings from a 1991 American Express Survey of Business Travel Management.
To manage that spend, nearly three-quarters of respondent companies employ just one or two people for all travel management and procurement responsibilities. But 14 percent of companies employ three to five people, 7 percent dedicate six to 10 people and another 7 percent have more than 11 people tasked with travel management. More than half of those with T&E spend greater than $15 million task three or more employees with travel management. Articles and charts highlight the relevant variances between respondents where annual T&E is defined as small (less than $5 million), medium ($5 million to $14.9 million), large ($15 million to $59.9 million) and extra-large (more than $60 million).
At nearly three-quarters of respondent companies, travel management now reports to the executive offices (28 percent), finance (23 percent) or procurement (22 percent). For 7 percent of respondent companies, human resources, administration or other departments each have oversight of travel management while shared services is the overseer for 6 percent.
Responsibility for travel supplier negotiations rests in procurement's hands, according to 38 percent of respondents; executive offices, according to 23 percent; or finance, according to 14 percent. Administration holds such responsibility for 11 percent of respondents, human resources for 5 percent and other departments for the rest.
Thirty percent of respondents defined their titles as travel managers, directors, supervisors or vice presidents. At companies with the largest T&E spend, half of the respondents said their titles were in this group. Overall, 13 percent said they were procurement directors, vice presidents or chief procurement officers and another 13 percent (all at companies with the smallest annual T&E spending) said their titles were in the CEO/COO or president categories.
Globalization of companies, and their travel management programs, was evident in the findings as nearly 60 percent of respondents said travel policies applied to operations in multiple countries. Of this multinational group, 36 percent said travel polices applied to operations in two to 10 countries, while 21 percent said they covered operations in 21 or more countries. The larger the spend, the more likely respondents were to manage travel in multiple countries. Policies applied to local offices and staff in a mean of 12 countries for those with spend of $15 million to $59.9 million and in mean of 28 countries for those with more than $60 million in annual T&E spend. The overall mean was 9 countries.
Various other studies touted 2008 as the year that buyers would get serious about preferred supplier use through tightened policies as they aimed to attain the savings that policy and compliance improvements could deliver (as high as 21 percent savings, according to 2006 research by the CWT Travel Management Institute). Among "State Of The Practice" respondents, 68 percent had policies regarding use of preferred travel management companies, followed by 67 percent on hotels, 65 percent on corporate cards, 64 percent on airlines, 63 percent on car rental/ground transportation providers, 52 percent on expense reporting systems and 50 percent on online booking systems.
In terms of negotiating preferred rate agreements, 82 percent of respondents said they directly negotiate those with hotels, 75 percent with car rental firms and 69 percent with airlines. Savings from such negotiated deals varied greatly. Eleven percent of respondents said they attained "no savings" from such deals while 12 percent cited greater than 21 percent savings and the vast majority pegged it somewhere in between.
Overall, 67 percent of respondents said their companies had a designated traveler booking tool, but among those with T&E of more than $5 million, that percentage rose to 82 percent. Among the 317 respondents whose organizations had a designated traveler tool, nearly half (48 percent) said more than 60 percent of their overall bookings were initiated by travelers as opposed to agents. A smaller share, 38 percent, said more than 60 percent of bookings were completed with no agent assistance at all.
Buyers also were asked about their current and planned use of e-folio lodging data. Among all companies, 28 percent said they currently get hotel e-folio, rising to 35 percent among those with annual T&E of more than $15 million. But among the 266 respondents who said they don't currently get efolio, only 44 percent said they plan to use it in the next couple years.
Despite decades of attempts to manage meetings, executives continue to grapple with how best to evaluate, procure and manage this substantial spend category. While 85 percent of respondents quantified their meeting spend, 15 percent weren't sure of the annual meeting tab. Nearly half said their companies spent less than $1 million a year on meetings in 2007, 20 percent said the tab was from $1 million to $4.9 million and 10 percent said it was from $5 to $14.9 million. About 4 percent said the 2007 expense was more than $60 million. The larger the spend, the more aggressive the efforts to better control meetings sourcing, contracting and execution.
Of all respondent companies, 22 percent now have policies on use of preferred meeting providers; among those with meeting spend of more than $5 million, the percentage rose to 39 percent.
Buyers also were asked about traveler safety and security support. Nearly 70 percent of respondents said their companies now track travelers for safety and security. At the largest companies, 89 percent track travelers. Travel management companies provide the tracking, according to 69 percent of all respondents, while 38 percent said they get tracking from online booking tools and 24 percent cited the global distribution systems. Third-party security firms provide the data for 21 percent of respondents.
Demand management, remote conferencing and mobile technology were among the emerging issues covered in the survey. Sixty-two percent of respondents said their company policies now recommend that travelers consider remote conferencing before booking travel. For 16 percent within that group, such a policy was implemented in the past year. But less than a quarter of the 292 respondent companies that recommend use of remote conferencing have configured their Web-based booking systems to ask travelers if they have considered the non-travel option. Only 14 percent said company travel agents ask travelers if they have considered remote conferencing.
Emissions reporting, the impact of new airline regulations, supply chain management issues and supplier relationship management trends are among other topics highlighted in the special report, sponsored in part by Carlson Wagonlit Travel, MasterCard Worldwide, Southwest Airlines and Qatar.