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HSBC during the past two years did not alter its travel policy to adjust for challenging economic conditions, yet the financial services company dramatically reduced business travel spending, according to U.K. travel and fleet manager Lee Whiteing. Speaking here at the Business Travel Market conference last month, Whiteing said HSBC's local budget controllers proactively became cost-per-trip conscious through the downturn, and led by example.
"We haven't lifted the boundaries on business class; we haven't stopped people from going to first class; we haven't downgraded our hotels," said Whiteing.
Without changing the global travel policy "one bit," HSBC from January to April 2009 cut average cost per trip--the combined price of hotel, air and rail--to £269 (US$396) from £352 (US$518) compared with the same timeframe in 2008, according to Whiteing. "Last year, we saw that our costs were coming down much more steeply than our transactions were."
Local "business managers responsible for the budget said to their people, 'I really can't afford for you to go twice [a year] unless you go in economy,' " said Whiteing. "Believe it or not, there have been a lot of travelers that have downgraded to take that trip in economy."
Asked this week to describe how much of an impact lower rates and fares may have had, Whiteing declined to comment.
HSBC's global travel policy indicates that air trips over six hours (or over three hours for executives) can be flown in business class, and all rail trips are standard class (except Eurostar's Business Premier service). For hotels, there is no set policy around property tiers, as long as travelers book at preferred properties.
But local office managers began downgrading their own hotel accommodations and traveling economy class in air and rail, setting the standard for other employees to follow, Whiteing said at the conference. When submitting expense reports, travelers essentially felt "guilty" for booking more lavish trips than their superiors.
"We have a lot of people, especially senior managers, who lead by example," said Whiteing. "My current manager and my previous manager are based in Sheffield. Both come to London probably one or two nights a week, and both used to stay in a Hilton or the Radisson Edwardian; now they stay at the Ibis."
Meanwhile, HSBC travelers have become more sensitive about booking cheaper, restrictive, advance-purchase air and rail tickets. "Two years ago, people didn't have a clue what an unrestrictive fare was," Whiteing said. "Now, locally, they are very keen to make sure that they take--wherever possible--a restrictive fare, which gives us a cost savings. We have seen these people ask, 'What is the policy around these tickets?' We never got asked that before; now, all the time."
This year, costs are rising. Per-trip costs between January and April increased £32 (US$47), partly due to growing long-haul volumes, which drive up the company's average airfare. "I don't know if we will get back to exactly where we were two years ago, but over the next year or two you will see a continual and gradual increase in cost of trip until we get almost back to the level of 2008," said Whiteing.
Even so, he said that altering the travel policy to restrict traveler behavior is not an option. During the first year of the downturn, HSBC had the opportunity to implement changes because travelers "were happy to have a job," Whiteing said. Now, as a sense of job security grows amid improving economic conditions, "that option is gone. We didn't react quickly locally.
"Certainly in investment banking we have a situation where it is an employee market, whereas last year and the year before it was an employer's market," Whiteing continued. "Now we have good staff. We want to retain them and making them stay at cheaper properties or fly economy when they do their business is not going to work. They will leave us and go to another institution."
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