Companies take a closer look at travel

When Jack Bernard was a senior executive in the health care industry, he racked up millions of airline miles, but also made millions of dollars for his companies.

All those trips, slogging through all those airports and spending time away from home, was about building relationships with clients and, ultimately, winning their confidence.

“I was selling multimillion-dollar stock purchases to (corporate officers and directors). They had to see me, they had to know what I was doing and it was a long-term relationship,” he said. “If you need to build trust ... you gotta have face-to-face contact, it’s that clear.”

As vital as in-person meetings can be for a business, the recession had a lot of companies taking a second look at their travel budgets and cutting back even if it meant losing ground with clients.

Revenue from the corporate-travel industry going to travel suppliers such as airlines and hotels dropped 23 percent from 2008 to 2009 for “a pretty incredible decline,” said Douglas Quinby, principal analyst with the travel research firm PhoCusWright.

Nationally, the ripples were felt in sectors such as transportation, entertainment, retail, and food and beverage; in Las Vegas the corporate meeting and convention business took a definite hit.

But when the business world is at its best, it’s adapting and changing course when necessary, and that seems to be exactly what has happened. Since the steep drop off in 2009, corporate-travel spending has risen and is expected to stay on an upward track into next year.

“Corporations realized, OK, the recession isn’t the end of the world. We still have to do business, we have to generate sales, we have to get out on the road, we can’t be frozen forever,” Quinby said.

In 2009, the amount American businesses spent on domestic travel fell to less than $200 billion, but in 2012 it reached an estimated $225 billion, according to a survey by Oxford Economics.

Travel for meetings and conventions, which are 40 percent of business travel in terms of spending, increased 4 percent from 2011 to 2012, and survey respondents expected to travel on business even more in 2013, especially for sales trips, and conferences and trade shows.

The survey also cemented the idea that face-to-face meetings are still considered invaluable. Business travelers reported that, on average, 42 percent of their customers would eventually be lost without in-person meetings, and that business prospects are twice as likely to become customers as a result of face-to-face meetings.

Optimizing value

Although business travel is getting back on track, it may never be the same.

The recession has meant closer scrutiny of employee travel expenditures by many companies and, in some cases, the creation of policies to rei n in perks such as flying first class and expensive hotels.

On a broader scope, there is even closer attention to overall value which means, for example, negotiating more with travel suppliers to get the best possible terms and a concentrated approach to collecting data to understand how employees are spending on the road.

“Organizations are taking a much more rigorous approach to managing their travel programs. Optimizing spend, data analysis, has become increasingly more sophisticated and robust, so increasingly procurement managers now, not travel managers, are rigorously analyzing their employee traveler-behavior data and adjusting their programs,” Quinby noted.

A specific example of a company “optimizing” travel practices is the avoidance of large meetings at off-site locations that are pricey or require a lot of logistical maneuvering to get everyone there, he said.

“They may still hold it at a four- or five-star resort if it’s a really important event, but if they’ve got 200 people coming in, they’re going to make sure that it’s 15 minutes from the airport rather than a two-hour drive or one-hour drive,” Quinby said.

Technology is another major component that is changing the face of travel and goes hand-in-hand with the push to oversee expenses.

Corporate travel management companies, for example, are providing the technology companies need to make sure their employees are following company travel policies, such as booking with airlines and hotels for which they have negotiated discounts, and even who is allowed to fly business class versus coach. Managers, in fact, can be alerted for pre-approval before bookings move forward.

Egencia, the corporate travel management arm of online travel company Expedia, provides an auditing service called TripController which monitors employee bookings, as well as DataMinder which can oversee corporate travel budgets based on daily booking activity.

One of the most effective tools, of course, is what those in the industry call “visual guilt,” or an employee’s own guilt when all those less-expensive options pop up on the screen during the selection process, according to travel experts.

Paul Wiley, chief product and strategy officer for GetThere, a corporate online travel reservation company, said that his company’s drive to save clients money and judiciously track their travel expenditures is not new, but there has been a recent uptick in clients interested in using money-saving strategies.

“We see more and more requests for … some of the policies to be tightened a little bit more, and many of them are looking at their overall corporate (travel) policies again to say, well how should I handle whether it’s based on the level, whether it’s based across-the-board, whether it’s based on some of the additional fees that might be coming through as well, taking a look at these different expenses to understand how can I manage them better for a big company,” he said.

Technology, making it personal

In addition to managing costs, it has also become vital in the corporate-travel realm to keep up with technology that is aimed at making travel more personal and hassle-free in today’s busy world. Also, to meet the demands of an increasingly savvy segment of travelers.

Studies show that three out of four corporate travelers carry a smartphone and, according to a report from the Boston Consulting Group, millennials, or those 16 to 34 years of age, will represent more than 50 percent of spending on business flights by 2020.

Baby boomers, on the other hand, are expected to make up only about 16 percent of total reported spending on business flights by 2020.

So what will the new generation of business travelers want?

“We term it: They want the best,” said Mark Hollyhead, senior vice president for Egencia Americas.

No surprise that mobile technology will continue to be a focus since business travelers are perhaps the most frequent users of mobile devices and services, he said. For Egencia, he added, the focus has been on integrating all the technology so that a traveler can have the same experience using core services on a smartphone and tablet as on a desktop.

In the fall, for example, the company is releasing a new app that will “reinvent the path of booking a hotel, be very graphically based, few clicks, not a bunch of drop-down menus,” he said.

He also envisions a day when the integration of technology will create “contextual links” with mobile devices to the extent that they become like personal travel arrangers.

“Obviously we notify travelers when there’s a storm or a flight cancelled that’s relevant to their itinerary, but how do we really surprise and delight them? Your flight is in the air, you’re going to land in San Francisco, there’s dense fog and they’re going to divert you and, in fact, we’ve booked you a hotel in another city,” he said. “This idea of mobile being contextual, it isn’t just about the sexiness, it’s also about the really functional brilliance of following you as a business traveler.”

Wiley agrees that integration of technology is key. Sabre Holdings, which owns GetThere, developed the TripCase mobile app that allows travelers to have access to all their trip details, including flight gates, travel times, travel alerts and maps and also allows travelers to book on-the-go.

Tips for small businesses

Bernard, who worked as a senior-level executive in the health care industry for 25 years, is a mentor with the nonprofit business-counseling organization SCORE.

He said that when it comes to employee travel, companies of any size have to maintain oversight so they know how their travel dollars are being spent rather than assuming every employee is towing the line.

“If you don’t have time to check, I guarantee you you’re getting ripped off,” he said.

He recommends regularly auditing employee travel expenses and using a kind of carrots-and-sticks approach to management. He has seen companies, for example, take away first-class airline travel and other perks to save money, in exchange for stock options and bonuses.

He also knows of a trucking company that charges financial penalties to employees who stay in hotels that don’t have a discount agreement with the company. This is not only a matter of the company saving money on hotel rates, but also fulfilling those contractual agreements, he said.

Smaller companies can apply these kinds of management strategies to their own travel policies, he said.

Technology, if used the right way, can be a great way to save on expenses and time, he added. Bernard worked for a business that regularly used webinars among its own employees to save on travel costs “and it was very viable,” he said.

“If they’re done well and everybody is connected and they’re not cutting off continually and having all the technical issues … they’re great for having meetings and not dragging your CEO, your CFO, your VPs all over the country. If you’re not talking sales, you’re talking about in-house reactions, then I think they’re great for that.”

When it comes to virtual meetings with clients, however, companies need to decide whether that relationship would be more profitable through face-to-face meetings, say if they are dealing with a specialty good or service, as opposed to a straightforward commodity.

He also points to the army of mobile applications that are available such as GasBuddy, which lists the gas stations with the best prices within a certain distance of where someone is traveling. Social media, he added, can be a great tool to connect to those who already know you or your product, but companies should not fall into the trap of thinking it is the answer to all their problems.

“Where you don’t know someone, you’re not going to just buy a product from Facebook or if somebody sends you 10 tweets about it. You gotta have the face-to-face contact. And once again, it’s especially true if it’s not a commodity.”