Businesses opt for tighter travel plans

Date: October 21 2008
Source: TulsaWorld.com
Website: http://www.tradingmarkets.com/.site/news/Stock%20News/1957278/

Two surveys of corporate travel managers have found companies are reducing travel spending, while a minority have implemented emergency travel cutbacks in response to the Wall Street financial crisis.

The surveys by the Business Travel Coalition and the National Business Travel Association found sizable increases in business travel costs as the airlines have reduced capacity and increased fees in response to the downturn in the economy.

The survey results are mirrored in Tulsa, where business travel and travel spending are down, travel and airline officials said.

"We have seen a 10 percent drop in travel spending by our corporate clients," said Alex Eaton, president of World Travel Service. "We have only seen a 2 percent drop in corporate travel, but they are spending less."

The NBTA survey found the cost of a business trip, including air fare, hotel, rental car and meals, increased from $140 to $175 in the United States and $315 to $400 for international travel in 2008 compared with 2007.

To cope with the increased travel costs, 56 percent of corporate travel managers surveyed said they have imposed a range of cost-cutting measures; 53 percent said their companies have adopted cost-saving

mentalities at every level, and 39 percent said they have reduced meetings and company events.

The top five strategies companies have adopted to contain travel costs, the NBTA survey found, are emphasizing advance purchase of airline tickets; encouraging or requiring less air travel; sending fewer employees to conferences; strengthening enforcement of travel policies and encouraging employees to seek travel alternatives.

In the Business Travel Coalition survey, 25.5 percent of corporate travel managers said they have implemented emergency travel cutbacks in recent weeks as a direct result of the financial crisis.

"Some 68 percent of survey respondents in 2008 indicated that their corporations would keep emergency travel cutbacks in place until 'further notice' underscoring the great uncertainty about the global economy," said the Business Travel Coalition.

In September at Tulsa International Airport, airline passenger traffic dropped 11.7 percent -- one of the largest monthly decreases in passenger traffic in the airport's history.

"I think that would indicate a decrease in business travel," said Alexis Higgins, deputy airport director of marketing. "September typically is not a leisure travel month."

Tom Horton, American Airlines' chief financial officer, said last week in a conference call with the media and analysts that American was seeing some softness in corporate travel bookings.

In the fourth quarter, American's booked load factor -- the percentage of seats filled -- is 2 percentage points lower than 2007's fourth quarter, said American spokesman Tim Smith.

At Southwest Airlines, which last week posted its first money-losing quarter in 17 years, there has been no "dramatic" decrease in fourth-quarter bookings, said spokesman Chris Mainz.

"We're certainly concerned about the economy and what it will do to business travel after the first of the year, but at the moment we don't see anything alarming as far as bookings through the end of the year," Mainz said.

Eaton, president of World Travel, said rising travel costs and the financial crisis on Wall Street underscore the importance of traveling smarter.

"The difference in cost between a seven-day and a 14-day advance purchase ticket is about 50 percent," Eaton said.

"Flying Tulsa to Atlanta on a seven-day advance purchase ticket is $740 and a 14-day advance purchase ticket is 48 percent less. And it's true market by market.

"We're trying to get companies to understand what makes travel expensive. Getting a hotel downtown, for instance -- if you shop competitively, you can save $100 a night ... on a three-star hotel that provides breakfast and free Internet access.

"Companies don't have to gut their travel plans. We can show them how to travel more efficiently."