Business travel - Going places?

What is the travel industry doing to win back business travellers after over two years of catastrophes, coupled with a global economic downturn? Accountancy looks at the airline and hotel industries and offers tips on ways to manage your travel budget.

Travel and entertainment ranks as the second largest controllable cost after salaries among typical businesses today, according to the American Express 2000-2001 biennial survey of business travel management. Between 10% and 30% of a company's indirect operating costs often relate specifically to T&E.

Against a backdrop of some of the biggest catastrophes to hit the travel industry over the last few years, including 9/11, foot and mouth, the Iraq war and the threat of terrorism, and SARS, companies can expect to be able to reap substantial savings on the cost of business travel.

'The airline industry has lost more money in the last two years than it has made in its entire history,' claims British Airways spokesman Richard Goodfellow (see p44). These catastrophes have coincided with a global economic downturn and the emergence of new technologies such as videoconferencing.

But while the full-service airlines are putting a lot of effort into getting closer to their corporate clients, many business travellers are being attracted to the low-cost, flexible airlines like Easyjet. So popular are the no-frills options that a consortium has been formed to launch the first airline to offer low-cost business class - Blue Fox Airlines - which is aiming to mount its first flight in spring 2004.

And when travellers get to their destinations they are being able to call the tune on hotel rates, since the hotel industry (see p48) has suffered in the same way as the airlines from the disasters over the last few years.

These have hit the conference market in particular.

The recently published American Express/AT Kearney European Expense Management Study 2003 reveals that there is plenty of room for improvement when it comes to companies managing their travel budgets. It found that the hidden administrative costs of business travel are as much as a quarter (23%) of the total travel bill. But there are basic steps that can be taken to improve this picture (see p51).

Companies are unwittingly missing out on up to 64% in cost savings in the management of their T&E expenses through inefficient, fragmented processing systems, says the study, which reveals that the largest direct T&E expense is transport (52% of the total bill), followed by hotel accommodation (18%) and meals (11%).

Potential savings are walking out the door, says American Express.

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