What businesses are doing to cut their travel costs - Financial Times ...

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8 FINANCIALTIMESMONDAYNOVEMBER 10 2008 Global Traveller Cash crisis sounds wakeup call THEBIGSTORY Roger Bray looks at the lengths to which companies are going to cut their travel budgets The long suffering road warrior, reading a list of ways to save money on trips suggested by American Express Business Travel, might be forgiven the urge to rebel. “Employees that stay together save together,” says the international travel management company in a 10-point plan to offset the impact of the financial crisis, issued from its New York headquarters. Some companies, it claims, are already asking employees to share hotel rooms. But while waiting for a colleague to finish shaving before using the bathroom may seem an economy too far, evidence is mounting that companies around the world are seeking to reduce the cost of business travel. How are they going about it? When KDS, the online travel and expense management provider, asked its clients how the downturn was hitting them, 54 per cent said they expected to have pruned travel costs by next March and 36 per cent said they had cancelled trips already booked. A survey by the Brussels-based Business Travel Coalition of corporate travel managers in 17 countries found that just over a quarter had implemented emergency cutbacks in recent weeks, over and above those made earlier this year. Of those, about one third had banned all trips temporarily. Roughly one in five had ordered cuts in travel spend, 45 per cent of those demanding reductions of 10 to 20 per cent. The findings indicated that there had also been a significant swing towards the use of low-cost airlines, while 30 per cent of managers said their companies were planning “above normal” investment in technology that might obviate the need to fly, such as video conferencing equipment. Besides more predictable measures such as demanding employees should forego business class flights, steps being taken to reduce travel include compulsory seven-day advance purchase of air tickets, avoiding overnight stays or, perhaps extending trips, visiting more customers in one go, requiring staff to stay in cheaper hotels and use compact or economy rental cars rather than more expensive models. A separate survey of corporate travel managers by the National Business Travel Association in the US found that the reintroduction of minimum stay requirements by airlines on domestic routes was having a marked impact, with “a significant percentage” encouraging staff to consider staying over on a Saturday night if the saving outweighed the additional hotel and meal costs. Many were urging travellers to compare the cost of airport parking with using taxis, and to use public transport if possible. They were also requesting employ- Shareandsharealike:astimesgettight,employeescouldbeaskedtomakecertainsacrifices Alamy BostonScientific Staff comfort still a priority Travel budget in Europe, the Middle East and Africa is about €30m, but the company is looking for a 5 to 10 per cent reduction. It has frozen all but essential, customerfacing travel (such as sales trips) and is encouraging others to use alternatives such as web conferencing. Employees are recommended to make “hybrid” flight bookings: travelling to North America in ees to share hire cars and fill up the tank before returning them, to avoid higher refuelling charges imposed by rental companies. Companies with large enough demand to negotiate discounts with airlines, hotel groups and other suppliers in return for providing set levels of business should start by ensuring employees do not jeopardise those deals by booking with, for example, non-preferred carriers. Small or medium-sized businesses with insufficient clout to secure such deals may not have that option. As Norman Gage, business travel director of the UK’s Advantage travel agents’ consortium, observes, if only one or two personnel represent the company on the road, it is clearly much harder to make economies by cutting the number of staff travelling. “SME guys are more hand-to-mouth. The often have no choice but to fly.” One company, whose business travel clients include a large number of individuals and small outfits is UK-based Trailfinders. Typically, they are not big enough to employ inhouse travel managers or to secure deals with airlines or hotel groups. In the current climate it is “very, very clear” that such customers are seeking ways to cut economy, for example, but returning overnight in business class. It has also been discussing whether to ask staff to stay in lowerrated hotels. But, says, Volker Spichal, finance director for EMEA, “the idea is that people who already have fairly long days should still have some degree of comfort”. “We are trying to set ceilings on costs, says Steve Gadd, its business travel director. “The crisis has acted as a wake-up call. Maybe the company secretary has demanded savings on travel. As a result we are getting inexperienced employees asking for our help to reduce spending,” he says. “Increasingly, customers who might have been happy to fly direct when times were better are pre- ‘Customers who might have been happy to fly direct when times were better are prepared to book indirect flights’ pared to book indirect flights – to India via the Gulf for example. That can add two to three hours to their journey times but it can save companies 20 to 30 per cent on fares. Others are switching from flag carriers to emerging airlines such as Jet Airways and Kingfisher. “It’s also clear that people are moving away from the very high price luxury hotels, the uber-brands if you like, to less expensive fivestar properties. At the same time a the amounts staff spend...We want them to consider how much they would spend eating out on their own account.” The company hopes to use information garnered via the staff online booking and expense reporting tool, supplied by KDS, to drive down negotiated air fares and keep tabs on staff spending – naming and shaming the most profligate. lot of travellers are dropping from five to four-star hotels.” Although it may seem contradictory, at least one travel management company, Yorkshire-based Redfern Travel, has decided to help clients avoid travelling – by offering them the option of online audio or video conferencing. Commercial manager Mark Bowers says: “The credit crunch wasn’t the driver, but there’s no doubt that it will focus people’s attention on the first question they should always have asked, which is: do we really need to travel? They are now more likely to ask it and if they don’t, their senior executives are going to insist that they do.” Even the way businesses pay travel management companies can make a difference to costs. Norman Gage says: “After the downturn in the early 1990s we saw a shift from airlines and other suppliers paying agents commission, to our clients paying members overall management fees. After 9/11 clients found they were travelling less but paying agents the same fees, so there has now been a big shift to transaction fees [fees paid for each booking or other service provided].” The switch away from commission has meant agents are under no SFR Flowers for the Host The Parisbased mobile phone network operator has a total travel budget, including transport and other expenses, of about €18m. Staff make some 18,000 trips a year. SFR succeeded in cutting its travel spending by 10 per cent last year and is now attempting to achieve a further 20 per cent reduction. With about 70 per cent of its travel already restricted to the use of trains, it has banned the purchase of first class tickets for trips of less than two hours. It has now also increased the minimum rail journey time above which employees are allowed to fly, from two to three hours. The company is planning to raise the time threshold beyond which staff may book business class on longhaul flights from three hours to five or six hours. At the time of writing a decision was still pending. Strenuous efforts are being made to maintain high use of the company’s selfbooking tool. Travel manager JeanFrancois Magne says this shows staff economic ways of travel, including advance purchase of nonrefundable tickets if they are confident the trip will not be cancelled. “To do that for each employee would be impossible for me and uneconomic even for a travel management company.” Staff who choose to stay with friends or relatives on the road get €15, not as some miracle solution to cut costs, says Mr Magne, “just to buy flowers or a bottle of wine”. pressure to push business class fares, he notes. “Previously they earned more from selling premium class but now they don’t care which class they book.” Automation also helps cut costs, says Mark Bowers: “A figure we have often heard from government travel sources is that by the time a train ticket has been sent out and an individual invoice issued – and maybe sent to the wrong department – the administration cost for one trip is on average £41. We have automated transactions, providing clients with ticket printers and invoicing all their trips together at the end of the month, which they say cuts the cost to £3.50. I take both the higher and lower figures with a pinch of salt but even if they save £10 on each transaction it is considerable.” Meanwhile other recommendations in the Amex list include reconfirming appointments rather than risk incurring flight cancellation fees; before embarking on longer trips, comparing the cost of recently-imposed fees for checked bags on some US airlines with that of the hotel laundry, which, if you really have to share a room might have other added advantages.
FINANCIALTIMESMONDAYNOVEMBER 10 2008 9 Global Traveller Safe and friendly place to sing your heart out EXECUTIVEGUIDE TOKYO Jonathan Soble is told where to go by an old hand In the battle of the Beatles tribute pubs, John Vail is an Abbey Road man. “I used to go to the Cavern Club years ago, but I heard their old band moved to Abbey Road (4-11-5 Roppongi, Minato-ku, 03-3402-0017) so I started going there. It’s a very friendly place.” Tokyo – where Mr Vail, chief global strategist at Nikko Asset Management, has spent eight years – is a place of wanton cultural mixing and near-infinite choice. Other cities may have Beatles tribute bands, but only the Japanese capital has a mini-industry of bars dedicated to the form. “I like it when both western and Japanese cultures are represented. I’m not the kind of guy who insists on ‘The subway is easy to use, except maybe in rush hour. It’s best to wake up early’ JohnVail ChiefGlobalStrategist NikkoAssetManagement sushi served the traditional way. I like fusion.” Mr Vail was born in Ohio and raised on Chicago’s North Shore. He watched Japan’s stock bubble inflate and burst during his first stint in the country from 1988-1992, as a fund manager with Fidelity. After returning in 2004 he joined Nikko – a big mutualfund manager that is now part of Citigroup – in 2006. “Tokyo is a lot more pricefriendly now,” he says. “It’s still really safe and the service is always impeccable. You never have to worry about being cheated. I never look at the coins the taxi driver gives me.” Hotels By Mr Vail’s reckoning, the Conrad (1-9-1 Higashi-Shinbashi, Minato-ku, 03-6388-8000), in Shiodome, southwest of Tokyo Station, offers Tokyo’s biggest, bestdecorated rooms. For high-style lobby tea service he recommends the Ritz Carlton (9-7-1 Akasaka, Minato-ku, 03-3423-8000) in Roppongi’s sprawling Midtown development, while the venerable Imperial (1-1-1 Uchisaiwai-cho, Chiyoda-ku, 03-3504-1111) in Hibiya boasts Tokyo’s “best old-fashioned bars”. Restaurants “I’ve never had a bad meal in Japan. It’s universally very high quality, and there is a huge amount of variety.” Nobu (4-1-28 Toranomon, Minato-ku, 03-5733-0070) offers its globetrotting brand of Japanese fusion at “surprisingly reasonable prices” in Toranomon, next to the Okura Hotel, while the New York import Union Square (9-7-4 Akasaka, Minato-ku, 03-5413-7780) grills Tokyo’s best western-style steaks. Sushi connoisseurs are known to line up at Tsukiji fish market at dawn, but even the lazy have little trouble finding tasty maguro, ikura and hamachi. “For sushi, there are so many places and it can be very inexpensive – or outrageously expensive, if that’s what you want.” Networking Few places attract moneyed dealmakers like the Oak Door (6-10-3 Roppongi, Minato-Ku, 03-4333-1234), a bar and restaurant on the sixth floor of the Grand Hyatt hotel in Roppongi Hills. “It’s definitely a place to meet people,” Mr Vail says. At ground level in the same complex is Heartland (6-10-1 Roppongi, Minato-ku. Tel: 5772-7600), where the crowd of 30-something expats spills out on to the street, drinks in hand. Where to sing karaoke “I’ve had some of my best nights out at Fiesta (7-9-3 Roppongi, Minato-ku, 03-5410-3008), a small karaoke bar across from Roppongi Midtown where you sing on stage in front of everyone. It’s amazing – you get professional-level singers and warbling old men, but it’s always fun.” For those who prefer to keep their ululations among friends, the similarly named Festa (3-5-7 Azabudai, Minato-ku, 03-5570-1500), also in Roppongi, offers thousands of English songs in private rooms for up to 30 people. On an afternoon off “Meiji Shrine is so serene. You feel like you’re a million miles away,” Mr Vail says of the wooded Shinto sanctuary just west of the city centre. He also recommends peoplewatching in neighbouring Yoyogi Park or along Takeshita Street in Harajuku. “It’s jammed on the weekends with young people wearing all sorts of odd outfits.” For indoor culture there is Roppongi Hills’ Mori Museum (6-10-1 Roppongi, Minato-ku, 03-5777-8600) and the nearby National Art Center (7-22-2 Roppongi, Minato-ku), with its Kisho Kurokawa-designed curving glass facade. “Even if the exhibit isn’t special, just being in the building is treat enough.” What to miss “I’ve never been up Mount Fuji but I’ve had a lot of people say they’ll never do it again. It’s single file all the way up this rocky path, and you’re just looking down at the footsteps of the people in front of you all the way.” Getting around town “I don’t own a car – you don’t need to in Tokyo. The subway is clean and efficient and it’s easy to use, except maybe in rush hour. It’s best to wake up early.” Ideal excursions “Take a one-hour express train to Mount Takao, with shrines and many nice paved and rough hiking trails.” In winter, the ski slopes at Karuizawa and Echigo-Yuzawa are less than two hours away by bullet train. Overnighters can stay at the Karuizawa Prince Hotel (Karuizawa-machi, Nagano, 0267-42-1111) or the Otani (330 Oaza, Yuzawa, Niigata, 025-784-2191), though there are “many wonderful oldstyle pension hotels everywhere”.
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What businesses are doing to cut their travel costs - Financial Times ...

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