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Agents, Industry Confront Business Travel Challenges

October 20, 2008 By: George Dooley


A newly released survey by the Business Travel Coalition (BTC) designed to explicitly capture corporations’ responses to the financial crisis that has dominated news headlines this fall offers evidence of broad-based reduction of business travel and changes in corporate travel policies. The BTC also lists steps corporations and business travel mangers are taking.

The survey of 196 travel mangers from 17 countries, titled “The Financial Crisis & Travel Policy Changes: An Order of Magnitude Worse than 2000,” says many corporations began cutting back on air travel at the beginning of 2008 based upon worsening economic data but that, by mid-year, reduced business travel activities seemed broad-based.

“There is an eerie similarity in the current economic environment compared with the last cyclical downturn in the fall of 2000; however, there is an order-of-magnitude increase in the seriousness of the current situation and in corporate responses vis-à- vis travel policy changes this time around,” the BTC said.

Highlights of the survey include:

• 25.5 percent of survey participants implemented emergency travel cutbacks in past weeks as a direct result of the financial crisis. These cutbacks are in addition to those implemented by many corporations throughout 2008.

• 34.4 percent indicated that cutbacks have taken the form of straight-up travel freezes; 18.8 percent indicated that a mandated reduction in travel was between 10 and 20 percent.

• For those corporations that implemented emergency travel cutbacks, 68.8 percent plan to keep them in place “until further notice.”

• 34.4 percent indicated that during 2008 their corporation cut back on the use of major network airlines in favor of low-cost airlines.

• 50 percent of survey participants said their corporations were planning additional strategic investments for 2009 in substitute technologies to air travel such as video conferencing.

• 33.9 percent indicated that the investment in these technological substitutes to air travel will be at above normal or greatly-accelerated capital expenditure levels (compared with prior years).

• 54 percent of survey participants said they will be required by senior management to track cost-avoidance savings used to justify the investment in technological substitutes to air travel.

• 11.6 percent indicated they are instructing their travel management companies to offer technological substitutes to air travel at the point-of-sale, i.e. before travel products are purchased. Another 8.8 percent are considering doing so.

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. Moreover, many corporations are still monitoring the situation and have yet to make travel policy decisions.

Corporations are taking a number of steps to tighten travel controls according to the new BTC survey. This includes:

• Stricter policies on travel; lower class of air travel; lower star rating of hotel
• Looking at train travel vs. air travel
• Trying to do day trips instead of overnight 
• One person travels when usually two would
• Trying to not travel if a web or conference alternative could work, for example, a mid-project update
• Mandated seven-day advance purchase
• Combining trips; staying on road longer
• Meetings have had the largest cuts
• The company has employed an automated travel policy enforcement tool
• Trips have to be approved by more than one superior
• Review of trip reasons; pre-trip costs analyzed
• Analysis of car vs. taxi; conference call vs. face-to-face; evaluate benefits of conference/seminar travel 
• Downgrade booking class for international travel and/or require advance purchase discount tickets
• Follow treasury guidelines for Daily Subsistence Allowance; entertainment budget for clients/prospects is pre-approved
• Travel must be approved in advance regardless of the level of traveler
• Employees must use the automated booking tool; book seven days in advance
• Daily pre-trip reports feeding up management structure so that unnecessary travel does not occur
• All overseas travel subject to higher than usual level of authorization
• All long-haul flights to be approved at director level; all non-essential travel canceled
• Sending out exception reports
• More attention to low-cost airlines
• More customers per trip
• Freeze on premium travel— cannot buy business class or above, but can use upgrades from full coach to business on trips eight hours or longer for executives and 12 hours or longer for all other travelers
• Travel freeze on internal travel and specific reporting on spendign to senior executives
• Domestic airfare over $1,500 needs manager approval; international airfare over $3,000 needs manager approval
• COO sign-off on all long-haul travel 
• Infrastructure meetings, forums, inter-office meetings postponed
• Looking to move to lower-tiered properties; considering use of economy/compact vs. intermediate sized rental cars; limiting meal reimbursement allowances

“Those corporations requiring their travel management companies to offer technological substitutes to air travel at the point-of-sale doubled from 2001," the BTC reports. "The increasing use of low-cost airlines coupled with the recent plunge in oil prices and industry-level reduction in seat capacity should buoy the prospects for lost-cost airlines such as AirTran Airways, Frontier and easyJet. A global recession would likely help maintain downward pressure on oil prices through 2009.”

Visit www.businesstravelcoalition.com.


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