Battening Down the Hatches On Spending

February 4 2009 by Chris McGinnis
Comments (1)

batteningdown.jpgWhen American Express talks, the business travel community listens. Last week, the travel behemoth released a new study that details how companies are controlling travel costs in an economic downturn.

While the report was written for travel managers and procurement types, let me translate it into language road warriors will understand.

The report says that companies will be holding employees accountable. This means you are going to be getting plenty of edicts from management to cut your travel costs and if you don't, you'll be asked why. Your company is going to try and explain the financial implications of out-of-policy travel spending and will emphasize that the sacrifices you make on the road could help save your job.

Second, the study found that companies will be analyzing your travel spending data more closely. This means it's much more likely business travelers will be asked to use a single credit card for travel purchases. This should help your company gather the data it needs to better understand its spending trends.

Companies will take that data and use it to negotiate optimal pricing with suppliers. For example, your company could go to a supplier and say, "According to our credit card data, we spent X dollars at mid-priced hotels in Dallas last year. Give us a deal and we will send ALL our Dallas travelers your way this year." The same thing goes for negotiations with airlines or rental car companies.

Suppliers will say in return, "That's great, but you won't get the discount until you prove to us that we are going to get X amount of business. If you don't meet these volume targets, the deal is off."

If these negotiations are successful, it means you are likely to be heartily encouraged (if not forced) to patronize only suppliers with which your company has specially negotiated deals.

Finally, companies are making changes for the long term. Once policies and procedures that show savings are in place, it's unlikely that management is going to loosen the travel spending reins any time soon.

Categories : Road Warriors

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    By Robert Berry on April 22, 2009 10:38 PM

    Cutting back on travel costs is one way that companies can reign in expenditures. Just judging from several corporate emails I have received lately, I verify that this new accountability is happening. One can hope that it doesn't get out of hand.

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