"TRAVEL HAS BECOME SUCH A VITAL PART OF BUSINESS that for most companies, T&E makes up either the second or third highest expense category, behind personnel and IT," says Ed Gilligan, group president of global corporate services for American Express. In fact, he said, "businesses are spending more on Travel & Entertainment (T&E) than ever -- all the more reason to focus on a spending discipline."

This special section will cover the new trends in travel management that lead to cost reductions, better productivity and higher traveler satisfaction. You'll learn how the best-run companies handle travel policy and procedures. How they encourage savings through clever technology applications and the implementation of strategic sourcing initiatives. You'll also learn ways to save on hard and soft travel costs, keep employees efficient on the road, improve purchasing practices, and leverage volume to get the most out
of every dollar spent on the road.

THE ABCs of CORPORATE TRAVEL MANAGEMENT
How are the country's most innovative companies saving money on corporate travel?

Through a careful retooling of purchasing, the instituting of a series of best practices that ensure advantageous prices and service, and streamlining expense management, reporting and other administrative functions.

Here are a few best practices initiated by leading corporations that lead to consistent bottom line advantages:

CHOOSE A CAPABLE TRAVEL AGENCY PARTNER This may seem counterintuitive in the age of do-it-yourself-online travel reservations sites, but the fact remains that travel agencies are a vital part of a sound corporate travel management program.

Most major companies offer their corporate travelers a "bricks and clicks" arrangement, in which road warriors are encouraged to use an online product (see rationale below) when a flight, hotel room, and car rental reservation is straightforward, and a live travel professional at a business-travel agency when an itinerary is complex.

The true value of the bricks and clicks strategy became quickly apparent on September 11, when millions of passengers were stranded after U.S. air space was closed for several days. "Never did our customers need us more," said Ed Gilligan of American Express, whose travel counselors helped 400,000 stranded customers get home safely. "What companies can take away from this experience," Gilligan added, "is that travel agency partners aren't just travel advisors and facilitators; they're an important part of traveler safety and security."

RUN A FEW ECONOMIC MODELS to see precisely where travel policies and procedures can be improved. Some companies hire travel management firms (Connecticut-based Management Alternatives, and Washington, D.C.'s Caldwell Associates, are both well regarded) to help them assess an existing travel management program, make enhancements, and help with the change management that follows.

Many companies look to their travel agencies for help with running what-if scenarios as well. At Maritz-TQ3, a leading travel management firm based in St. Louis, clients have access to "OptiMiser" software, a patented
analytical tool that's used to objectively examine and analyze the key aspects of a T&E program: budget management, policy, supplier relations, reservation process, payment management and expense reporting.

To give an example, a major manufacturing client wanted an evaluation of its entire T&E workflow process. Following an initial assessment, including interviews with key management, focus groups with frequent travelers and travel arrangers, Maritz-TQ3 account managers identified the areas that promised the greatest return. By managing the RFP process for automated booking systems, charge card and automated expense reporting, the hard-dollar reductions in the cost of travel components (air, hotel, car rental) represented an incremental six percent of related spending. There were soft-dollar savings in internal processing costs as well.

In another case, account managers were able to help a New York-based, mid-sized client rationalize its airline contracts after making a series of corporate acquisitions. An analysis helped the company decide to immediately consolidate agreements, which improved its discount markedly. Besides which, the account manager knew that the timing was perfect: Two major airlines were caught in a price/market-share tug-of-war, leveraging the new purchasing strength to guarantee airline discounts of 25 percent.

BUILD A COMPREHENSIVE, EASY-TO-USE CORPORATE TRAVEL INTRANET SITE These help companies keep travelers informed on everything from policy (who can buy what kind of travel, including which airlines, hotels and car rental companies to use, and which kind of flights, rooms and cars that can be booked) to how to file an expense report. More often than not, companies with Intranets have attached online booking systems to these sites, so it's a quick leap from information to reservation. Add an online expense reporting module, allowing travelers to pull down details from a charge card "feed" right into an expense report template, and the tedious, detail-heavy expense report process is streamlined considerably. That means less busy work for travelers, less time handling paper for managers, and a direct path to the general ledger for travel data.

ENCOURAGE SELF-BOOKING Self-booking sites help companies save significantly. First, they save as much as 50 percent on transaction fees, which easily can run $50 per itinerary. Second, travelers who see a variety of choices invariably choose options that save their company money. Companies like Motorola, Lockheed-Martin and Citibank all have seen significant reductions in ticket prices when travelers researched and booked tickets themselves. And third, all of the system's users can book only with preferred vendors, and are automatically channeled to negotiated rates.

How do all these reductions add up? To a striking 20 to 25 percent, industry experts say.

WATCH MEETING SPENDING How do you create any kind of purchasing efficiencies when there are dozens, if not hundreds of small meetings being planned at your company every year, and no single person is overseeing how, why, and when they're booked?

One way to capture that kind of purchasing power is to pool meeting numbers with that of individual travelers. At Microsoft, for example, meeting-goers help the travel department meet its volume threshold with preferred carriers, which then guarantees future discounts.

A corporate travel Intranet also helps facilitate control over group expenses by imposing certain purchasing disciplines. Companies like Joseph A. Seagram & Sons, Hewlett-Packard and EMC are keeping meeting costs down by mandating that any offsite meeting be registered through a meetings page on the corporate Intranet. "It's not a big brother thing," said Earl Foster, Seagram's former director of global travel management, now a travel management consultant at Partnership Travel Consulting in Hawley, Pennsylvania. "It's more that anyone planning a meeting can see who else may be holding an event in the same city at the same time. If they can piggyback a few days, or hold an event at the same time, they can get preferential room rates with a multi-meeting contract."

USE A SINGLE PAYMENT SYSTEM to capture vital data and to earn benefits. Universal Air Travel Plan (UATP) was actually the world's first charge card, and remains the only one exclusively for corporate travel expenses. It's issued by individual airlines directly to corporate customers, or subscribers, who may purchase tickets from any participating airline or travel agents, and then receive a consolidated statement of all air/rail charges from the card-issuing airline.

Several billing options allow corporations maximum flexibility and choice. While the airfare portion of a UATP card is normally centrally billed to the corporation, either a Visa or MasterCard co-branded charge card handles other T&E expenses. These co-branded cards can be set up so that non-air charges are billed to individuals or centrally to a business. UATP also offers corporate customers the option of setting up a cardless, or ghost account for centralized control and management.

What's particularly interesting about UATP is that it helps companies save on a hidden air travel cost ­ the vendor fee. When airlines pay less to a charge card company for vendor fees, explains Richard Crum, president and chairman of the board for UATP, "they can pass along the savings to their customers. When you're talking about two percent of an airline ticket, multiplied by hundreds or thousands of business trips a year, the savings can really add up quickly."

The redesigned UATP program includes a new automated back-office system for reporting that allows online access and expanded travel insurance. The ability to make payment via electronic funds transfer also helps companies shave costs through streamlined administration, Crum said.

Diners Club's corporate card program offers everything from free, comprehensive insurance on rental cars to a generous airline-miles-for-dollars program, to replacement of luggage and its contents if they're lost, stolen or damaged. Diners Club has also recently re-released Carte Blanche as a premium card expressly for U.S. based international business travelers. A cluster of privileges includes access to many of the world's most exclusive golf courses, free companion airline tickets, a 24-hour personal global concierge and complimentary international cellular phone rental. The card is accepted everywhere the Diners Club card is ­ with nearly six million merchants in more than 200 countries.

American Express has a number of corporate- and purchasing-card products that also offer a series of benefits for frequent travelers, including free upgrades, free companion tickets, access to airport lounges and insurance coverage. One of the newest types of cards, the Executive Corporate Card, provides the expertise of senior travel counselors to make or change travel arrangements, and to advise on ­ and handle, when appropriate ­ problems, if they arise on the road.

STRATEGIC SOURCING INITIATIVE
Strategic sourcing is a purchasing technique successfully being used by scores of companies to help them make intelligent selections of suppliers and leverage their buying power. But does trying what works for the purchase of computers and office supplies translate for travel?

According to Scott Gillespie, principal for Travel Analytics, the answer is a resounding yes. "Sourcing for travel is growing exponentially," he says. "First, it's a huge part of a company's controllable costs. Second, it's so visible. So when a company begins a sourcing initiative on an enterprise basis, travel is typically in the first wave of commodities to be considered. The higher-ups want to show that they're serious about cutting costs, and travel gives senior management the opportunity to walk the talk, since they're the ones who travel."

While sourcing methods do work for the purchase of hotel rooms and car rental, it's airline spending where most companies should focus, Gillespie said, because that's where 45 to 55 percent of a T&E budget typically is, and because airline pricing is so complex.

Sourcing for air typically begins with a city-pair "diagnostic," which analyzes route data (for instance: Chicago-Dallas) to assess a corporation's ability to move market share among airlines. Then, there's measurement of the major carriers' overlap and coverage potential. The next step is to work out a what-if scenario to calculate potential savings of various combinations of airline partners.

How effective is the exercise? For most companies, it can immediately reduce airline costs by five to twenty percent. For Chevron, Dell, Microsoft and Coca-Cola ­ all Travel Analytics clients ­ by shifting travel volume to a particular airline, or switching airlines on certain routes, each has been able to save millions of dollars per year.

"Any time you can increase competitive tension among suppliers and demonstrate that you can move market share, you have an opportunity for price relief," Gillespie explains. "One airline may not offer any discounts whatsoever out of its hubs, for example, but another carrier that has less frequency at those airports may be very eager to deal. And then the savings go right to the bottom line."

ALTERNATIVES to TRAVEL
What's the surest way to save money on travel? Travel managers have a two-word solution: Don't go.

They're not entirely facetious. One of the fastest-growing trends in travel management is the use of videoconferencing, which is growing in popularity as the technology improves and participants become more comfortable with the medium.

Some companies, like Chicago-based AON, have determined that videoconferencing is such a viable alternative to travel that they've installed dedicated, networked videoconferencing facilities in 46 AON locations around the world. Employees are subtly encouraged to use the rooms on the corporate travel Intranet site: there's a tab called "travel avoidance" right next to the tab for airline reservations.

For companies that don't (or don't yet) have facilities like AON's, there are still plenty of ways to use videoconferencing without any upfront expenses. Some commercial sites, like the Digital Sandbox in New York City, and many hotels and conference centers, like the Hilton Lakes Executive Conference Center in Dallas and the Hyatt Regency San Francisco Airport, feature the fiber-optic lines and bandwidth that support videoconferencing and data transmission to multiple sites.

Other companies are turning to virtual meetings, using Web conferencing applications on participants' laptop and desktop computers.

Participants log on to a Web site, type in a password, and take part in some sort of meeting, demonstration, announcement or tutorial. The fee can be based either on the number of meeting participants or the amount of time the conference uses. Anyone who misses a live Web conference can play back the recorded version.

At Honeywell, virtual meetings are used to help different research and development teams share information with product testers located in various manufacturing plants around the world; participants share control of the screen and whiteboard during collaborations. Companies are also using virtual meetings for training and internal communications, as a way to introduce a new product and get feedback from potential customers, and as an alternative to a road show. At Medtronic, teams use Web conferencing for training sessions, brainstorming, product development, weekly status meetings, and meetings with vendors and partners.

Major players in Web conferencing include WebEx, PlaceWare, Raindance Communications, BT Videoconferencing Services, Sprint Video Conferencing, AT&T, and Kinko's, which has hundreds of videoconferencing rooms at many locations around the world.