Domestic

Corporate Travel Cutbacks: How They Affect You

Did you enjoy your last business trip? We hope so, because it may be your last business trip. Here's what to expect as the recession stresses company travel budgets, and how you may be asked to meet the challenge.

When former General Motors CEO Rick Wagoner had to downgrade his business travel, you knew the rest of us couldn't be far behind.

Called to Washington to plead for government help for the embattled auto giant, Wagoner flew, per usual, on a corporate jet. But called back a few weeks later, his mode of transport was decidedly different--two days in a Chevy Malibu.

Wagoner's downgrade was as much due to public relations as corporate economies, but in the face of a severe recession, even companies not in trouble are cutting back on travel expenses. According to a recent survey by Orbitz Business Travel, 79 percent of respondents said they're being pressured by management to cut trip costs. Some ways they're doing it:

--Fewer trips. Previously where travel was the rule for internal meetings and training sessions, these days a trip to the videoconference center is common. (This one step reduced Procter & Gamble's travel budget by 20 percent.) Travel is still the rule when visiting customers or prospects is the reason, but travelers now are more pressured to bring back that sale for management to feel the trip was justified.

--More restrictions. Multiple levels of management approval are now often needed to travel, and trips need to be arranged through company approved websites, not a favorite travel agent. The websites are pre-programmed to deny reservations at higher costs or to ask for reasons and notify bosses if pricey options are chosen. One business traveler resisting the trend, Tom James, was quoted in USA Today as saying, "I have no interest in going online and fooling around. Some swear by it, I swear at it."

--First Class? Increasingly, the message is "forget about it", and often Business Class too. On a recent survey conducted by banking giant UBS, 56 percent of corporate travel managers have either eliminated premium class travel or tightened requirements for it. Companies are also buying non-refundable tickets, reasoning that a change fee, if it must be paid, is still less than the extra cost of an unrestricted ticket. What's more, such changes may outlast the recession, says Frank Schnur of American Express Business Travel. Quoted in the Wall Street Journal, Schnur explains that, "they ratchet [travel policy] tighter and it typically remains tighter."

--Share and Share Alike. Companies have cut back on multiple attendees to conferences or other events, and when several are sent, they're encouraged to share. Carpool in a van instead of renting several cars. Share hotel rooms if travelers are the same gender. Not share meals ... yet. But travelers are urged to book hotels with free breakfast, and some are being asked, "how about eating at home before heading to the airport?"

Some wonder if such measures are overkill--whether the savings significantly impact profitability and whether they exact a toll on employee efficiency and morale that's worth the price. A Wall Street Journal reader identified as "Chris B" thinks not. "Try to hit the ground running after 16 hours in coach with no sleep," he writes. "Any shareholder who thinks this is smart is pennywise and pound foolish."

Fortunately, there are ways to accommodate or even come out ahead in this situation. In tomorrow's Wing Tips, we'll tell you some.