A strengthening economy is giving companies more confidence to loosen the
purse strings on business travel – but only a little bit.
Corporate travelers will probably take more trips next year, but they'll do
it with only slight increases to the overall budget, consultants say.
Travel spending will rise 4.6 percent in 2005, according to the national
hospitality group of Marcus & Millichap, a real estate investment brokerage.
Other industry forecasts will be released in October.
Travel managers are stretching their dollars by using deeply discounted
airline tickets and curbing employee expenses.
"Cost containment is here to stay," said Ruth Philpott, general manager of
hotel procurement for American Express Business Travel's consulting
division.
Companies remain cautious because the economic recovery has been so
unsteady.
But the balance of power is beginning to shift away from corporate travel
buyers in the $200 billion industry.
•Hotel companies are raising prices and avoiding two-year contracts that
lock in rates.
"With the market strengthening, we don't want our hands tied," said Feliz
Jarvis, vice president of sales for Irving-based La Quinta Corp.
•Travel managers are locking in rates in peak occupancy periods – which were
rare in the slump. Hotels assign higher prices when demand is high, just as
airlines do.
Dallas-based Wyndham International Inc. will be more selective in offering
its corporate discounts in certain markets where demand is expected to be
strong next year, said Andrew Jordan, executive vice president of sales and
marketing.
For large companies that have been trying for years to control travel costs,
the challenge has been to eke out additional savings.
7-Eleven Inc., the Dallas convenience store giant, has focused on fighting
for the best rates in key cities where it has field offices or regional
distribution centers.
7-Eleven also looks to leverage its size, asking to have fees waived for
services such as breakfast or high speed Internet when the company brings in
a group of travelers, said spokeswoman Margaret Chabris.
Dallas-based Texas Instruments Inc. is pushing more of its corporate
travelers to use an online booking tool for simple itineraries to save on
travel agency fees.
It has also reduced the number of hotels it uses to leverage buying power,
said Marie Hill, a purchasing manager for TI's global travel program.
Small companies are also developing formal programs to control costs.
With only 25 employees, CDG & Associates Inc., a Carrollton software
consulting firm, doesn't have its own negotiated discounts with travel
suppliers, but it's hoping to gain buying power by using a corporate travel
agency.
Until recently, CDG's travel costs were typically billed directly to its
customers after work began. But in a cautious spending environment, the firm
must now include travel in its initial contract proposals.
"Clients are very sensitive about costs, so we have to be hyperaware of
every penny we spend," said Deborah Driskill, CDG's senior vice president of
sales and marketing.
Another industry shift is the growing acceptance of online services from
Travelocity, Expedia and Orbitz, which have been expanding from the consumer
market to business travel.
Those sites boast reduced booking fees and greater acceptance by travelers
who already use them for leisure travel.
And corporate customers have become more willing to consider using
discounted pre-paid "merchant" hotel bookings.
"If a traveler is already going to buy a nonrefundable ticket, adding a
hotel room with a $25 to $50 cancellation fee isn't that much of a hurdle,"
said Scott Hyden, general manager for Travelocity Business.
(www.dallasnews.com)
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