Executive Travel : Travel Management Change? It’s Automatic

The business travel squeeze is only getting tighter. Companies keep looking for ways to shave money out of the process. But while much of the cost has already been wrung from the travel itself, by flying with lower-class fares and staying in lower-cost accommodations whenever remotely possible, there is still one big area for savings: automating the arrangements.

That is the message Hal Rosenbluth of Rosenbluth International keeps hearing as he travels the country conducting travel focus groups with corporate executives. Rosenbluth heads Rosenbluth International, which, with $2.5 billion in annual sales, is the third-largest travel management company in the country, after American Express and Carlson Wagonlit. He met recently with corporate business travelers and their managers in Los Angeles and San Francisco.

It has become increasingly important to get out and talk to people, Rosenbluth said. “There are so many structural changes in the travel industry.”

And two of those changes have made the time right for automating travel management, he said. The first is the change in the way travel agents are compensated. The second is the growing popularity of on-line programs for travelers.

Travel agents are being squeezed by commission caps, which means it’s harder to get agents to take the time to find the optimal arrangements for a company, Rosenbluth said.

And on-line arrangement is already gaining momentum among travelers, who often wind up making their own arrangements by personal computer after hours, when they have more time to think about travel details, Rosenbluth said. Since it is happening anyway, progressive companies would do well to capture that trend and use it to their advantage, he said.

If companies don’t provide a way for business travelers to make arrangements that adhere to negotiated rates and other corporate policies, they will risk having their employees schedule themselves on unapproved airlines or make reservations in unapproved hotels. That affects both a company’s costs and its ability to negotiate better deals with travel companies, Rosenbluth said.

By automating and integrating various functions formerly performed by agents and business travel managers, no other person need be involved in the process, from the time a business traveler conceives of a trip to the final reconciliation of expenses.

It costs time and money for an executive to talk to an agent every time he or she wants to make a trip, Rosenbluth said. It also costs time and money for employees to collect and enter receipts for accounting purposes.

“Integration can remove hundreds of thousands of dollars, if not millions for companies who are really looking to get rid of expenses,” Rosenbluth said.

Such labor-intensive steps can consume as much as 30% of a travel budget, he said. “It’s one of those last frontiers where you can really, really wring the last bit of cost out.”

Travel agents recognize that the use of on-line reservations systems and other forms of automation is growing, and they’re working to become proficient in the new technologies, said David Love, spokesman for the 25,000-member American Society of Travel Agents, a trade organization in Alexandria, Va.

“Travel agents have been a little bit slow catching up with technology because they have traditionally been order takers,” he said. “You tell them what you want and they do it.” Now, however, many agents are functioning more like consultants, or trying to find niche markets in the travel industry.

As their expertise in on-line systems and database management increases, travel agencies will eventually be able to provide many of the automated services other travel management firms are talking about with smaller companies that can’t fund in-house automated travel programs, Love said.

Meanwhile, Rosenbluth is testing an “agentless” system, developed in conjunction with AT&T; and Wal-Mart. The reservations and expense management system is pre-programmed with information about all the carriers, hotels and rental car companies with which the company has negotiated terms and arrangements. When a business traveler makes a reservation, it’s automatically made with an approved provider at an approved rate. Too often, business travel is done on non-negotiated terms because the traveler or the agent doesn’t stick to company policy, Rosenbluth said.

There’s no reason that steps such as booking rental cars and confirming airplane seat assignments can’t be done automatically, he said.

The system then sets up an expense reconciliation form. The traveler enters expenses and the program automatically reconciles them so the corporate travel manager can tell how well the traveler is sticking to the budget.

Automated systems are not meant to replace the travel manager, Rosenbluth said, pointing out that his company is filled with travel managers.

“I believe the travel manager’s role is not only critical today, but most strategic for companies going forward,” he said. By automating the reservations and expense-handling functions, travel managers have more information with which to negotiate strategic deals with airlines, hotels and other travel providers, he said.

“The CFOs of the world are looking more at how the travel manager can be a strategic influence for the corporation,” Rosenbluth said.

Response to automated arrangements has been positive from business travelers in his groups so far.

“The business traveler himself wants to get where he wants to get with absolutely no hassles,” Rosenbluth said. “He wants the whole process to be as simple as possible--he wants to focus on the business, not the travel.”