Save up to 30% on travel costs: Amex

By Reiner S.

HONG KONG (JP): Companies can save up to 30 percent on travel and entertainment expenses by adopting the best travel management practices which include reducing cash advances for travelers and streamlining the administration process, according to the world's leading travel service provider.

Tim Johnson, head of American Express travel services group, said in an Amex travel management forum here last week that in the wake of the current economic crisis, the saving measures would be even more compelling as companies in the Asia-Pacific region were expected to spend some US$100 billion this year on airline tickets, hotel rooms, business luncheons and rental cars.

"While the economic downturn has provoked some rationalization of the costs of both people and real estate, little focus has been given to the savings potential within the third largest category, travel and entertainment expenses," he said.

"We can help companies save up to 30 percent of their total travel and entertainment expense," he added.

Gregor Lochtie, director of Amex consulting services, said that despite the year-long economic crisis, there had been very little slowdown in the amount of travel that corporations were sending their employees on.

He explained that the reasons were because companies that trade in more than one market still needed to travel to manage their business and investments, and companies in the region were being encouraged to look for export markets to pick up the oversupply caused by contracting domestic markets.

Lochtie pointed out that there were four key fundamentals of best travel management practices that companies had to embrace in order to make significant savings in their business travel expenses, including by writing down their travel policy and designating a single travel agency.

A single travel agency can provide complete information on travel patterns and expenditures which can be used primarily to negotiate rates with hotels and airlines, the two largest sources of travel expenses, he explained.

He said that in terms of payment methods for travel expenses, it was very important to reduce cash advances because, from a company's point of view, it represented negative float as cash was dispersed before expenses were incurred.

"Our research has shown that people take more cash than they need, earlier than they need it; they use cash to pay for items that can be charged," he said, adding that the amount of cash advances could be put to better use somewhere else in the company.

He also recommended minimizing the use of central bills and invoices, in which a company directly received a single invoice from a vendor such as an airline or travel agency for all corporate activity.

"Central bills can be an administrative nightmare because they are difficult to reconcile," he said.

He suggested companies issue a multipurpose corporate card like the Amex corporate card which allows employees to charge all types of travel purchases on a single card and allows cash advances.

Lochtie said that expense processing was probably the one thing that took the longest and was the most prone to errors.

He said that because the cost of expense processing could amount to some 8 percent of total travel spending, many companies had started to automate some of the process.

"Automation is a relatively simple but highly effective step for companies to take in this area, with the added benefit of eliminating rework," he said.

Johnson said the travel industry must also change its way of doing business due to globalization and fast development in technology.

He explained that partnerships would be critical as the past rebate-based brokerage role of a travel service provider had started to shift into a provider of an integrated expense management solution.

"However large you are, in such a complex and diverse global marketplace, you never have all the resources you need, which is why partnerships and alliances have become so critical to success," he said.

"Amex has long recognized the value of partnerships," he added.

He pointed out that Amex had developed the partnership concept by forming joint ventures with other companies in the travel industry, including with Australia's Qantas, the ACCOR hotel chain, and travel company Havas Voyages of France.

Johnson said Amex's groundbreaking partnership was the one developed with Microsoft to provide an interactive travel self booking software, called the American Express Interactive (AXI), which can help companies automate the expense reporting process, reduce administrative costs and achieve higher levels of compliance with travel policy.

"AXI has already been successfully launched in the U.S., and will be available in some markets in this region this year," he said.

He added that Amex had several smart corporate card technology projects at the testing stage, including those with partnerships with American and Continental airlines and the Hilton International.

"These smart cards will enable business travelers to move through airports and hotels more easily, taking advantage of automated boarding passes and check-in and check-out procedures. The smart card application opportunities for travel management are limitless," he said.