Procurement is key to cutting travel costs
American Express Business Travel reports survey results at ACTE event
By Susan Avery -- Purchasing, 5/19/2008 7:59:00 PM
Despite the uncertain economy, companies still want their employees to travel, and are, in fact, looking to procurement for help managing costs.
That’s according to results of a new survey conducted by American Express Business Travel released today at the Association of Corporate Travel Executives global conference and corporate travel world in Washington, D.C.
“Given today’s industry and economic dynamics, companies are seeking out strategies to take advantage of savings opportunities without sacrificing the effectiveness or scope of their travel programs,” said Frank Schur, vice president of consulting for American Express Business Travel’s Advisory Services in New York. “Travel is increasingly viewed as an investment, rather than a commodity to procure, and the partnerships and shared strategies created between procurement and travel departments are instrumental in maximizing the value of corporate travel and entertainment budgets.”
According to results of the Second Annual Strategic Sourcery Procurement Practices survey, 83% of respondents expect their travelers to take the same or increase the number of trips this year as compared to last year. However, in the face of rising costs for both domestic and international trips, 62% of companies are looking to procurement activities to produce savings of 5% to 15% this year, with another 19% expecting even greater savings. Over the past year, 67% of survey respondents credit procurement activities with creating savings for their travel budgets.
American Express Business Travel estimates incremental cost savings can range between 11% and 33% of a company’s total air spend.
Asked about the use of selected travel procurement practices, 53% of respondents indicate they are mandating use of preferred suppliers and 51% are applying demand management principles.
The majority of companies involve both procurement and travel departments in the selection of suppliers and more than half (53%) mandate use of these preferred travel suppliers by travelers. Another 51% actively manage demand of travel services.
Survey results also show meetings management is a focus for savings opportunities.
See: With travel budgets tight and rates high, buyers keep costs in check in ‘08 and For purchasing, the next strategic sourcing opportunity in travel is meetings management.
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