HK firms lag rivals on cost control

PUBLISHED : Tuesday, 30 March, 1999, 12:00am
UPDATED : Tuesday, 30 March, 1999, 12:00am

Hong Kong companies need to rein in their travel and entertainment expenses and formulate more stringent travel policies for employees or risk falling further behind the rest of Asia, a report has found.

The American Express study also involving businesses in Malaysia, Australia, India, Singapore and Taiwan revealed Hong Kong companies spent an average of $2.44 million a year on travel and entertainment.

But while air travel was the single biggest component for companies in other Asian countries, Hong Kong firms spent more on meals and entertainment.

The biggest need for improvement was in travel arrangements. Only 22 per cent of Hong Kong firms surveyed had adopted travel management best practice, including using a single dedicated travel agency.

Doing so lessened a firm's risk of having to accept non-preferred - usually more expensive - deals, and gave them more control over information for travel budgets, analysis and negotiations.

In contrast, 69 per cent of Australian companies used a single agency, while 40 per cent of Singaporean and 39 per cent of Malaysian companies also adopted the practice.

The report also found one in five Hong Kong companies did not take action to enforce a travel policy, whereas in Malaysia and India, firms were much stricter, with only 2 per cent not enforcing policy.

While almost three quarters of all firms had guidelines for air travel in their travel policy, most failed to include simple requirements that would significantly reduce costs, such as using the lowest logical air fares.

In Hong Kong, only 18 per cent of companies will not allow employees to fly business class, although nearly half do not allow first-class travel.

Most Asia-Pacific companies were also losing money because they did not have an efficient payment method for travel expenses.

Most preferred cash advances, the most expensive payment method as opposed to corporate credit cards, which were more popular in Australia, Singapore and Hong Kong.

More companies relied on employees' charge or credit cards, which severely limited a company's ability to consolidate information about expenses, American Express said.

However, Hong Kong companies were ahead of their neighbours in negotiating cost-saving deals for hotel accommodation, with 75 per cent of them involved in such programmes.

They were also the best performers in the use of expense approval processes, with almost 75 per cent of companies requiring approval.