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CORPORATE TRAVEL in Asia has seen drastic changes over the past few years. Firms which previously based their travel policies on the kind of socio-economic attitudes that have characterised Asian business have now realised that the travel budget needs a drastic cut.

The financial crisis of 1997-98 put paid to the notion that executives could freely spend while on a corporate junket.

Soaring business travel costs have only reinforced the need to make substantial travel savings. Greg Treasure, general manager of corporate travel specialists Carlson Wagonlit, believes Asian firms are clearly tightening their purse strings.

'Organisations are becoming tighter and far more focused on making savings,' said Mr Treasure.

The American Express Airfare Index for the Asia-Pacific region provides evidence of the rise in corporate travel costs. Business class fares were 7.3 per cent higher for the fourth quarter than they were in the same period last year.

Of these, routes to Europe saw the greatest increase - up 20.7 per cent over the past three years. Routes to the Americas and North Asia also saw double-digit increases over the same period.

Travel policies, therefore, have become more rigid. While Mr Treasure acknowledges that some companies require a degree of flexibility, frequent flyer executives have begun bemoaning the strict adherence with which they must follow travel plans.

Part of the reason for this is the massive increases in business travel over the last two decades. In the United States alone, firms spent US$182 billion (about HK$1.4 trillion) on business travel last year, compared with US$70 billion in 1982. Globally, about US$396 billion is spent annually on business travel.

According to Mr Treasure, corporate travel now usually ranks as a company's second or third cost-line.

'Large multinational companies can spend over US$50 million a year,' said Mr Treasure. 'Travel carries a huge load.'

A company like Carlson can usually negotiate discounts of 15-20 per cent on air fares and hotel rates. 'Depending on volume and travel patterns and behaviours, prices will be negotiated with select suppliers,' said Mr Treasure.

'Travellers must be on the right products. Not their frequent flyer programmes.'

Mr Treasure also believes that the emergence of new markets has increased the need for executives to travel the world.

'Technology and globalisation is increasing the demand on travel,' said Mr Treasure. 'New markets are being opened up.'

Advances in the Internet were supposed to decrease the need to travel. In particular, video-conferencing was expected to minimise the need for executives to fly halfway across the world to carry out a face-to-face meeting.

However, the statistics show otherwise. Harold Stanley, managing director of corporate travel management firm Travelco, puts this down to the birth of new markets across the globe and expects business travel figures to rise again next year.

'The number of people participating in business travel next year will only rise,' said Mr Stanley.

American Express recently released its biennial Survey of Business Travel Management, which examined 424 large US companies. The survey displays how complicated a process business travel has become. From negotiating discounts and rebates, to incorporating preferences and demands, the area has become a treacherous one to navigate.

And the volatility of air fares and hotel prices only makes matters more confusing for travel managers.  Worldwide, hotel prices are also on the rise. The survey reports that popular business destinations have seen the greatest price rises.

One important area where savings can be made is through greater automation of bookings. In this respect, the Internet has proved a boon for corporate travel managers, who are now able to operate in a more 'paperless' environment. Online booking systems also serve to trim costs.

The survey identified a number of tools which can be used effectively to cut travel costs. One of these is to charge the costs back to an individual department or traveller.



Curbing flyaway costs big mission for global firms