- The Washington Times - Monday, July 23, 2001

Bill Weisberg doesn't travel on business as much as he used to.

The partner at the law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo says he has cut his trips by at least one-third over the last year as the firm and its clients like many businesses struggle to control their travel budgets.

"We ask is this trip nice to have or is it important," Mr. Weisberg says.

More and more companies are asking the same question trying to figure out which trips are a necessity, and how they can cut costs and maintain a manageable travel budget.

The economic slowdown and higher travel costs have caused about 77 percent of U.S. companies to reduce all but essential travel, according to a February survey by the National Business Travel Association, the Alexandria group that represents 2,000 corporate travel managers and travel service providers.

In April, the association found that 68 percent of U.S. companies have been affected by the slowdown of the economy and as a result have cut back on the number of employees who travel.

"Companies are tightening their belts because they don't know what's going to happen," says Eugene Laney, director of information and legislative services at the National Business Travel Association. "They are holding back."

"It's hard if companies are laying off people to continue at their same travel budgets," says Cheryl Boyer, a senior manager at PriceWaterhouseCoopers.

The travel cutbacks began in the third and fourth quarters of last year but became even more common at the beginning of this year.

"Since April we've seen a clear reduction in the amount of money [our clients] are spending and the actual number of people they're sending [on trips]," says Raiford Pierce, chairman of D.C.-based Executive Travel Associates.

The travel management company's overall sales are up this year because they have added new clients, but Mr. Pierce says business would be down 12 percent if the new clients didn't exist.

Businesses have gone through travel cuts before.

During the economic slowdown in the early 1990s, companies took a "crude knife to their travel budgets," says Kevin Mitchell, chairman of the Business Travel Coalition, an advocacy group for customers of the business travel industry. "This time around companies are much more thoughtful and are investing in people resources [to find cost-saving alternatives]. Some of the changes will be temporary but many will be permanent."

In a Business Travel Coalition survey of 62 U.S. corporations, the businesses said they expected to spend at least $1.7 billion less this year than the $6 billion they spent in 2000.

Finding alternatives

"Travel costs can be a tremendous wasted cost," Mr. Weisberg says.

Most of the law firm's clients have travel policies in place to make sure the lawyers fly the cheapest route. That means if the lawyer has to wait a couple of hours for a connection because that's less expensive than a nonstop flight, it's going to be done, Mr. Weisberg says.

Mr. Weisberg and his colleagues try to book one-day trips instead of staying overnight even if it means coming home at 11 p.m.

"Most of us, particularly those of us with families, like that better than getting home the next day," says Mr. Weisberg, who travels on average about a week per month.

Lockheed Martin is continually trying to find ways to cut its travel costs.

Over the years, the $25-billion Bethesda-based company has eliminated first-class travel and renegotiated contracts with its preferred air carriers. And it encourages employees to plan trips as early as possible to save on costs.

Recently, the company renegotiated its air carrier contract, gaining up to $100 million in savings this year.

"We do what we can to keep travel and entertainment [expenses] at a bare minimum," says spokesman James Fetig.

Some companies, like Lockheed Martin, have substituted teleconferencing and video conferencing for travel.

Mr. Weisberg uses video conferencing at least once or twice a week from his Reston office. But the majority of the firm's video conferencing usage is for internal meetings. The firm has five offices including its home office in Boston.

"Video conferencing replaces a huge amount of our internal travel," Mr. Weisberg says.

Companies that don't have their own video conferencing equipment can use services provided by businesses like Public Production Group, based in the District or even some Kinko's locations.

Public Production Group, which began offering video conferencing in September 1999, has had steady business from companies that are interviewing job prospects or from law firms giving depositions.

The company charges $200 an hour for rental of the equipment and the room at its Northeast office, as well as additional connection charges.

Mary Anne Caudle, business manager at Public Production, says companies save hundreds, even thousands of dollars using the video conferencing rather than paying for expensive air fare and accommodations.

Recruiting new hires is one of the top reasons why companies use Kinko's video conferencing service. There are several Kinko's in the Washington area that offer the service including in Arlington, Vienna and Rockville.

Video conferencing is quite effective as technology has gotten better. It's a cheaper and readily available alternative to travel, Mr. Mitchell says.

Airlines struggle

Airlines are feeling the biggest effect of the decline in business travel a segment that makes up at least 50 percent to 60 percent of airline revenue.

Companies are planning more in advance and even turning to discount airlines for their business trips.

Five years ago about 36 percent of corporations were using low-cost carriers. Now 71 percent of companies opt for discount airfare, according to the National Business Travel Association (NBTA).

Airfares have increased more than 45 percent since 1996. The average business fare cost $736 in 1996 compared with $1,070 in 2001, according to the NBTA's 2001 projections.

International business fares have skyrocketed. For example, a round-trip, business class airline ticket from Washington Dulles International Airport to London's Heathrow International Airport would cost a company nearly $7,000.

A recent NBTA survey says 68 percent of the companies would lift current policies restricting business travel if business fares were reduced.

For now, many businesses are requiring their senior-level executives to fly coach or requiring them to use other, less convenient airports to keep costs down.

As a result of slumping corporate demand, airlines have attempted to lower their ticket prices and offer special deals like two tickets for the price of one.

"Airlines are doing what they can to fill the seats," Mr. Pierce says.

But Mr. Laney says the offers come a little too late because companies already have their budgets figured out for the rest of the year.

The summer months are usually a slow time for travel anyway and that will likely continue through September. But some industry officials say business travel should start to turn around in October.

But Mr. Laney is a bit more skeptical and says the businesses won't increase their traveling until the spring.

"Ultimately people will have to get back on the road," says Vivian Deuschl, corporate vice president, external public relations for Ritz-Carlton. "There's only so much you can do over the phone and e-mail."

No cutbacks required

Ritz-Carlton has not required its executives to cut back on their travel but Ms. Deuschl is doing so anyway.

"It's the responsible way for an executive to behave," Ms. Deuschl says. "I'm more mindful than I was a year ago."

Ms. Deuschl has taken about 30 trips so far this year a little less than the number of trips she took during the first half of last year.

She says she tries to prioritize her meetings deciding which ones are a necessity and which ones she can pass on.

Other companies just can't afford to cut back on their travel because their industry won't allow it.

"We have not really cut back because face to face [contact] is important to us," says Kenneth Umansky, president of Arnold Worldwide in McLean.

Mr. Umansky, who travels a couple of times a week with trips to places as diverse as Richmond, Pittsburgh and Europe, says it's important in the advertising business to see a client in person.

"We're in the relationship business," he says. "We believe in seeing what the other side of the table is reacting to."



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