Traveling Workers Told to Trim Expenses

March 5, 2008 -- Faced with a weakening economy, more companies are targeting travel and entertainment expenses.

"Everyone's starting to think about what's going to happen if there's an economic downturn," says Adam Weissenberg, who heads Deloitte's travel industry consulting division.

"Travel is one of the more controllable expenses."

Penny-pinching strategies vary. Some companies are asking employees to travel more cheaply by booking advance-purchase airline tickets, less-fancy hotels or more-fuel-efficient rental cars. Others are forcing them to cut trips or replace them with audio, Web or phone conferences.

"Our CEO (Fred Festa) has put out a mandate to cut travel costs. He wants to reduce it as much as possible," says Guy Welty, global networks manager for W.R. Grace & Co., a Fortune 1,000 company with 6,400 employees in 40 countries.

Now, the materials and chemicals company lets people travel "only when absolutely necessary," Welty says. As a result, conferencing use is soaring, especially with offices in Asia, he says. Last year, conferencing saved W.R. Grace more than $5 million in travel costs. More savings are expected this year.

Some companies are shrinking trips by creating more obstacles.

United Rentals, a publicly traded company based in Greenwich, Conn., with 11,000 employees, requires some travelers to obtain supervisors' approval before booking, says Megan Adams, United's purchasing chief. The new rule, implemented in January, will cut about 20% of their trips, she says.

Travel cutbacks aren't limited to big corporations. Fielding Fowler, a professional comedian from Saginaw, Mich., says he's increasingly being put up in cheaper hotels or having to share a four-star room with another comedian. Comedy clubs, bars and colleges in cities such as Chicago, Cleveland and Columbus, Ohio, are spending less on guest lodging, he says.

New travel policies and stricter enforcement will cause the average U.S. hotel occupancy rate to fall slightly to 62.6% this year vs. 63.2% in 2007, says Bjorn Hanson, chief lodging consultant for PricewaterhouseCoopers. Tighter policies will fuel "the largest decline in U.S. hotel occupancy since 1999," excluding the dramatic cuts in travel post-9/11, Hanson says.