NEW YORK - November 13, 2000 - A comprehensive survey by American Express reveals that, after several years of skyrocketing business travel prices, travel and entertainment (T&E;) costs have climbed a notch to become the second-largest controllable expense at U.S. companies. In response, corporate America has ushered in a new get-tough era of sophisticated T&E; cost management.

According to the recently released 10th biennial American Express Survey of Business Travel Management 2000-2001, many U.S. businesses have embraced cutting-edge strategies and technology to rein in T&E; costs and enhance service to employees - tools previously applied only by the most progressive travel managers.

"Over the past four and a half years, the average airfare bought by business travelers has risen an incredible 40%, catapulting T&E; to the second-largest controllable expense at companies today from its traditional third place behind salaries and data processing," said Rusty Carpenter, Vice President, American Express Consulting Services. "Now, only salaries eclipse T&E; as a controllable corporate expense. So, there's a new urgency out there in corporate America to rein in spiraling T&E; costs, and companies are becoming more aggressive in implementing innovative strategies and technology to help."

U.S. T&E; Spending by the Numbers
American Express estimates that by the end of this year, large and mid-size businesses in the U.S. will spend $157.1 billion on managed T&E; expenses, up 8% from $145.4 billion in 1998.

The new Survey, which polled more than 400 large and mid-sized companies around the country on their travel management practices, reveals that air travel consumes 45% of the average company's T&E; budget, while 17% is devoted to lodging expenses. Firms allocate 10% of T&E; dollars for car rentals, another 10% for meals, 8% each for entertainment and for the fastest-growing category: telecommunications costs. The remaining 2% covers other expenses, such as taxis, tips and tolls.

Technological Solutions at Forefront of Cost Control
A significant number of companies today are turning to technology, such as Web-based applications, to help cut T&E; costs. According to the Survey, 21% of respondents said their companies have implemented an online booking system. Another 44% report that their firms plan to do so within three years.

"Online corporate booking systems have passed the experimental stage," said Carpenter. "Companies are incorporating them into their cost-containment programs as recognized, proven tools - not only to cut airfares but also to slash the administrative cost of booking."

New Financial Strategies
The growth of online booking and the reduction of airline commissions have not substantially altered the travel agency's role: 89% of this year's respondents said their companies use a dedicated travel agency, consistent with previous surveys. What has changed dramatically is the financial relationship with the agency. The most common arrangement today is a transaction-fee contract, which 29% of the respondents reported having. Another 21% have management fee contracts, while only 12% have a rebate or commission-sharing arrangement

"Companies have dropped the old commission-based way of buying travel services in favor of a more tailored fee-based arrangement," said Carpenter. "Clearly, for much of the corporate world today, it's more advantageous to select and pay for services that travelers actually need - rather than tying the agency compensation to the revenue received from airline commissions, which is beyond their control."

Negotiating Deals With More Airlines
In response to rising prices for airline travel, companies are getting more aggressive in negotiating with airlines and encouraging use of non-refundable fares. According to the new Survey, 63% of respondents said their companies negotiate discounts with airlines, compared to 44% in 1998 who said their firms had discounts. Of firms with negotiated air deals, the largest group (28%) has discounts with more than three airlines.

Travel policies at 65% of companies surveyed encourage use of non-refundable fares, while 11% of companies require employees to use them when available. The result is that among those two-thirds of companies that encourage their use, on average, respondents estimated that 57% of their tickets are in a non-refundable fare category.

Corporate Card Usage Rises
The new American Express Survey also reveals that corporate cards continue to gain popularity among companies as a convenient way to pay for T&E; and provide service to traveling employees. The largest proportion of respondents, 74%, said employees at their firms use corporate cards to pay for T&E;, compared with 72% in the last Survey.

Cash is quickly going out of style - only 28% said their firms issue cash advances to employees to pay for travel. In the last Survey, 67% issued temporary cash advances.

About The Survey
Information for the American Express Survey of Business Travel Management 2000-2001 was obtained from telephone interviews conducted earlier this year with a target sample of private-sector U.S. businesses operating across major industry categories with minimum annual revenue of $50 million.

The target sample was employed to ensure representation of large and mid-size companies that are likely to have managed travel programs in place. However, within the targeted parameters of overall revenue requirements and industry groupings, respondent companies were selected at random. A total of 424 interviews were completed.

The full edition of the American Express Survey of Business Travel Management 2000-2001, an American Express Consulting Services study, is available for $450 from 1-800-483-5020. Discounts are available for American Express corporate customers.

American Express Corporate Services, which includes the Corporate Card, Corporate Purchasing Card and Business Travel Services, in addition to the Consulting Services group, assists companies in managing and controlling their business travel and purchasing expenses. It is a unit of the American Express Company - a diversified worldwide travel, financial and network services company founded in 1850.

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