Friday, November 20, 1998

Sharing cabs, flying coach: Business travelers cut back amid uncertain economic times

By MAGGIE JACKSON

Associated Press

They're sharing cabs at AT&T and flying coach at Motorola. Grounded executives find it's hard to book a videoconferencing room at transmissions maker Sauer-Sundstrand.

Business travelers are increasingly finding themselves bumped to economy, told to forgo trips and pressed to defend expenses as companies shaken by the uncertain global economy slice travel budgets.

"We're questioning everything," says Rich Halliday, a globe-trotting design engineer for computer maker Hewlett-Packard, which has been belt-tightening to offset the economic troubles in Asia and Latin America.

People say, "'don't use the cell phone if there's a regular phone nearby,' " says Halliday, who usually travels more than 100,000 miles a year globally supervising new building construction for HP.

At 6 feet, 5 inches tall, Halliday has trouble fitting into a coach class airline seat. But nowadays, unless he uses his frequent flier miles to upgrade, he flies coach - even to Asia. Business class is out for now.

Companies long have been trying to cut the soaring cost of business travel. Many now have an in-house travel manager keeping a hawk-eye on travel budgets - the average company's third-largest expenditure. More companies are negotiating directly with hotels and airlines to get better prices.

Yet nowadays, companies are doing much more. As a result of the economic slowdown, nearly 60 percent of companies reduced the number of employees traveling and 40 percent changed their travel policies to cut costs in the past month, according to a survey of 450 companies by the National Business Travel Association.

Although the stock market has recovered from a summer fall and the Federal Reserve has cut interest rates to hold off a recession, U.S. companies are still being hit by troubles abroad and weakness at home.

Motorola cut travel and entertainment expenses in half in the past three months, partly by mandating economy class flights, even internationally, for some departments.

AT&T, which seeks a $20 million cut in its travel budget this year, suggests employees share cabs when on the road, book travel early and consider the necessity of each trip.

Jim Olson, product marketing director for AT&T's internet services, last year brought half a dozen colleagues to Comdex, the world's largest computer show. This week, he's running his department's booth by himself, and trading taxis for the free shuttle between convention sites.

"I can be very efficient," he said by telephone, shouting over the din of the annual Las Vegas show. "I've been collecting business cards frantically. It's working out real well."

At Hewlett-Packard, travel manager Phil Wilson practices what he preaches, recently holding a day-long meeting with Pacific Northwest-area travel agents at the Portland airport. "You can save a night's stay," chuckles Wilson, who has helped cut airline tickets issued to employees by 25 percent since September.

In an effort to keep lodging bills down, Wilson also doubled to four the number of his staff involved in this year's negotiations with 800 hotels worldwide.

Last year, many hotels raised corporate rates about 10 percent, but executives at some chains, including the Four Seasons, Ritz-Carlton and mid-priced Wingate Inns, say that, with occupancy soft+ening, this year they'll boost rates only 3 percent to 5 percent.

"I don't know if the party's over, but the party's winding down," said John Paul Nichols, chief executive officer of Wingate Inns. "The market is shifting from a sellers' market to somewhat of a buyers' market."

United, American and other major airlines, which depend heavily on business travel, are also scaling back growth plans next year due to the weakening global economy.

In the end, companies from Merrill Lynch to Motorola are learning that sometimes the best way to trim travel costs is by staying home - and using videoconferencing.

At Ames, Iowa-based Sauer-Sundstrand Co., where travel is down 25 percent, meetings via videoconference have risen 50 percent in recent months. "It's hard to book the videoconferencing room," laughs Mel Hill, director of telecommunications for the German-owned company.

Even CEOs are joining in. In September, Hewlett-Packard's chief executive officer Lewis E. Platt cancelled a trip to Asia. Then, for at least one of his Far East meetings, he traveled down one floor - to the videoconferencing room.