Rising fuel prices eat into travel budgets
— -- Dick Taylor has been hitting the road as a sales rep for 35 years. But now he's slowing down — not because he's tired. Fuel is just getting too expensive.
In the last month, Taylor's company told him to cut his business road trips and flights back by a third. "I'll try to keep in touch by phone and e-mail," says Taylor who lives in Jacksonville. "They could see the fuel prices going up … so we're between a rock and a hard place."
With a gallon of gasoline costing an average of $3.80 nationally on Monday, according to AAA, some businesses are coming up with a plan to keep rising costs at the pump and in the air from eating into their bottom lines.
Some are forgetting about airline loyalty, choosing instead the carrier offering the lowest fare. They're renting local trucks rather than driving long distances with their own fleets. If they know they're bringing the rental car back on 'E', they're prepaying for gas. And some businesses are starting to cut back on trips.
"All of our travelers are encouraged to try to do something electronic, whether that means something as simple as a phone call or a webinar, or to go to more electronic meetings," says Ralph Velasquez, an executive director of sustainability for a company specializing in construction materials, which sees travel cuts as a way to lessen the impact on the environment and employees' health.
The company also is requiring all its traveling staff to take a webinar on software tools that will help them figure out cost-cutters such as the best days to fly, what routes to take and whether to make a stop along the way.
"If we can effectively do that, we can see a 10% to 15% reduction in costs," Velasquez says. "We thought that was pretty significant."
Travel industry observers say there's not a widespread retreat from travel underway. But if fuel prices stay high and economic emergencies such as the debt crisis in Europe aren't resolved, companies may again pull back.
"In a worst-case scenario, we could see both of those impacts take away a great deal of the recovery we've seen over the last few years," says Michael McCormick, executive director of the Global Business Travel Association, an organization of corporate travel and meeting planners and managers.
A rebound reined in?
Business travel had been on the rebound, with expectations that spending on corporate trips would return to 2007's pre-recession levels by spring, McCormick's group estimated.
McCormick says that companies are likely to look for other ways to save money before putting a halt to travel, which is considered vital to a company's growth and ability to make money.
Often, he says, "the first thing companies do is look for ways they can economize without taking their people off the road, because they still have a business objective to accomplish. As things become more drastic, the number of trips either don't increase, or worst case, start to get cut."
Kevin Mitchell, of the Business Travel Coalition, an advocacy group for issues related to corporate travel, says that most big companies already have their travel budgets in place and won't alter them. But by the end of the year, he says, "that may change … if budgets begin to be exceeded."
