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Away on business: Online bookings grow

More companies are relying on employees to save money on their own travel bookings
/ Source: Reuters

For many business travelers planning a trip still means reaching for a telephone instead of keyboarding onto the Internet.

But that is changing, according to a new report which suggests that on-line travel booking is capturing an increasing share of the corporate travel dollar.

How far those inroads will go remains to be seen.

Companies trying to save money and cut the best travel deals are increasingly shifting responsibility for travel arrangements onto their employees through on-line systems, according to Susan Steinbrink, who wrote the report for PhoCusWright Inc. The company supplies the travel and tourism industry with research and forecasts.

Steinbrink's report estimates that about 23 percent of U.S. corporate travel bookings are now made online. That means about $18.8 billion worth of air, car rental and hotel industry revenue came from bookings made via on-line sites operated by the suppliers themselves or on sites such as those run by Orbitz, Expedia, Travelocity and other travel bookers.

The study estimates that such on-line corporate bookings will grow to 38.5 percent of total sales in 2006, when they are expected to reach $36.5 billion.

For comparison purposes, the entire estimated gross bookings for corporate travel now amount to $80.9 billion in the United States, a figure that will rise to $94.8 billion in '06, the report calculates.

Much of the expected growth, the report speculates, will come from mid-sized companies, each of which currently spend from $5 million to $10 million per year on travel.

In such companies "typically there is no travel manager, format travel policy or agency to manage the company's travel activities," according to a summary of the study. Employees in such situations typically pick up the telephone and make their own arrangements, going directly to travel agents or a variety of airlines, hotels and rental car companies.

In addition to Expedia, Travelocity and Orbitz, more traditional management companies such as American Express and Carlson Wagonlit "are wooing business and capturing shares in this lucrative segment," the report said.

But the companies being eyed as potential growth centers may not be easy pickings. Matt Hulett, president of Expedia Corporate Travel, calls the mid-market segment "the promised land" - attractive, but maybe not that receptive to changing the way business has been done.

He doubts unmanaged or lightly managed travel will disappear because the smaller companies involved, while looking for efficiency and value "may not have the means to get it" in terms of negotiated rates and services that bigger high-volume companies get.

Hulett says there are perhaps 300,000 mid-sized U.S. companies that spend from $1 million to $20 million each on business travel annually. Combined with smaller companies, they control about half of corporate travel spending, he said.

The balance of corporate travel in terms of money spent comes from the largest companies, which the traditional travel agencies have focused on, he added.

He said Expedia's experience in the leisure travel market has helped pave the way for corporate business, with about 1,100 companies signed on in the year since the firm began going after business travelers.

Rick Weber, vice president for business travel services at Orbitz, says "companies of all sizes have realized that, for no implementation charge, they can begin using an online travel program that increases employee adoption and drive down the company's travel management costs and overall travel spending."

But, he adds, "there will always be rogue travelers" using older booking tools, even if they are comparatively cumbersome and difficult to use. The pressure for change, however, could come from those business travelers who have become more and more familiar with easy-to-use online tools, he said.