CFOs embrace online travel booking: online providers eliminate the middleman for routine bookings, which can reduce processing time and travel costs substantially. That's made finance executives advocates of these systems.

With savings estimated at 52 to 76 percent for each transaction, it's hardly surprising that Klaus Stegemann, CFO for Siemens Corp., the U.S. subsidiary of Siemens AG, would be a believer in using online travel reservations instead of working with a live agent. Siemens has used online booking since 2001, and in the U.S., its employees booked more than 270,000 air transactions last year.

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Larry Bennett, executive vice president of finance/CFO at the Dallas Market Center (DMC) of Dallas, a huge wholesale display center, says the DMC produces 2,600 tickets annually and has used online booking for two years, saving approximately $350,000 a year.

The online travel industry has come a long way, enabling CFOs to experiment and tailor their demand for meeting business needs while realizing cost savings. PhoCusWright, a travel research and advisory firm based in Sherman, Conn., projects U.S. online corporate travel transactions to grow from 39.4 million in 2003 to 56.4 million in 2006. During this same period, PhoCusWright expects offline agency share of business travel bookings to shrink from 62.3 percent to 47.5 percent.

Online booking is not the end of the offline agency, but a way to reduce its use when not truly necessary. "We typically find that companies save between 10 and 15 percent by booking online," says Ellen Keszler, president of Sabre Corporate Solutions for Sabre Holdings (parent of GetThere and Travelocity Business) of Southlake, Texas. "Companies can save up to 80 percent on agency service fees, as the traveler is doing a portion of the work that the agency would be doing."

For simple, routine flights that are made frequently to the same destination, booking online is virtually effortless. "At most sites, you can save repeat itineraries, so there is everything that you need and it is very quick," says Phil Guthrie, CEO of InTech Aerospace Group LLC of Dallas. InTech Aerospace has seen savings on 200 flights per year from agency booking fees and individual employee productivity. Guthrie adds, "Websites are not nearly as cumbersome and time-consuming today as some of the earlier sites were."

The travel agency still can play a valuable role, particularly when the destination involves multiple flights or foreign travel. There, the agent can analyze complicated fare rules to see if it's a good idea to break up the tickets, Keszler says.

Siemen's Stegemann agrees, saying, "We encourage all travelers to book trips online, with the exception of those who are coordinating multiple stopover trips because those require a dialog with an agent to find appropriate routes, times and fares."

"The online tool is great for normal everyday travel, but you often need the assistance in the complicated situations," Bennett says. "You provide focused personal care on the 20 percent of the time that you need it, not on every trip, as it used to be when you were dependent upon a travel provider."

Keszler points out that many online booking sites make "it easy to have itinerary queued to an agent in the fulfillment process to take a look rather than have it ticketed automatically."

This past May, the Association of Corporate Travel Executives (ACTE), in conjunction with corporate travel providers GetThere and Travelocity Business, issued research results on business travel. The study involved 374 BusinessWeek subscribers, comprised of senior executives with financial and procurement responsibilities (CFOs, senior VPs, executive VPs and presidents). These results were compared with two previous surveys that were conducted in March 2002 and September 2003.

Forty four percent of the respondents use online booking to reduce travel costs, the survey found, with 69 percent reporting significant cost savings related to booking travel online. When asked about the benefits perceived in utilizing online travel booking agencies, 83 percent of the CFOs cited lower service fees.

Investigating and Adopting Online Booking

Pilot programs being implemented to assess the merits of online booking can gauge the proper approach, based upon business objectives for each organization. For Guthrie and InTech Aerospace Group, a small business with 300 employees and only eight frequent fliers, the logical place for the initial trial was on short flights. Following the successful trial, all flights are now booked online.

For Bennett at the DMC, customer travel is a critical component of its success; as a wholesale trade facility, it hosts more than 150,000 visitors a year during market trade events. DMC performed a pilot program internally with one department of six associates and one coordinator prior to fully going online.

As an organization where high-touch customer service is paramount, Bennett opted to establish a call center of seven agents that assists with travel bookings and partner with a travel agency as an "electronic branch" for further expertise. "A fourth of the visitors book themselves, but the others use the call center, which uses online booking, so one can argue that most, if not all, our travel is booked online."

Siemens, a huge global enterprise, opted to launch an in-house online travel service several years ago. Initial testing took place the last half of 2001 and the first quarter of 2002. Following the successful tests, the system was gradually implemented throughout the company; by earlier this year, all Siemens units in the U.S. were using the service.

Siemens encourages all of its business units to use online travel services and believes the savings generated will build a natural case for compliance. However, its business units are somewhat autonomous and craft their own travel policies. "More than one-third of Siemens U.S. travel reservations are arranged using our online service," Stegemann says. "This resource has helped us reduce operating costs while maintaining the quality of our travel services."

More Willingness to Allow Travel

While there was growth in using online booking in 2005, the growth rate has curtailed from a compound annual growth rate (CAGR) of around 100 percent to approximately 33 percent, according to the survey. The slower growth rate appears to be tied to the decreased number of respondents citing that their company will focus heavily upon reducing travel costs in 2005 (34 percent), compared to 59 percent of the respondents in 2002 and 54 percent in 2003.

Correspondingly, survey responses show an increasing willingness for organizations to boost travel budgets: 41 percent in 2005 versus 28 percent in 2002 and 32 percent in 2003.

Worldwide sourcing and the global market place have been manifested in a paradigm shift concerning how business is conducted. Potential competition, as well as markets, increasingly transcends borders and distance--and that begets travel.

Bennett observes, "The globalization of our economy is pushing the need for more travel. It isn't a 'billion-dollar company issue' anymore. Even smaller businesses now have to go to Asia and other parts of the world to find lower cost materials and products."

For Stegemann, there is no substitute for conferring in person. "We recognize the value of travel. Customer relationships are paramount to the success of most businesses. We need the ability to demonstrate our solutions in person, which requires travel. Equally as important is our employees' ability to meet with their colleagues to share ideas and resources. While Web chats and teleconferencing certainly are options for certain tasks, full collaboration means physically meeting."

Reporting, Controls and Interfaces

New technology now features robust reporting tools and controls, which have simplified the task of online scheduling. "There are a lot of capabilities in technology to integrate into the infrastructure of the company," Sabre's Keszler says. "The tools allow for customizable rules and parameters to group employees to conform to corporate travel policies."

At some levels, employees are given a choice of booking online or not, depending on the level of employee and/or trip complexity. A department or travel administrator can ensure adherence to travel policies by establishing permissions with customized thresholds.

Business has also learned that the advantages of online booking continue to multiply. The more mature online booking model at Siemens benefits not only the company, but also the employees, says Stegemann. "We have been successful at customizing our online travel reservation service, including integrating multiple Siemens travel policies for employees in different functions and negotiating preferred vendor agreements with benefits that are meaningful to different types of travelers."

Keszler points out that online technology now allows for alerts and important information to be relayed to travelers during their trip. "There are a number of tools available to notify you of changes sent to your cell phone, BlackBerry or preferred device."

DMC's Bennett adds, "The customization around our travel policies makes the online tool a cost-savings asset. Additionally, online travel booking has allowed us to provide more travel services to our customer base, which has been a more important achievement than hard cost savings."

Guthrie sees the benefits from several perspectives. "There are continuous refinements to the online booking tools," he says. "I don't see any reason for not using the online agencies or carriers, as the management tools are there along with the time and cost savings." (Savings will be a major focus again in 2006, when business travel costs are expected to jump another 12 percent, according to researcher Runzheimer International.)

But online bookings won't become ubiquitous any time soon. "As in any development, the online tools are improving over time, but there are times when a traditional 'off-line' provider is still needed," Bennett says. "That's no different than the world of e-commerce."

Bruce McCracken is a freelance business writer focusing on outsourcing, customer relationship management, human resources and information technology. He can be reached at [e-mail].

RELATED ARTICLE: takeaways

* The online travel industry has come a long way, enabling CFOs to experiment and tailor their demand for meeting business needs while realizing cost savings.

* While savings vary, they can be substantial. A Siemens unit claims to be realizing savings of as much as 76 percent on certain transactions.

* One research firm expects the percentage of bookings using an offline agent to drop from about 62 percent in 2003 to 47 percent by 2006.

* A travel agency still can play a valuable role, however, particularly when the destination involves multiple flights or foreign travel.