More business travel being booked on Net

Savings: Online travel sites that catered to the leisure market are targeting corporate accounts.

October 03, 2003|By Jerry Hirsch | Jerry Hirsch,LOS ANGELES TIMES

Kris Sarajian admits it. He was a guerrilla Web booker.

The marketing executive regularly bypassed his company's travel agency to book his business travel arrangements online.

The logic was obvious. "It would save money," Sarajian said. His employer, Akibia Inc., an information technology provider in Westborough, Mass., now books virtually all its travel online.

Guerrilla booking has become typical in offices coast to coast, said Bjorn Hanson, a travel-industry consultant with PricewaterhouseCoopers.

Sure, it might violate a company's formal policy, but "it's pretty hard to punish people who find ways to save money," Hanson said.

Web-based specials, smaller booking fees and the ability to find cheaper travel options all contribute to savings available online that can range up to 60 percent and typically average 8 percent, according to PricewaterhouseCoopers.

Even offline, there are greater savings for business travelers. The odious Saturday stay-over rule has eased a bit, and unused nonrefundable tickets sometimes can be applied to future travel.

The gap between what business and leisure travelers pay has narrowed, contributing to a shift in the business-travel marketplace. Business travelers have figured out how to better tap the lower rates typically offered leisure customers.

Although business travelers are still a key source of travel-industry revenues and profits - and often still pay higher rates - gone are the days when airlines, hotels, car rental companies and others could expect corporate customers to open up their wallets without asking for deals similar to what leisure customers get.

The trend has spurred Internet travel sites such as Travelocity, Expedia and Orbitz - whose rapid growth has stemmed largely from leisure travelers - to offer services specifically catering to business travelers.

Some experts warn, however, that booking online doesn't always produce savings. And such practices often don't allow companies to capitalize on volume discounts obtained from specific travel suppliers.

Nonetheless, more companies are formally encouraging Internet bookings. Computer giant Hewlett-Packard Co. now books nearly 70 percent of its U.S. and Canadian tickets online and is beginning a pilot program to do the same in Europe, said Lea McLeod, HP's global travel manager.

HP saves about 15 percent when it buys online compared with when it uses a traditional agency. Moreover, administrative costs of processing tickets booked online are 30 percent to 50 percent less than those booked manually.

A National Business Travel Monitor survey of 1,200 business travelers found that 65 percent now use the Internet to plan some aspect of their trip - from checking a flight schedule to booking a rental car, reports Peter Yesawich of Yesawich, Pepperdine, Brown & Russell, a travel-industry consulting firm. That's up from 55 percent a year ago.

"Business travelers now are much more likely to adjust their flight schedule to save money, and they aren't as interested in paying more just to be on a concierge floor at a hotel," Yesawich said.

It's all part of a "commoditization of the industry," said Carl Winston, a travel-business expert at San Diego State University.

For the most part, road warriors no longer differentiate between airlines or even hotel chains, instead making their decisions on ratios of price and convenience, Winston said.

Internet tools help reinforce this message by quickly giving corporate travel planners and employees information that could be seen only by travel agents just a few years ago.

Confronted with online booking, Akibia Inc., the Massachusetts information technology service provider, signed up in March to a Web-based Expedia Corporate Travel system, where going online was the first option rather than the covert one.

Since then, the company has driven the average cost of an airplane ticket down $100, said Donna Jakobites, the executive assistant who oversees the company's travel arrangements.

Akibia now books 99 percent of its travel through Expedia after adopting the system just months ago.

Among other Internet travel sites, Orbitz also has a corporate offering and Travelocity just launched Travelocity Business, a service targeting small to mid-size companies with annual travel budgets of $500,000 to $15 million.

The Travelocity service charges $5 to process an airline ticket booked online and does not place a fee for car and hotel arrangements. Phone reservations cost more - up to $20 for an air-and-hotel package. That compares with $10 to $60 in fees charged by traditional travel agencies.

Three factors have fueled business travel's shift to the Internet, said Ellen L. Keszler, president of Travelocity Business. The advent of discounted Web fares aimed at leisure travelers in the late 1990s was the start.

"Business travelers began to get upset about the differential between those fares and what they were paying," Keszler said.

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