India Inc To Spend $3 Bn On Travel By 2000, Says Survey

Indian corporates rank travel and entertainment expenses as the second largest controllable expense, higher than that on advertising and information technology.

While companies on an average spent Rs 1.65 crore on travel and entertainment in 1997, those in retail, wholesale and financial services sector spent substantially higher, according to India's first-ever survey on business travel management practices of companies conducted by American Express, a leading travel-related services company.

Worldwide T&E today constitutes a significant segment of corporate expenses and is growing rapidly. In India too, these expenses are growing at a rate of over 10mper cent and is expected to exceed $ 3 billion per year by 2000.

 

According to the survey, four T&E spending categories account for more than 80 per cent of total T&E expenditure with air travel accounting for 28 per cent, hotel 27 per cent, meals and entertainment 14 per cent and rails & taxi 13 per cent.

Although 60 per cent of the companies surveyed have a formal written travel policy, only 12 per cent of travelling employees receive a copy of the policy. Almost 85 per cent of the companies have designated travel agencies but employees in half of such companies continue to make travel arrangements outside the designated agency.

The survey, commissioned by American Express, was conducted by an independent research organisation covering over 600 senior management contacts in 400 companies across India.

Commenting on the survey findings, Gregor Lochtie, director(consulting services) American Express, Asia, pacific and Australia, said, "Although the majority of companies agree that T&E expenditure is an extremely critical cost, the survey reveals limited implementation of proven business travel management practices that can control and better manage these costs."

According to the survey, a key driver of the increase is the development of domestic and international business and trade. The survey says that there is a trend to issue corporate cards and about 30 per cent of companies have already opted for the card programme.

The survey points out that 83 per cent of the companies urveyed still continue the practise of cash advances and employees in less than half of the companies take advantage of negotiated rates for hotel accommodation, air travel or car rental.

Key recommendations for T&E expense management include setting goals for travel management; analysing and using spend data that may already exist;develop and effective written travel policy and sharing it; consolidating purchases through one travel agency; minimising use of cash advances and auditing a selected sample of expense reports.