Surprising number of companies cut travel spending

Twice as many U.S. companies as previously expected are cutting their travel spending this year in response to economic weakness and uncertainty.

The Association of Corporate Travel Executives says 71% of its member companies now plan to spend less on travel this year than in 2008. That's a huge and unprecedented shift in corporate travel managers' plans from just five months ago, says Susan Gurley, the association's executive director.

In September, when the association — whose members typically manage travel budgets of $50 million to $100 million a year at midsize or large U.S. corporations and institutions — asked about travel spending plans, only 33% of respondents said they expected to cut back. In fact, 36% said they would be spending more on travel in 2009.

But in the just-completed survey, only 8% of the ACTE member companies that responded said they now expect to spend more on travel this year. Most companies are seeking to spend 10% to 20% less on travel than they were expecting to spend just five months ago, the latest survey shows. Using the most conservative figures for estimating the dollar impact of such cuts, the ACTE suggests that the 176 member companies that responded collectively will spend about $880 million less on travel this year than they had planned.

If the same method for estimating is applied to the ACTE's full membership — about 2,400 companies — the impact would be more than $2 billion in foregone travel spending this year, Gurley says.

Never have corporate spending plans deteriorated this much, or this fast, she says.

"Not even after 9/11," she says. "And I don't think

One reason: rising unemployment. If jobs are being cut, companies are reluctant to approve travel.

"There's only two things that companies have immediate control over when the economy turns bad: personnel and travel," she says. "That's why we believe that as long as joblessness is still on the rise, travel spending won't begin to bounce back."

Source: USA today