Business Travelers Seek Ways to Cut Costs, Aggravation

Updated on September 18, 2008. 

LAN LIEVENSE, 63, remembers when business travel was about closing deals, not waiting at the airport. In one day, he could fly out of Los Angeles to meet with a client for breakfast in Denver, another for lunch in Portland and a third for dinner in Seattle — and return home just in time to tuck his children into bed.

Those days are long gone now. Flight delays, long security lines and crowded airports have changed the business travel experience so dramatically over the past several years that Lievense, once a 40-week-a-year road warrior, now avoids air travel altogether.

In fact, when Lievense started a health-care billing consultancy three years ago, he made a conscious decision to avoid taking clients outside of California — just so he didn't have to step foot on an airplane. "I've turned down offers to work for trial lawyers who were in Vegas, Reno, and Tempe, Ariz.," he says. For trips to San Francisco and San Diego, he drives. Ironically, he says the six-hour drive to San Francisco is often faster than the one-hour flight. He's also using the web to communicate with clients, replacing seminars with webinars and face-to-face meetings with online presentations. "Airlines have become so incredibly dysfunctional, that whenever possible, we make corporate decisions based on avoiding them," he says.

Lievense isn't the only one. Self-employed consultants and corporations alike are beginning to take note of the high cost and hassles associated with business travel. In a survey conducted in 2007, research firm JupiterResearch found that 22% of employees are encouraged to teleconference as an alternative.

That said, business travel still remains as robust as ever. In 2008, demand for business-travel services outweighs supply and has consequently led to increases in airfare, hotel and car-rental rates, according to the latest business travel report from American Express. Airfares, the report says, increased 10% between the second quarter of 2008 and the second quarter of 2007, while 2008 hotel rates have jumped 6% in the North America and as much as 13% in Asia. In 2009, however, increasing airfare and hotel prices are expected to result in fewer business travelers, according to the report. 

Even as companies continue to fork over more cash, they're faced with nothing but trouble from the airlines. Late arrivals are near their highest since 1995, with 24% of flights arriving late so far this year. Late departures are also near 12-year highs: 21% of flights so far this year left their destination late, compared with 15% in 1995. And that doesn't take into account the time lost to airport security lines, the hassle of baggage restrictions and the disappearance of in-flight pillows and legroom.

"It's safe to say that a lot of the love is gone in terms of business travel," says Diane Clarkson, a travel industry analyst with JupiterResearch. To cut the costs and aggravation of taking to the skies, here are some of the most popular strategies used by road warriors.

Conducting a videoconference used to be a nightmare of technological problems, grainy images and picture-sound discord. But these days, high-definition monitors and ubiquitous high-speed Internet connections allow you to feel as if you're in the same room with your colleagues and clients, even if they're sitting half a world away, says Claire Schooley, senior analyst with market research firm Forrester Research.

Of course, the best technology doesn't come cheap. Telepresence, a conference-room-style set-up that uses large-screen plasma displays to create the illusion that all attendees are in the same room, can cost hundreds of thousands of dollars. Hewlett-Packard's Halo product is the priciest, at $349,000 for a specially-designed conference room, technology and equipment, plus an $18,000 monthly fee for network maintenance and operation. Cisco's TelePresence generally costs $300,000, but if you cut down the number of plasma screens, the price tag can be reduced to $220,000, according to Schooley. (Both Cisco and HP are clients of Forrester Research.) Polycom's concierge-managed telepresence service starts at $299,000, plus an $8,000 monthly fee (it also offers lower-priced options).

That's money well spent for large companies that want to cut million-dollar travel expenses, but don't want to give up the convenience of face-to-face meetings. Businesses with thinner budgets, meanwhile, can look to more affordable solutions such as web conferencing.

Sure, web conferencing won't give you the "being there" feeling of telepresence. But for many businesses, it's good enough. It offers practical solutions like the ability to make online presentations or review documents with the click of a mouse, as well as bells and whistles like the ability to take control of another participant's computer, which can come in handy during training, or the integration of live video and audio into a presentation. Among the most widely-used web-conferencing products are WebEx, IBM's Lotus Sametime, Microsoft Office Live Meeting and Citrix Systems' GoToMeeting, each offering a range of solutions that cost as little as $40 to $50 per month or several hundred dollars a year. (Many also offer per-user pricing for each meeting.)

Bill Morgan's company, an engineering and management consultancy in Castro Valley, Calif., has only 24 employees, so they use WebEx and, frequently, Skype, the Internet calling service owned by eBay. Calls — including video connections — are free of charge when all participants use the Skype software on their computers. When audio-only is used the quality is impeccable but, as with anything free, the video can be patchy at times.

When it comes to traveling, Morgan has a simple rule: If his employees can drive to a destination in fewer than five hours, flying makes no sense. "Five hours is a long time, but it won't tie you up," he says. You'll be accessible by phone while driving and — an always appreciated bonus — you never have to take off your shoes or wait in a security line.

Even with prices at the pump skyrocketing, it still makes sense to hit the road. In California, the average price of a gallon of gas was recently $3.80, meaning a drive from Los Angeles to San Francisco in a 2007 Ford Explorer would cost $146 round-trip, according to AAA's Fuel Cost Calculator. That's comparable to the cheapest flights currently available between the two destinations.

If you use your own car for business travel and your employer or clients don't reimburse your expenses, you can take some vehicle-use deductions on your tax return. If you deduct the actual cost of your trip, you can also claim vehicle depreciation. Vehicle depreciation is capped at $11,060 for new cars purchased and placed in service in 2008, but is reduced for personal use. If business use is 55%, for example, the cap is $6,083. Alternatively, you can deduct the IRS standard allowance of 50.5 cents per mile (for 2008). Whichever method you choose, though, you'd have to stick with it for all of the years that you use your car for business. Restrictions apply so be sure to consult with your CPA, or read IRS Publication 463.

As a fraud investigator for the U.S. General Services Administration, Chris Langello used to travel frequently from Washington, D.C., to New York or Philadelphia. Instead of the one-hour flight to either city, Langello relied on speedier Amtrak. Convenient railroad service is hard to find in many places, but where available — particularly in the Northeast — it can save business travelers plenty of time and hassle.

Travelers have taken note. National ridership on Amtrak is up 11%, to 23.7 million passengers between October 2007 and July 2008, compared with the previous year. Ridership on Acela Express, a high-speed Amtrak train that runs between Washington, D.C., Philadelphia, New York and Boston, increased 5.5% to more than 270,000 in July 2008 compared to July 2007.  More importantly, from January to August 2008, trains arrived on-schedule 84% of the time.