As the Senate outlines corporate spending restrictions in its new TARP legislation, the Association of Corporate Travel Executives urged legislators to exclude the use of corporate jets and other travel costs among its restrictions from S-133.

In a letter to Senators Feinstein, Snowe, Lieberman, Boxer, Nelson, Kerry and Specter, the organization said that while it agreed with nearly all the bill’s provisions prohibiting TARP funds from use in lobbying or political contributions among other things, it cautioned that a blanket restriction of use for transportation, accommodations and for corporate aircraft would be detrimental since corporate aircraft plays a major role in saving money when other travel options are exhausted or not practical.

“Business travel is going to play a major role in the reconstruction of the national and global economy,” said Executive Director Susan Gurley. “Executives on all levels routinely travel for business. Business travel is the ultimate form of communication for building relationships between buyers and suppliers, for closing deals, and for expanding new business. The staggering majority of business travel represents a legitimate investment in time, money and manpower resources. It is exactly the sort of thing that TARP resources were created to help sustain during this period of economic trial.”

Gurley favors spelling out appropriate travel restrictions such as prohibiting the use of the these funds for incentive travel, meetings of a congratulatory nature, or accommodations that “do not reflect the new spirit of thrift and fiscal prudence that can save jobs.”

“In essence, S.133 includes a very basic travel policy regarding the expenditure of emergency taxpayer bailout funds,” noted Gurley. “Every effective travel policy carefully defines the spirit in which it was written. The spirit of not wasting taxpayer resources is clear in this bill, but it should not just write off one of the most efficient means for companies to rebound business travel."

Indeed, recent surveys by travel-related organizations around the world have confirmed that business is cutting back not only on travel but on the level of accommodations including business and first class seats.

In December, Orbitz published survey results saying spending cutbacks rather than reduced travel seem to be how businesses are coping with travel costs. Business Traveler Magazine Quarterly Trend Report, which examines the most prevalent issues affecting the corporate travel industry today, looked ahead to 2009. A majority of business travelers surveyed, 55 percent, said they are planning to travel as much or more than they did in 2008. One of the key findings throughout 2008, however, pointed to growing numbers of travelers flying in and out of a business destination the same day, staying at a less expensive/lower star-rated hotel or sending fewer employees to trade shows and conferences.

That was confirmed during the recent reporting season when airline executives across the board reported a continuing demand downturn as reflected by forward bookings.

The report also explored the extent to which professionals feel traveling to conduct business in-person makes them successful. More than 90 percent called in-person meetings as important to their work productivity. When asked how important maintaining travel frequency is to overall productivity and business success, 76 percent say that it is important, with 16 percent labeling it as "critical."

A significant storyline in 2008 was the tightening of corporate travel policies as a means to control or curtail travel expenditures, said Orbitz. In fact, some companies have already implemented new policies for 2009 to account for new fee structures being rolled out by suppliers.

For example, some airlines are now charging, or plan to charge more for an aisle or window seat. The Orbitz for Business year-end report found that 34 percent of respondents' employers will not allow such an upgrade as a business expense. Twenty-four percent say it is allowable, while 42 percent are unsure. Some 80 percent reported changes to company per diem policies in the past six months while 31 percent are being required to “squeeze in more work and more meetings per business trip compared to the past year.”

For 2008, the report indicated 71 percent of business travelers say they've traveled more or about the same in 2008 as they did a year ago. But an overwhelming majority – 79 percent – of travelers said they've felt pressure to curb their travel expenses during the course of 2008, with an additional 55 percent having to make further cuts in the past three months.

Orbitz surveyed the corporate travel landscape to identify the most newsworthy trends that shaped this past year, while also collecting insights into what some business travelers expect in 2009.

"In 2008, our survey revealed an emerging trend of business travelers changing their behaviors in light of the recession, traveling differently by becoming more cost conscious," said Dean Sivley, senior vice president and COO, Orbitz for Business. "We can expect corporate travel managers to exert continued pressure on employees with travel policies focused on cost savings, like booking flights farther in advance, staying in lower class hotels and renting fuel efficient vehicles."

As was most of America and Congress, Gurley was shocked to see the excess of TARP recipients including bonuses and incentive travel. Yet she pointed out that many more have grounded their corporate jets, regardless of potential economies, rather than risk criticism by the public or their own employees.

“It is regrettable that Congress must legislate the use of emergency funds to exclude parties, celebrations, and limited executive profit amid an atmosphere of growing joblessness, homeowners facing foreclosure, and companies locking their doors,” said Gurley. “But it is critical not to throw the baby out with the bath water, especially where economically beneficial business travel is concerned.”

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