Keeping the wheels of commerce turning

Corporate Report Wisconsin, Oct 2008 by Arendt, Laurie

Wisconsin companies face tough choices when traveling to visit customers and reach out to prospects. Careful planning and exploring options are key.

Kent Newkirk is used to solving problems. As a sales engineer for a small metro-Milwaukee manufacturer, part of his job is to come up with solutions to meet his customer's needs.

But he's yet to come up with a solution to his business travel problems.

"We've always tried to keep our costs in check," he says. "In that respect, we're probably no different than any other small business."

Newkirk says that a proposed visit to his Midwestern clients typically meant spending five minutes to weigh the pros and cons of driving vs. flying.

"Sometimes that did mean a long car trip, but the mileage and the hotel room were cheaper than trying to book a flight at the last minute," he says. "But during the past year with the high cost of gas, it's been the proverbial horse a piece."

He's tried to schedule several road trips, in which he piggy-backed visits to regional clients together. He's also stretched out the time between visits, which he doesn't like do.

"Though my clients seem happy, I think our service has suffered," he says. "And sometimes I just have to go, regardless of the costs, which has really weighed on our profitability this year."

Now he has a new problem.

"We're doing our long-term planning and weighing whether or not we can exhibit at two upcoming trade shows," he says. "We don't generate a tremendous amount of immediate business from them, but I think they've historically been a good move for us."

Trade show now out of reach

Unfortunately, the cost of exhibiting, transportation and lodging for two staff members is unrealistic right now for Newkirk's company.

"One of the shows is within driving distance, but it will make for a very long week," he says. "The other one requires flying, and after taking a hard look at the transportation and lodging costs for three employees, we've decided it's not worth it this year."

Instead, its likely that Newkirk and his sales partner will each attend a single show, but not as an exhibitor.

"If there is any upside to our decision, it's that I heard we're not the only ones pulling out," he says. "When I called the trade show representative to let her know we wouldn't be coming, she told me that I was part of a growing list of companies not exhibiting next year."

The tightening in corporate travel is something that has slowly occurred during the past year or so, says Mae Ibe, CMP, director of convention sales at the Fox Cities Convention and Visitors Bureau and current president of the Wisconsin Chapter of Meeting Professionals International.

"We're seeing this in a number of ways," she says. "Companies do seem to be cutting their travel budgets."

It's not so much that companies and organizations are postponing travel. Rather, they're being more economical in planning and execution.

"For example, some companies are doing two-day conventions in lieu of their more typical three-day events," she says. "We're seeing more carpooling with the state agencies, for example, where everyone will drive in one vehicle rather than having two or three drivers heading to the same meeting."

She says that the tighter budgets are also affecting how meeting planners are thinking about future events as well.

"They've become quite diligent in watching their room blocks, and making sure those get released at the appropriate time to avoid any penalties," she says as an example. "But it's also hard for them as they plan future events - some meeting planners are working on events two years out."

What else do we get?

Ibe says that, from a CVB perspective, the economics of site selection, from perks offered by properties to the destinations themselves, are also now more in play.

"We've seen some of the hotels becoming a little more competitive," she says. "Some are offering perks like $25 gas cards, which is appealing because it can help cover the increase in gas prices."

She says that some organizations are also sticking closer to home in their site selection decisions, simply to cut down on the transportation costs.

Another trend that seems to be growing within the state is the consideration of alternative destination cities for meetings and events.

"We've seen this with the Fox Cities, and I think other smaller destinations throughout the state are seeing a positive impact, too," she says. "There is a perception that they are more affordable."

In October 2007, the National Business Travel Association released its 2008 U.S. Business Travel Overview & Cost Forecast. Based on a survey of 215 NTBA member travel buyers, the forecast predicted that business travel would continue growing in 2008, though the rate of growth would level off. Another key finding from the report is that while the percentage of travel buyers reducing non-essential travel in 2008 was expected to remain level at just under 8%, the percentage restricting business class air bookings was expected to increase from 7% to 16%.