(FORTUNE Magazine) – As bean counters peer through their green eyeshades and see -- egads! -- a recession, corporations are squeezing their travel costs. One result: More business people are checking into ''limited-service economy lodgings,'' a.k.a. cheap hotels. Says Michael Woodward, a consultant at American Express: ''Companies see this as a way to make dramatic inroads.'' Brent Garback, president of Total Travel Management in Troy, Michigan, and an adviser to General Motors and Rockwell, says many of their managers ''always stay at economy hotels if they need only a place to put a toothbrush and take a shower.'' Northrop, the defense contractor -- which like its peers is often accused of spendthrift ways -- may be next. It shells out $11 million a year on hotel rooms, mainly reimbursed by government per diems. Promises travel manager Gerard Smith: ''We're going to increase our use of economy chains.''

If your company books you into a cheapo chain, don't be alarmed. Budget hotels and motels, which used to conjure images of an isolated Gothic fleabag run by a psychotic Anthony Perkins, have improved their reputation. Since the mid-Eighties, clean, well-run chains have launched big expansions (see chart), and budget hotels are the only major segment of the lodging business to register a profit. In 1989 they earned $307 pretax a room, compared with an industry loss of $158 a room. The cheaper chains already get 42% of their revenues from business travelers. To compete for more, they are adding services like free fax reception (Red Roof Inns), free breakfast room service (Budgetel Inns), and same-day dry cleaning (Marriott Hotels' Fairfield Inns).

CHART: NOT AVAILABLE CREDIT: SOURCE: CENTSIBLE LODGING SERVICES INC. CAPTION: GROWTH IN ECONOMY HOTELS