1996 Winter ACTE Quarterly: President's Message | Earl Foster Preview | ACTE Europe Roundtable

AQ: Looking at managing travel today, what do you see as the most difficult challenge facing you?

MAUREEN ALLGOOD: My travel program in the UK is fairly new. My biggest challenge is still very much internal, to get across the reason why we need a travel program, why we need uniformity across the company and what the benefits are on the purchasing front. The Philips group of companies all want to be autonomous.

AQ: What kind of success have you had?

ALLGOOD: We're starting to get some successes, but it's very much a hard slog. When I joined 2 years ago we had 4 or 5 different travel companies. I would have said I've got it down to 1 but I found out last week that another one popped up somewhere in the corner of Durham where someone was using [a different agency] and it just never appeared before. I'm also consolidating onto one card payment system at the same time. Just before I joined up the company had changed travel agent and corporate card, and dictated that everyone must use them; it didn't first go out to businesses to find out what their requirements were. It turned into a battlefield.

AQ: What's the general goal of your company, to consolidate and manage country by country or is that a step to a regional approach?

ALLGOOD: It's a step to a regional approach. I'm a member of Philips's European travel council, but we've got to get our own country together in order first of all. Then we'll move toward a global program.

AQ:: Is Maureen's experience fairly typical across the UK-have most of you already gone through the headaches and heartaches of consolidation?

MOIRA SWEET: I'm afraid we've taken a backwards step. British Gas recently reorganized. In the UK there used to be 12 regional offices. Now there are 5 main business units. It should have made things easier but it's in fact made things more difficult. The [business units] aren't speaking to each other, everyone's got concerns outside of travel, and it seems to be each unit is going each own way.

AQ: Is each business unit responsible for its own travel program or are you in a position to consolidate your program?

SWEET: At the moment I'm not in a position to do that. I've been with British Gas for just over 4 years-and ever since it's been my aim to get some coordination. But because there's been so much reorganization it's never really worked. There's no one travel services officer with responsibility for the whole country. Until they appoint one they're going nowhere.

DAVID RANDALL: You can't manage change within change.

SWEET: I think our next hurdle is to get one representative from each of the business units to actually say what they're looking for from a travel program, and to ensure that they recognize the benefits to be had by centralizing. Travel has taken a fairly low priority although it's a big spend in the company overall. The reorganization is still going on; two business units are now re-merging. So now it's change within change within change.

AQ: Is it difficult to get the attention of the CFO?

SWEET: Yes, because of the reorganization.

RANDALL: Have you actually said to them, "I could save you a million pounds?"

SWEET: It's very difficult to get the ear of the right people at the moment.

RANDALL: One of the secrets is to identify the senior managers fairly early on.

JOHN CASH: And the cost of nonconformance, and the benefit you can bring to the party. If you can put anything with six naughts on it . . .

SWEET: That gets their interest.

AQ: Where are all of you getting your MIS?

CASH: We get a consolidated data feed on air and hotels on disk, and it gets dumped into our database. Three inplants and 7 business travel centers are consolidated on one disk, and I'm looking into getting a card data feed as well. We manipulate the data ourselves. I can sit at my workstation and write a report in 45 seconds.

AQ: Are you pleased the quality of the data?

CASH: Absolutely.

AQ: It's interesting-some of you are saying you're getting the data; it may have to massaged a bit, but it's okay. Others say they're not getting it or that they have no confidence in it if they are. Why is there such a conflicting view?

CASH: It depends on how hard you've worked at it. When we needed it it wasn't there, and we had to do some pushing with our agency to make it happen.

RANDALL: We've had to push the frontiers forward as well. We do it slightly differently; we do it through a third party. But you're right about inconsistency. When you leave the UK and look at continental Europe, that's where you see the decline of reporting data, no matter who the agent is.

CASH: We've spent a lot of time working on IT (information technology). It pays huge benefits.

AQ: Now you have these wonderful reports. What are you using them for?

CASH: Feedback to senior management. We put in an authorizer field so the senior manager can see who's traveling and who authorized it. I actually report at the board of directors level, so I'm very lucky that I can get main board attention and support. You've got to have your sponsor.

AQ: Is your company the exception or the rule in the UK?

CASH: One of the exceptions. We also use the data to work with the agent to ensure consistency. We actually developed our own set of performance codes-we threw out the agent's version. That was designed by the agent for the agent. We trained all their staff to consistently use our performance codes. We also use the data in airline negotiations. We tailor-make reports to the airlines. They tell us what they want, we give them the feedback reports so they can see what's happening in our business.

RANDALL: We also show our data to the airlines. And we're very hard on reconciliation between what's ticketed and flown to make sure we're getting the full benefit [of our program]. We've had to kick a few airlines who were coming up with very low percentages on measurements.

AQ: Do you anticipate much of a change in 1997 with European airline deregulation?

CASH: I don't think it's going to change much, actually. There may be a bit more emphasis on market share than there is now.

RANDALL: Which indirectly brings up the issue of airline rebates. At some point it'll be taken up at New York head office level. I'll say you're kicking me about my budget down here and you're not passing the savings back-that's about 10% of my spend. Which means the next challenge will be net fares.

CASH: There are pockets of net fares already . . .

RANDALL: Which is a nightmare to administer. But net fares will be the challenge that we're walking into in `97. We want to share the savings right up front. That'll also play into compliance matters as well. Sometimes it's very difficult to explain to someone who expects a rebate at the end of the year that it's better for the company to save up front.

AQ: Net fares are net of what?

RANDALL: They're sort of a retrospective rebate from the airline-a ticket fare that's negotiated for Citibank.

AQ: So it's net of commissions and overrides.

RANDALL: I'm just talking about the airline agreement-not necessarily net of the commission. It depends on how you've structured your agent agreement. One step at a time; I'll tackle the airlines first.

AQ: When do you think you'll be making net fare arrangements?

ALLGOOD: I think it'll take a bit longer to get to that point. I don't know how quickly the impact of commission caps will be here; the airlines are testing the water. But there is a problem with net fares in Europe because it's not truly an open market yet.

AQ: Pat, what are your biggest challenges today?

PAT SMITH: A job, it seems to me . . . I continue to rattle cages within the organization at the most senior level, but we have to never forget that travel is not a core activity. Barclays make £2 billion profit in six months and I go to the board and say I can save you a million pounds, guys, and they nod . . .

I haven't given up, and I've been fortunate in achieving sponsorship from the chairman. A steering group has been formed to closely examine travel within the organization, first in the UK, then ultimately on a global basis. Then there's a tremendous amount of work to be done on the IT.

AQ: John, what's your biggest challenge today?

CASH: One, to redesign the whole travel process, both in the front and the back end, to reduce the amount of time people spend running around with travel requisitions or expense claim forms. We've deliberately delayed doing it until we've totally into a PC networked environment, so now requisitions can be made on the screen, authorizations are going through the network rather than on a piece of paper, and we have direct interface with the CRS. On the back end process we're using the corporate card statement as the expense claim form.

Automation has taken out many of the below-the-line costs associated with travel-it's almost impossible to quantify the financial benefit of it. We know it's a better solution, so we'll do it. Meanwhile the typical secretary spends a third of her day involved in travel in some way. Why can't we get that down? And the typical manager will spend four working days a year at one end or other on the travel process, never mind the dead time when he's traveling. Are there alternatives to that?

AQ: Maureen-you're in the early stages of your program. Are you looking to technology for help?

ALLGOOD: Very much so. I'm still at the quarterly paper report stage from my agency. And I get data from Diners Club. But unfortunately I can't get everyone to use exactly the same card. That obviously makes things rather difficult.

AQ: Are any of you using expense report software?

RANDALL: I get a lot of questions about it and every time we've investigated it in the States it hasn't been quite what we thought it would be.

CASH: I'll make a presentation to our travel user group, and we'll see if there's a benefit in developing a tailor-made solution. We have to ask, can we design something today that's going to meet the business requirements tomorrow? If you look 2 or 3 years down the pike, can you have truly cashless travel, or are you always going to need some lira for the taxi driver in Milan? There's probably no single process that will work for everybody all the time.

ALLGOOD: Philips decentralized the expense reporting process a few years ago, and every one of those businesses has its own authorization processes, its own rules about who can claim what . . . There has been this conflict before, so when travelers don't like a UK policy, they say, well I really don't have to do that because I report to Holland. So we had the first world policy issued last year, and it was signed off by all the heads of business before it came out.

AQ: What was the reaction?

ALLGOOD: They welcomed it to a certain degree. But-what's in it for us. It's still a bit like walking through porridge for the moment; they're looking for reasons why they don't need to conform.

AQ: Let's shift the discussion to agency relationships. How do you see your relationships with your agencies changing over the next few years?

SMITH: The question is, is there going to be a travel agent? It's common knowledge that BA are seriously considering dealing direct with the corporate customer. They've got a Windows package on test, where you go right into the CRS system, and they have gone around to the major travel companies and given presentations on it. Undoubtedly that is why the last year or so the payback has moved to open book, and management fee. The big guys have seen the writing on the wall, they know their world is going to change, and they're planning for that to happen.

AQ: When you say whether or not there will be travel agencies, do you mean whether they will exist at all? Do you see that the intermediary role will disappear, or do you see a transition from the agency relationship to a management consultancy relationship?

SWEET: That's what they'd like to see themselves as.

SMITH: They certainly won't be here in the form they're here at the moment.

RANDALL: I can't help feeling there's going to be a big difference. There's going to be a movement to the management fee, transaction type [arrangement] with large corporates who've got direct relationships with the airlines. But there's also going to be almost a traditional setup, for smaller companies whose economies of scale won't allow them to manage on a transaction fee basis.

SWEET: I agree. We have about a £10 million spend, and at the moment we're on a rebate basis with our agency, which I think is very old fashioned. But British Gas is about 5 years behind everyone else, so we're probably ahead of the game now.

SMITH: We have an enormous UK hotel spend. We negotiate net rates, and at the moment it's an unfair thing to do unless there's some sort of fee agreement with the agent.

RANDALL: A lot of people have a different supplier or agent for the hotel and the air. They actually split it up.

SMITH: Surely it's easier for the traveler to go through the same agent for everything, rather than do airline bookings in one place, hotel bookings in another.

CASH: One of the issues with hotels is that we don't know that the contract price equals the booked price equals the paid price. Because the paid price goes to the expense man over here, and it's totally divorced from the front end activity, and there's no link between the two. You don't actually know if you've paid the price you thought you were going to pay . . .

SMITH: . . . Or even what the price was. The traveler doesn't always know or ask or want to know. They just know that Barclays Bank and BA has a preferred rate at that hotel, and they trust it.

RANDALL: Our travelers have got religion when it comes to rates.

CASH: We actually did an audit of 500 hotel transactions-I had spare labour available (laughter). I simply wanted to answer the question, are we actually paying the price we contracted to pay.

SMITH: And?

CASH: We found we paid 20% above, 20% below, and 60% within a reasonable margin (laughter). The point is there is a significant financial opportunity if we can put in place a process that ensures that we are never over. I don't mind the unders.

SWEET: They could argue it's the traveler asking for executive rooms.

CASH: The key to me is putting in the closed loop process where our people know that they will be checked. The problem is the card companies can't give you a data feed that shows you the room night costs. If it's a £200 bill I want to know whether it was £50 for the bed or £35 for the bed.

SMITH: It's not the card companies-it's the hotels.

CASH: Whatever-the process doesn't work. Not for the level of detail I want. Therefore you have to put an overlay on it, an audit control that asks did we pay no more than the contracted rate. And that costs a lot of money.

AQ: Is it going to be worth the cost of that overlay?

CASH: My logic is if I put that overlay in place for 12 months I might just change the culture, so when I take it off, I could do spot check audits to see that everything's okay. The cost of the 12 months will be paid for the year one savings.

AQ: We've all heard about the new technology that's on the horizon. Smart cards, debit cards, the electronic ticketing/point of sales systems that will be on the travelers' desktops, the whole new network-server relationship. How do you see it changing your travel management program, and your roles?

ALLGOOD: How it will affect the travel management program will absolutely depend on the information that's consolidated at the end of it. It could actually help the process. And the easier it is for anybody to use the system, the more likely they are to conform.

As for the role of the travel manager, I hope it will be a hell of a lot easier. I find it very frustrating. I was involved in travel many years ago and there are certain areas where I'd thought it would have moved on a lot more. I see to a fleet of 3,000 vehicles and make analogies to that type of business. Cars are very much an emotive subject, same as travel is; it's a very large expense; there are a lot of diverse things to it, such as maintenance and fuel, etc. You can control it and people do conform. If some of those systems can be mirrored within the travel industry that we'll make some moves forward. But whilst you've got so many people dabbling-secretaries wanting to get involved in the local hotels and so on-if you try to put an absolute stop on it it just goes underground. Then you don't know at all what's going on.

AQ: Are your overall job skill sets changing as travel management grows more complex?

CASH: I would say for myself no, but it would demand that the people I use to manage my travel, namely the travel agencies, will have to change.

RANDALL: The key one for me is the PC-literate account manager who can evaluate our data and answer questions like that (snaps fingers). Not, `oh, we've got to program the report and get back to you in 3 week's time' and then another week's time to get the second version. That's where we saw the skill set going, which is why we turned to a third party software company, to get the picture globally. I don't want the duty of managing that.

AQ: To conclude our discussion, what about gains in reservations technology?

CASH: That's clearly the way to go, provided all [proprietary] information is built into the network.

RANDALL: I disagree. I'm worried about travel agents who can't get the best deal.

CASH: You could allow things to go direct to the CRS from the travel booker, where it's totally compliant with policy . . . whereas outside policy or a complex journey it diverts to the agent.

RANDALL: You'll going to end up wasting their time being amateur travel agents. They should get on with their jobs.

SWEET: But they spend a half day just trying to get the agent, ringing around. At the end of the day it's still a grossly inefficient process.

AQ:

Born to Buy

David Randall has worked for Citibank since 1987, but one thing he would like to make clear is that he is not now, nor was he ever, nor will he ever be, a banker. Accountant, yes; computer programmer, yes. Following spells with 3M and ITT he joined Ford Motor Company in London where, during his 12-year tenure, he moved from accounting into what he calls his birthright profession: purchasing. As Vice President of Central Purchasing at Citibank, Randall is responsible for acquiring everything from computers to letterhead to automobiles. And, of course, corporate travel, which represents about 10% of Citibank expenditures in the UK.

As Chair of ACTE Europe, Randall is overseeing a new region at a time of explosive growth. Much of ACTE's expansion in 1995 came from its European contingent; at 217 members, that segment represents roughly a fourth of the organization's total membership. Randall and many of his compatriots were attracted to ACTE largely because of its charter to include all participants in the travel management equation. "We also were attracted to ACTE's educational opportunities.

"No use reinventing the wheel," he explained. "We've all got the same issues, maybe at different times and different intensities, but there's a lot of insight to be gained by talking to others all over the world and sharing knowledge and contacts. North America was hit first with commission caps, and that's creeping here; we're looking forward to open skies-that's old news in the US. But technology and many management issues are the same. There's a lot of insight that can be gained back and forth across the Atlantic-and across the English Channel, too. Our common interests far outweigh the differences and we can all benefit from each other's experience."

Randall's immediate goal for ACTE Europe is "to get more seminars on the road" that appeal to "the whole of the European membership." The next seminar, tentatively scheduled for April, is on "the total cost of travel, with a particular focus on distribution costs."

The membership drive continues apace. And Randall also hopes that the burgeoning European rank and file will help in the continuing globalization of ACTE. "We don't want to be thought of as a splinter group, but rather as an integrated unit with North America and the rest of the world."

1996 Winter ACTE Quarterly: President's Message | Earl Foster Preview | ACTE Europe Roundtable