Implementing a travel management program for the University of California system's 10 universities uncovered $250 million in unmanaged travel spend, presenting a savings opportunity of roughly $12 million a year. Disarray in the universities' booking practices had deprived UC of savings through negotiated agreements with suppliers.
In late 2007, the Board of Regents for the UC system determined the combined travel spend for all 10 universities could be a potential savings goldmine and created a travel council tasked with implementing an end-to-end travel program. Before that, UC travelers had used "at least 50 local travel management companies on a totally laissez-faire basis," said Matthew Golden, director of UC Travel Services. To begin consolidating their travel spend, the travel council hired Balboa Travel, BCD Travel and Student Travel Agency as preferred travel management companies and maintained the University of California, Los Angeles Travel Center as a TMC. Through these TMCs, UC deployed multiple online booking tools, such as Sabre GetThere offered through BCD, and Amadeus e-Travel Management offered through STA.
All housed within an internal portal named Connexxus, the UC travel system uses its travel-booking gateway to facilitate use of the program. Since its completion in May 2008, roughly 30 percent of all bookings are captured by the Connexxus system, a figure UC aims to increase by 2013 to 80 percent. "At that capture rate, our savings per year will run $17 million to $18 million. In 2010, we saved $5 million, and for the first quarter of the 2011, we project a savings of around $6.5 million in air, hotel and car," Golden told BTN.
After cutting $50 million during the past two years, UC's travel spend is $200 million. "The Connexxus travel program and its application resulted in savings of about $12 million on an annualized basis," said Golden, attributing the remaining "$30 or $40 million" to cutbacks and lower travel demand.
Comprising of four employees, the UC travel services department negotiated agreements with American Airlines, Continental Airlines, Delta Air Lines, JetBlue Airways, Southwest Airlines, Singapore Airlines and Virgin America. "We have special relationships now with these airlines and I would hope to bring that down some day through negotiations to probably about three or four," said Golden.
UC also contracted with Marriott International, Starwood Hotels and Resorts and Wyndham Hotels and Resorts, granting its 9,000 travelers access to more than 7,000 properties globally.
Trondent Development Corp. stores UC traveler profiles, and the schools' booking data is scrubbed and deposited in an online system created by Peak Travel Group.
By directing bookings to preferred carriers and hotels, Golden said UC hopes to prove the schools can leverage their spend effectively and renegotiate better contracts.
"We do not encourage use of outside airlines," he explained. "When our travelers and travel arrangers encounter a lower price than the one offered by Connexxus, they usually contact their local travel coordinator or the central office to see whether we can get the lower price on our preferred carrier. Most of the time, they do match it."
UC expects to decrease its travel spend by an additional $20 million following further funding restrictions imposed by the State of California, from which 18 percent of UC's operating budget is derived. However, the addition of California State University's travel budget to the UC system would increase air spend by $20 million, Golden said.
"Following the significant budget pressures within the higher education system, I would expect that our travel would decrease even more than it has already," Golden said.
As a result, UC anticipates some challenges as airfares rise. "In the last two or three months airfares rose sharply," said Golden. "The airfares going up puts even more pressure on us to find and identify or develop systems by which our people can find the lowest fare available to them. [We] encourage booking in advance and encourage using our preferred suppliers."
Furthermore, UC president Mark Yudof is considering a mandate to use the Connexxus program when booking travel to drive additional savings and capture missing data, Golden said. "We formed a committee to examine the possibility of a systemwide mandate, a selective mandate or various types of mandates that we can use to increase our volume."
The article originally was published in Business Travel News.