Prague—The Association of Corporate Travel Executives opened its conference here last month with the announcement that its board of directors had named BCD Travel senior vice president of sales for Europe, the Middle East and Africa and Asia/Pacific Chris Crowley to become the association's president-elect on Jan. 1 and assume the presidency at its next global conference, to be held May 2010 in Chicago, succeeding AirPlus International president Richard Crum. It closed with the announcement of ACTE executive director Susan Gurley's resignation.
The election of a senior BCD Travel executive to lead the organization furthers the possibility of merger talks resuming between the Association of Corporate Travel Executives and National Business Travel Association.
BCD Travel publicly has stated its wish for the world's two leading travel management organizations to merge
(BTNonline, June 25) a stance joined by several other travel suppliers, and sources told BTN Crowley stood for the ACTE presidency on a ticket of renewed engagement with other industry associations.
"My wish is to continue dialogue between the two organizations," Crowley said. "We need to speak in a different way as an industry, and it would be good to sit with other organizations and see how we can work together to do that."
Merger talks between NBTA and ACTE started earlier this year, but have made little progress since August
(BTNonline, Aug. 23).
At a press conference in Prague, Crum said "the door is open" for further dialogue with NBTA but insisted the association is in good health.
"We didn't reduce our programming this year and our sponsorship is as strong as ever," he said. "We should have shut down a couple of times by now, if the rumors are to be believed."
Crowley, who is based in London, has worked in the travel industry for 18 years. He originally worked in sales for Accor and other hotel companies before joining BCD in 2005. Crowley is set to become Europe's first ACTE president.
ACTE also said it would hold its next global conference in Europe in Berlin in October 2010.
Deputy executive director Megan Costello will take over Gurley's role on an interim basis beginning Dec. 1, while Gurley said she would stay with the association through Dec. 31 before pursuing an opportunity within the federal government sector.
ACTE has formed a replacement search committee, and the hiring process will be conducted with its board of directors. The committee will begin the candidate interview process after the holiday season. ACTE plans to announce Gurley's successor by the end of the first quarter of 2010, according to Crum.
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It was standing room only as Google's Dublin-based global travel manager Michael Tangney summarized his company's unorthodox travel policy as, "Save what you can and spend when you need to. We trust you to make the right decisions for the company. It's amazing how much responsibility people will take on if you trust them."
Google has retained travel management company Carlson Wagonlit Travel and negotiated a program of preferred suppliers, but travelers are not obliged to use any of them. All they are required to do is avoid exceeding what Tangney described as "fairly generous" caps on air spending per citypair and, as of this year, hotel spending per city. If the traveler finds a price beneath the cap, the difference is split between the company and the traveler, who is allowed to spend the money on subsequent trips, on an upgrade, for example.
Travelers also are required to input basic information about their journey into a Google-created database called Trips. For air purchases, the information includes airline, citypair and price paid.
Despite the apparent autonomy, however, Google's laissez-faire attitude only goes so far. Retribution for overspending is applied at the post-trip stage of the travel process when company vice presidents monitor travelers' spend through Trips. "No one wants to get a call from a VP asking, 'Why did you spend so much? I trusted you,' " said Tangney. "They tend not to be very happy about it."
Asked whether the Google system encourages travelers to spend too long hunting for bargains, Tangney replied: "Yes, we have people wasting time trying to save $2, but it is a balancing act. Generally, they travel on the same routes and build up a cachet of information." Tangney added that Google travelers share recommendations through a social networking system, "so generally it is a very quick process."
Another simplifying factor is that 65 percent of Google's travel is U.S. domestic, and another 17 percent is domestic in other countries. Google's 15,000 travelers spend E130 million annually.
While fewer than half of reservations go through preferred online or offline channels, suppliers continue to negotiate corporate agreements with the company. Furthermore, Tangney argued, the lack of a policy mandate helps improve preferred deals. "When our travelers find better deals elsewhere, it puts pressure on our internal deals, and we ask our suppliers to respond," he said.
Travelers tend to book through the preferred travel management company for long-haul and other trips where they may need assistance either before or while they travel. The Trips database is integrated with a tracking system run by the travel security consultancy International SOS travelers can trace regardless of how they made their reservation.
Google employees book 75 percent of their travel online, but only 25 percent to 30 percent of that figure is through the company's corporate booking tool, which is not used outside North America. "We tried an online booking tool in Europe and it bombed," said Tangney. "The feedback was it was not worth the money we were investing, so I pulled it." Asked whether he had put enough effort into giving training for the tool, Tangney said: "The Google principle is, if you can't do it when you turn it on, you can't do it.
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The wisdom or otherwise of corporate buyers embracing dynamic pricing was examined during a session on optimizing hotel spend. Dynamic pricing in the corporate context entails clients receiving a fixed discount on a fluctuating best rate of the day instead of a flat fixed rate. Travel buyers often deride it for making it difficult to forecast likely expenditure, and many of those who embrace it use it combined with a pricing cap.
However, in a wide-ranging presentation on strategies for spend optimization, Carlson Wagonlit Travel vice president for business intelligence Christophe Renard said dynamic pricing does have its merits. He cited a client that had moved to the dynamic model. Between 2005 and 2008, its average rate at 12 U.S. hotels belonging to the same chain moved up 13 percent, whereas the average rate of peers at the same properties climbed 21 percent. "We are not saying everyone should move to dynamic pricing, but under the right circumstances and management, we believe it can be worthwhile," said Renard.
InterContinental Hotels Group has been a long-standing advocate of dynamic pricing, and EMEA vice president for sales Nick Grandvoinet made the case once again, claiming corporate clients only achieve 6 percent of their savings through negotiations.
"Coming from the car rental industry, I was staggered to see how much time is spent on requests for proposals," said Grandvoinet, a former Avis Europe executive. "It is one of the reasons we are pushing dynamic pricing. We won't ever have a situation where the corporate is going to have every hotel on dynamic pricing, but we are trying to get more of them on it. It is easier to sell at the moment because prices are softer, but also because hotels are employing revenue management more than ever before."
However, the two travel managers on the panel were less convinced. Joakim Grude, senior travel management consultant for Statoil of Norway, said the majority of his company's hotel nights are in domestic locations where he can leverage significant discounts.
"Dynamic pricing would drive up our rates, but outside Norway it would be interesting," he said.
Renard recommended several other techniques for optimizing hotel spend. He cited a Carlson Wagonlit Travel survey of more than 3,500 travelers showing 11 percent choose an economy property when booking a preferred hotel, but this figure rises to 21 percent when booking a nonpreferred hotel. As a result, it is important to include lower-category properties in a preferred program to meet this latent demand.
Renard also said only 14 percent of companies specify how much cheaper a nonpreferred rate must be before travelers are permitted to book it instead of a preferred property. He recommended the differential should be at least 20 percent. Renard added that companies that set city rate caps achieve lower average rates.
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In the closing general session, aviation consultant David Jarach added weight to recent reports of an impending merger between global distribution system companies Amadeus and Travelport.
"There is something which is going to happen very soon in the distribution chain," according to Jarach, a professor of marketing at Milan's Bocconi University and chairman and managing partner of Diciottofebbraio, a Milan-based aviation management consulting company. "There have been negotiations between some of the parties involved and this will once again re-shape distribution."
Jarach also predicted that the European Union would postpone the introduction of the Emissions Trading Scheme, scheduled for 2012.
"It is quite possible they will postpone the deadline because otherwise it will be very bad news for the airlines," he said. Jarach added the Emissions Trading Scheme, which by some estimates would cost airlines $1.1 billion per year, could prove counterproductive if the high cost of buying emission permits leaves airlines unable to afford new, more fuel-efficient aircraft.