Citi is pursuing an ambitious one-year plan to overhaul its travel program, including global requests for proposals for the major program components, strict enforcement of preferred vendor compliance and lowest logical hotel rate programs to drive savings despite travel volume cuts.
To prepare for a 12-month transformation, Mick Lee, managing director and head of Citi's global travel department, beefed up the company's travel team, upgrading positions and giving the organization a global scope, and is consolidating data through a single third-party company, which will be completed by June.
"The three core challenges are staffing, reputation and data," Lee said. "When we rectify those three things, we will have the foundation on which to build the program."
Lee, who earned
Business Travel NewsTravel Manager of the Year honors in 2001 as director and global head of the internal client services group at Credit Suisse, joined Citi in October 2009, inheriting a massive travel program with more than 20,000 frequent travelers, operations in more than 100 countries and hundreds of millions of dollars in annual travel spending.
With a new framework in place, Lee's first major target was Citi's hotel program, for which compliance historically has been a challenge, she said. Citi had about 1,000 hotels in its program in 2009, but data showed travelers had actually booked at many more hotels across the globe.
Two members of Lee's hotel program transformation team—vice president and New York hotel manager Karen Kulpik and events forum president Richard Venezio—led the global hotel RFP, the objectives being to negotiate rates in any city in which Citi has more than 100 room nights as well as contract with any hotel with more than 100 Citi room nights annually.
According to Lee, the team conducted local, regional, chainwide and global negotiations to compile a list of preferred properties, a mix of business class and select-service hotels.
Lee put together a Citi hotel council of about 230 frequent travelers, procurement team members and travel arrangers to offer feedback about hotels under consideration for the program.
"In order to ensure that our hotel selections met the unique requirements of each business and maintained the critical balance between location, traveler comfort, safety and costs," Lee said, "we created a forum to share the personal observations of Citi staff in our key locations."
Citi travelers as of this month are required to stay at preferred hotels. Lee has proposed that travelers who stay at properties outside the program not be reimbursed a percentage of their hotel costs.
"In my experience, that gets people's attention," she said. "They might have a preference for XYZ Hotel, but if they find they're paying for a portion of that, they'll look at it differently. We need to support our preferred suppliers so they understand the tremendous value of having the preferred status with Citi."
Additionally, Lee will get a daily report of travelers who have booked at hotels that were once in Citi's program but opted out of the latest round of negotiations. She will then notify those travelers that if they stay in that hotel, they must pay the full price of their stay out of pocket.
"Every hotel that rolled up their sleeves, sharpened their pencils and worked with us, I owe it to them to do that," Lee said. "The hotels that are not in the program will get the message very quickly."
Under Lee's proposed program changes, travelers also would face partial nonreimbursement if they book hotels outside of the agency channel, she said. Lee's target is to improve hotel booking through the designated travel agency, and expects use of the system to reach 90 percent this year.
On top of the preferred hotel list, Lee has proposed a lowest logical hotel program for Citi's top 15 cities: New York, London, Hong Kong, Singapore, Mexico City, Tokyo, Chennai, San Francisco, Beijing, Manila, Taipei, Dallas, Shanghai, Chicago and Boston. For those cities, agents automatically book travelers in the hotel with the lowest logical rate at the time of the booking. Three of those cities, New York, London and Mexico City, are further divided into zones so travelers can be close to where they need to conduct business.
Hotels in the program that do not have the lowest logical rate will be given the opportunity to decrease rates to become the lowest, though they must lower the rate for at least 60 days, she said.
"If you negotiate a hotel program just once a year, you're behind the curve," Lee said. "The industry and the volume are dynamic on a week-to-week basis, not just once a year. We are not talking about changing the list of hotels in the program—our objective is to actively drive the business within our preferred hotels."
While Citi's hotel volume is down from historic levels—in 2009, it was about 50 percent less than it was in 2008—the program's enhanced ability to deliver compliance allowed the company to get overall better rates.
The hotel program will serve as a model for other aspects of Citi's travel program, Lee said. She's now in the midst of a global airline RFP, which also will include lowest logical airfare, in June.
"It was important to me to illustrate a rapid and sustained change in our approach to travel management," Lee said. "The airlines will see the impact of the new hotel program and have proof that when Citi makes a commitment to a travel partner, we deliver."
Lee also is managing several other negotiations, including bids for management information systems and a third-party traveler profile system. Other projects will include driving savings from corporate car, car rental and card programs, she said.
Next year, Lee plans to go out to bid globally for travel agency services. In preparation, she has renegotiated Citi's existing agency contracts and enhanced service-level agreements and key performance indicators.
She also gave agencies some additional resources, enabling them to demonstrate their value before the global bid begins in January.
"Citi had agencies that were unable to perform because of the type of contract in place," Lee said. "The goal is to give the agencies the tools to succeed, clarify the expectations of Citi, develop the relationships and quantify the performance by the time we go out to bid. The Citi travel program will be fully transformed by Dec. 1, 2010. We owe it to our shareholders, our suppliers and our travelers to make it happen."