The key to developing a successful travel program in Latin
America is maintaining interpersonal contact with senior leaders and travelers,
many travel management professionals say. For professional services firm Marsh
& McLennan, which started a Latin American travel consolidation about three
years ago, it may have been the most important point.
"We spent one year planting the seeds, sharing the
vision and meeting stakeholders," said MMC Americas travel manager Greg
Wilczek last month during a webinar conducted by The BTN Group. "A lot of
times you just want to sign an addendum to your contract, appoint a country
manager and just get this thing implemented, but we found that we really needed
to secure buy-in across the region."
With worldwide T&E spending around $300 million
annually, MMC's project started after Wilczek "realized our program in
North America had reached a point of maturity and recognized that we had an
opportunity to bring Latin America into our program." But like many other
companies, MMC "had no insight at all into our T&E spending across the
region," he said. "We also knew that we were vulnerable because we
were not offering our travel risk management program to our colleagues across
the region. We knew that with a consolidation, we could solve all these
problems."
The first steps included securing executive support at U.S.
headquarters and engaging senior leaders in Latin America. In initial
conversations, "we didn't discuss specific tools, suppliers or processes,"
Wilczek said. "We spoke about the tried-and-true best practices of the art
and science of travel management and the benefits that could be had through
consolidation." After regional leaders were sold on the idea, MMC
collected data from its Latin American operations and mapped out a phased
approach.
To reinforce the benefits, Wilczek and his team went to the
region to meet leaders face to face. "We assured them that we were not
trying to export the U.S. way," he said. "We realize that the region
is a collection of cultures with different nuances."
After setting the tone, MMC began consolidating Latin
American travel with BCD Travel, its global TMC, and rolling out GetThere, the
booking tool used in the United States. Wilczek said Brazil and Argentina went
live in January 2012, followed by Mexico and Colombia. "Those were our
higher-spend countries," he said. Today, MMC has consolidated 80 percent
of its travel spend in Latin America, according to Wilczek, covering about
6,000 trips per year. In a future phase, MMC will implement the program in
Chile, Peru, Uruguay and Venezuela, according to Wilczek.
Ongoing Challenges
Wilczek laid out ongoing region-specific challenges:
• TMC fees: "There
was an intense focus with our local stakeholders in the region on the cost of
change," he said. "The incumbent agencies that were being used were
in some cases free, and in many cases mom-and-pop organizations. Introducing a
fee menu to pay for transaction processing or travel management company
services was viewed as new or problematic. To overcome that, we focused the
discussion on ROI. ... We focused more on the savings to be enjoyed through
supplier leverage with airlines and hotels than perhaps a nominal increase in processing
fees at the TMC level."
• Payment: The
challenge, Wilczek said, isn't merchant acceptance, but rather typical payment
cycles in some markets in which "credit card bills need to be paid within
10 days of receiving the bill, unlike other markets where you have three or
four weeks. That is something that is problematic for our finance organization
and something that we wrestle with to this day." The other familiar
payment issue MMC faces is a cultural reluctance to hand out cards to
employees. "As a result, we typically find that there is more of a demand
for direct bills with hotels, or they want to bill the hotel and/or the air
through the travel agency ... and/or the traveler wants to bill the cost of
travel to their manager's card. As you can imagine, this creates some pretty
enormous operational headaches that are not easily solved."
• Hotel rate
disparity: Wilczek said some hotels in Latin America will offer better
rates when travelers call than what is available in GDS channels. "You
might suspect these are the more local or regional hotels, but that is not
often the case," he said. "Some of the large chains—well-known to all
of us—do this across the region because the properties are franchised. The TMC
certainly takes a credibility hit and gets complaints that they are not
offering the lowest rate. At the same time, we are seeing less hotel bookings
through our TMC than we would like and less than we do in other regions."
• Resistance to online
booking: Wilczek explained that despite implementing a tool that is
properly configured, "adoption is disappointing." He chalked that up
to culture. "Travelers are in the habit of calling an agent," he
noted. "At the same time, the cost of doing business in Latin America is
lower than in other regions, so the price point between a full-service ticket
and an online ticket might not be dramatically different."
One typical challenge that MMC has overcome is ensuring data
quality. "We took a lot of pains during implementation to be sure that the
coding, and how data was formatted when it went into the system, met global
standards so when we reported on the region it didn't look different,"
Wilczek explained.
Of the lessons learned, the biggest goes back to keeping it
personal. "Stakeholders and senior management tend to be much more
relationship-driven than they tend to be in the United States or Europe,"
he said. "The senior stakeholders really want to engage in conversation,
and it is through that conversation that we have been able to weave our vision
and sales pitch, rather than through slides.
"Be prepared to do it conversationally and keep the
value proposition simple," he said. "Leave the buzzwords and
PowerPoints at home."
Sidebar: Nuances
Around The Region
Latin America is a collection of many countries, with lots
of currencies, different business processes and unique circumstances.
Organizations aspiring to manage travel there must be aware of the distinctive
characteristics, according to speakers on a recent webinar conducted by The BTN
Group.
"There are lots of tax and invoicing requirements that
are different per country," said Maura Allen, Latin America vice president
for Radius Travel. She also noted a general "reluctance to change
long-term local partnerships—with TMCs or major preferred airlines. Regional
travel centers are a hard sell in a diverse region. If regional volume is less
than $10 million, it may not be worth the cost of consolidating into a regional
center."
Allen said online booking is "evolving fast in Mexico,
Colombia and Chile." Global booking tool providers, she said, are "entering
or growing their market footprints." GDS-based systems "have more
share now because they can support agencies locally on first-time integration
and fulfillment."
Brazil, which
accounts for the largest portion of Latin American business travel, continues
to experience growing demand. "Hotel rooms are expensive and hard to get,"
Allen said, noting that most clients consolidating in the region start in
Brazil. She added that the country—unlike some others in the region—"has
many professional travel managers." Brazil also is more mature than others
in terms of online booking tools, because "locally grown solutions were
built to deal with Brazil's dramatically fragmented content." March &
McLennan Americas travel manager Greg Wilczek noted that content issues in
Brazil "are largely going away" now that the largest airlines "list
most of their inventory in GDSs." He also noted that TMC pricing in Brazil
"is different than what I have experienced in other markets. There are
some additional fees and taxes and commissions that are disguised as taxes that
you need to be aware of before you start negotiating fees. It can be a little
confusing at first."
Argentina "is
starting to take its first steps with online booking tools," according to
Roberto Rodriguez, travel services procurement executive for Walmart Mexico and
Centroamerica. "Mexico is one or two years behind, and Central America is
three years behind Mexico. That's why it is very difficult to put all the
countries at the same level." Allen, meanwhile, noted "currency
control issues in Argentina and Venezuela, with the former "now
surcharging 20 percent on purchases made abroad."
Colombia is "really
an up-and-coming market," said Allen. But to operate there, according to
Wilczek, companies should understand that "travel management company
pricing is set by the government, so there is no real negotiating to be done."
Venezuela, Allen
said, "still is large, though a little less connected to the multinational
market these days."
This report
originally appeared in the May 13, 2013, edition of Business Travel News.