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What if there were a way to improve employee productivity while also pulling together better data on company travel expenditures and improving negotiating leverage with suppliers? IBM and hundreds of other companies found such a solution in electronic folio (e-folio) transmissions from hotel companies.
As opposed to hotel bill summaries, which can be inaccurate or incomplete, e-folios itemize all costs of a traveler's stay: negotiated room rate, taxes and all ancillary costs (food and beverage, Internet access, parking, etc.). By receiving such "level three" data from hotels and via credit card systems, buyers can construct a more complete picture of their companies' T&E programs. When that data automatically flows into expense management systems and is "pre-populated," even before travelers begin completing expense reports, the convenience becomes readily apparent.
The practice wasn't easy to develop. E-folio requires coordination between hotels, credit card companies, bank issuers and automated expense system makers. Before adapting their property management systems, hoteliers want to see demand from clients and a return on investment. After years of development, the number of participating U.S. properties is estimated at nearly 11,000.
Spending hundreds of million of dollars annually for hotel stays, IBM was the first company to push its hotel suppliers toward e-folio. "It was driven from a procurement perspective in the late '90s, when we realized we did not have level three data on hotels," said Sarah Edwards, EMEA travel consultancy manager for IBM, at a recent Association of Corporate Travel Executives conference.
Such data can help improve negotiations with hotel suppliers, especially nowadays, as room rates rise and demand in many markets easily outpaces supply. Traditionally representing a company's second-largest corporate travel expenditure, hotel costs have grown as a percentage of total T&E, and for some buyers now rival air transport costs.
With traditional processes, buyers tend to lack insight into negotiated rate usage and ancillary expenditures, creating discrepancies that can slow the arduous annual negotiating cycle. But when vendor and client use the same data, there may be opportunities to negotiate specific line-item costs and create more accurate "total cost of stay" comparisons between chains.
For IBM, another key driver was process improvement for auditing and expense management, including a transition to a paperless environment. In the program's first year, the company saved $85,000. Now, with e-folio data pre-populating about a quarter of the more than 2 million expense reports processed in North America, annual savings total roughly $600,000 and employees' time completing expense reports is down by 50,000 hours, Edwards said.
The impact is cyclical. As travelers recognize the conveniences in the automated expense reporting process, they may be more likely to choose those hotels that have agreed to transmit e-folios. In turn, that can improve compliance to corporate travel policies and bolster the company's negotiating position next time around. As such, travel managers may consider promoting participating properties at the point of sale. Hotel companies, therefore, have an incentive to participate.
The same is true of corporate payment system providers serving as the intermediaries. Travelers who previously had not used their companies' preferred corporate card may be drawn to it if they realize the productivity benefit during the expense reporting process.
Moreover, pre-populated data makes travelers less likely to file fraudulent or otherwise inaccurate expense reports, helping their companies adhere to Sarbanes-Oxley regulations and Internal Revenue Service requirements.
For all these reasons, some hotel chains say more buyers are including e-folio elements in RFPs and accepting enriched data feeds via corporate card providers. Marriott International, for example, said a few hundred accounts already have established such programs, and executives expect significant expansion in 2007.
IBM's Edwards serves as an account manager for Proctor & Gamble, which outsourced travel managementto her company in 2004. By implementing an e-folio program, she said, P&G in year one could save $94,000 in North America and $62,000 in Western Europe--where it annually generates 300,000 and 200,000 expense reports, respectively. Cost reductions, of course, always are appreciated, but Edwards said P&G's focus would be on improved employee satisfaction.
"If you have three hotels in a city, you can bet that [travelers] will pick the one with e-folio because it makes their expense processing so much easier," Edwards said. "It is a no-brainer."
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