Three years after creating a policy for corporate meetings management and moving the department under corporate transient travel, Piscataway, N.J.-based American Standard Companies has developed a program in which hotel rates for small corporate meetings are negotiated once a year along with transient negotiations. Currently, about a dozen chains participate in the program in 15 designated cities.
"We pre-negotiate a contract once a year that covers all the meetings scheduled at that location and then we have that guaranteed rate throughout the year," said Ernest Guerra, Nashville, Tenn.-based director of global travel and meeting services for American Standard Business Services. "Typically, we'll have two properties—in case one is full—and sometimes three, depending on the size of the city."
Internal compliance was crucial to the success of the small meetings program, Guerra said, and American Standard had to show it could deliver its volume commitments to its preferred hotels. That process was aided by the policy, created in 2003, that dictates all events with either 10 or more attendees, $30,000 in expenditures, or requiring airfare or accommodations must be sourced through the meetings department.
To ensure compliance, the meetings department worked with local administrative assistants to research appropriate properties in their cities and explained the benefits of the preferred vendor program.
"We engaged them in the process, explained what we were doing, explained the benefits: They would not have to negotiate and we would leverage the spend from the rest of the company," Guerra said. "They wouldn't have any financial risk and they would have meeting planners to assist them."
The process has generated savings in 2006 despite higher hotel rates, Guerra said. Now, the program is ready to implement new sourcing technology and lay the foundation for expanding the policy overseas, he said.
American Standard's internal team of five meeting planners and one meeting manager handle high-touch, highly visible and high-spend meetings—which amount to 30 to 40 events per year or about 10 percent of the company's overall number of meetings. The remaining 300 meetings held by American Standard businesses, labeled as small meetings with fewer than 75 attendees, are sourced and planned by WorldTravel Meetings & Incentives, the meetings arm of American Standard's travel agency BCD Travel.
Guerra said that before he was hired five years ago to implement a global travel program, a group in the marketing department planned some large events and other meeting contracts were signed by administrative assistants. The small meetings program has continued to generate cost savings and cost avoidance for the company in 2006 despite the swing to a seller's market, Guerra said. The company tracks year-over-year savings separately from cost avoidance, and savings are harder to achieve as "the more managed the program becomes, the less the savings."
"We're at the point where hotel rates are going up and the savings become less, but we're still achieving savings. In the first quarter, we were still able to achieve savings despite the increase in room rates," he said.
The meetings team quantifies such value-add services it is able to negotiate into contracts as airport transportation or food & beverage, to show senior management. Guerra said the program achieved $700,000 in cost savings and avoidance in 2004 and $800,000 in 2005 off a total spend of about $10 million.
American Standard had $10.3 billion in sales in 2005 and has three manufacturing businesses: air conditioning units under the Trane brand, plumbing fixtures and automotive braking systems. It employs 61,500 people worldwide.
Guerra said the meetings department also used corporate card data and its expense reporting tool to increase compliance with the meetings program and Sarbanes-Oxley requirements.
By mandating the use of a corporate meeting card, the company can control budgets and contract-signing authority on the front end of the process, Guerra said. The meetings department developed internal benchmarks on per-attendee costs for various types and sizes of meetings.
"That was very effective, because you're able to demonstrate and show a CFO the data in a language they understand: 'Here's the company-level cost and the average cost per meeting for your particular business,' " he said.
Using the company's electronic expense reporting tool, the meetings department could ensure that invoices were backed up with documentation and that only the approved cards were used for meetings expenditures.
"We've now had about five or six internal audits and it's withstood the test of time," Guerra said. "That standardized the process and got us closer to meeting Sarbanes-Oxley requirements."
American Standard is also in the process of implementing a meetings management technology tool, provided by Philadelphia-based StarCite Inc. Guerra said the company initially had purchased WTMI's Plan2Attend tool at the end of 2005, but the tool was discontinued one month later and replaced with StarCite
(BTN, Feb. 6)."It worked out for us because we got everything at the lower negotiated price," Guerra said. "To tell you the truth, StarCite would have been our number one choice in the criteria we were trying to fill. It was just too pricey."
Guerra said the tool is expected to generate even more savings for the program and free the company's meetings department from time-consuming logistical tasks.
"One of the things that I've always believed in is that technology is an enabler for productivity. I was looking for a tool that could automate the menial tasks and the labor-intensive tasks that are kind of repetitive," he said, adding that labor costs can account for 60 to 70 percent of operating costs
As part of the goal to be more strategic, the meetings management department provides monthly reports for the chief financial officers of each of American Standard's business divisions.
"We started providing the corporate CFO and other CFOs with a list of their upcoming meetings for the balance of the year. We identified the estimated spend, the number of attendees, the location and who the meeting sponsor was." Guerra said, "When the CFO is looking for ways to contain costs, that information is very helpful to them. You can cancel a large meeting and save $250,000 to $750,000."
Even if an event is delayed by a month or two, it can help the company save money, Guerra said.
Now that the U.S. meetings management policy has been implemented, American Standard is looking toward events in Europe. "We're taking it slow because we need to make sure the program is implemented well in the United States before we take it outside, but we're looking to implement corporate meeting cards in Europe," Guerra said.