Tool Recoups Hotel Commissions

While collecting hotel commissions long has been a bane of both corporate travel buyers and travel agencies, a new tool devised by ECommissions Solutions has been developed and implemented in an attempt to expedite commission reconciliation.

The device, known as Kalypso, serves as an end-to-end commission recovery solution. Paul Hoffmann, president of ECS, said that the tool is a way for corporate travel departments, agents and accounting staffs to completely capture hotel segment data, which can be used toward boosting commission recoveries and cutting down on their retrieval time. "One of the biggest challenges is the collection of data of non-ARC accountable documents, such as hotel and car, and the issue of those segments making it into the back office accounting system" Hoffmann said. "Rarely, if ever, does the hotel segment data at the agency or CTD level match or reflect what's in the back office."

While the Airlines Reporting Corp., or ARC, serves as a clearinghouse for air commissions, the hotel and car segments do not have a similar body acting on their behalf, which makes data reconciliation that much tougher. "We have statistically found in our client group that anywhere from 15 percent to 50 percent of hotel segments don't make it into the back office," Hoffmann said. "We are enhancing the corporate and travel agencies' hotel data to make sure that the travel management reports are accurate. Data integrity is as important as the reconciliations and, sometimes, the commission collection."

"Buyers may have an interest" in these recouped hotel commissions, according to John Caldwell, president of travel management consulting firm Caldwell Associates, "but it's not going to drive the program. They can make some additional revenue on commissions, but commission retrieval at the hotel level is not the item it used to be years ago. Large global programs are net of commissions, so that cuts down on the number of commissions. There's still commission on the non-preferred properties where it's not net, but the whole idea about preferring a property or chain is to get the front-end price as low as possible absent the hotel commission."

One component of the ECS tool is its midoffice snapshot, which captures all of the reservations, changes and cancellations made on the global distribution systems. The technology is laid on the agent's desktop and every night a snapshot is taken of all the day's hotel bookings. "We now have the most current, active data element in the passenger name record up to their departure," said Hoffmann, "so we don't care about what's in the back office—we are making it easier on the agent because we are grabbing every single hotel segment at the point of sale."

Tzell Travel Group, the corporate travel division of CNG Travel Group, incorporated the tool at the beginning of the year "It's done a fantastic job on hotel commission reconciliation. We are extremely satisfied," said Willie Lynch, Tzell Travel Group's CFO. "Our agents don't have to go through all these unclaimed reports anymore to identify which bookings belong to them." Lynch said that before employing the ECS tool, it had a 40 percent match on bookings to agents. Post-ECS, that number reached 75 percent.

"We used to have to match checks and bookings to booking information in the back office that runs off the interface from Sabre," said Lynch. "In effect, the back office wasn't capturing as many bookings as the ECS tool could. The midoffice snapshot interfaces with Sabre and extracts information far cleaner than our back office. The tool probably captured about 40 percent more booking information than we had in our back office."

The tool extracts data with assistance from Perot Systems and performs the daily administrative duties that accompany commission retrieval. "We have a relationship where they consolidate the commission payments for agencies," Hoffmann said. "A hotel contracts with them and they are responsible for collecting their stay data from the hotel systems and then pay the commissions on their behalf. Once we find that the payment item is missing, after 50 days we automatically send out a notice to the hotel requesting commission payment." Hoffmann said that if a response isn't received, another request is fired off after 90 and 120 days. Added Tzell's Lynch, "We are seeing checks come in now that have dunning notices attached, so it basically has started to kick the hotels to get more commission in."

Hotels also are taking notice of the ECS tool. "Hotels find that the service makes their lives easier," according to Hoffmann. "Whereas some hotels only paid on receipt of invoice, now the automated request function urges them to pay in a more timely fashion."

Lynch also said that before employing the ECS tool, the company was recouping between 6.5 percent to 7 percent of hotel commissions after 45 and 60 days. Now, he said, that range has jumped to between 8 percent and 9 percent. "The hotels are so fragmented that to say you're ever going to connect 100 percent is unrealistic."

The strategic alliance between ECS, CTS Systems and Perot Systems provides an end-to-end commission retrieval service. Atlanta-based CTS Systems intertwines with ECS' tool and provides another level of tracking and reconciliation. It is also responsible for the automated dunning requests submitted to delinquent hotels.

Other companies now using the ECS tool include the Hickory Consortium, JourneyCorp Travel, Tailor Made Travel, Traveleaders and a number of ARC-accredited Corporate Travel Departments.

Among the CTDs is Moog Travel, the travel arm of the East Aurora, N.Y.-based manufacturer of military components. "We don't have resources to buy a lot of software, so to outsource hotel commission tracking is great," said Kathy Hall-Zientek, manager of travel services for Moog Inc., which has $12 million in T&E spend. Moog signed on to use the tool in mid-March. "For April, we had an oversight of 300 hotels that we never captured in the back-office system," she said. "We expect there will be a 30 percent increase on the number of returned commissions. One of the best perks of the tool is the physical retrieval of the commissions, "We get one check, which I love," said Hall-Zientek. "It's all one consolidated amount."

One outgrowth of the tool is the residual data that can be used by corporations during rate negotiations. Said Tzell's Lynch, "The value-add is higher now. The data received allows us to look at what hotels are good and bad. We now have a blacklist where if a hotel isn't going to pay us, then there is no point of our agents booking with them."