ACTE Focuses Buyers Beyond Commissions

<B> ACTE Focuses Buyers Beyond Commissions</B>

By Sarah Welt

<I>New York</I> - At the Association of Corporate Travel Executives regional forum last month, the discussion was focused on what impact the recent international commission cap and future reductions would have on corporate buyers, and strategies to best handle travel operations in the future.

Ralph Brown, president of R.D. Brown Co., Northbrook, Ill., told participants that the short-term effects of the international cap equate to a reduction to the travel agency of 48 percent--in the long term leading to an increase in the cost of corporate travel, a greater urgency to automate the travel process, more travel agency consolidations and more net-fare agreements.

Brown said the next logical step is to take commissions and overrides out of the equation because they make it more difficult to achieve a good working relationship with the agency and the airlines. ACTE president Earl Foster, global corporate travel manager for Joseph E. Seagram & Sons Inc., agreed. "If I leave you with nothing else today, this is your wakeup call--overrides will go away and if you still have your head stuck in the sand at that point in time you probably won't be here for another ACTE conference next year," he said. "Get commissions out of the picture. Develop a relationship with your agency so that you are responsible for their revenue stream and do that based on the services you consume."

Brown said that now is the time for travel managers to prepare their senior management for a commissionless future. That includes communicating the value of net fares, as well as tracking and reporting bottom line results.

He also stressed the importance of using the Internet and self-service reservation products. "Electronic processing is the wave of the future," he said, noting that in five years it is likely that 50 to 60 percent of bookings will be processed electronically. He touted the use of electronic tickets to further reduce costs, and suggested that travel managers look at which trips are really necessary, and consider replacing some with videoconferencing. "Maybe you need to roll that into the travel management function," he said.

Brown also said it is important to benchmark to determine best practices and stressed the value of a strong travel policy. Finally, he suggested finding alternative ways to bring more money into the company, including negotiating a revenue share with CRS suppliers.

Meanwhile, since the international cap, some corporate buyers already have gone back to their suppliers and renegotiated to get better deals. "We are doing a good job renegotiating existing contracts in light of the caps and find the airlines very reasonable," said Craig Anderson, director of travel services for the New York-based Revlon Consumer Products Corp. Another buyer in attendance said that both his major airlines are "begging me to renegotiate--they are coming forward and increasing our percentage off discounts.