ACTE Takes On Economy, Data

<B>ACTE Takes On Economy, Data</B>

<I>Tampa - </I>Florida sunshine could not melt away the economic concerns of travel buyers gathered here for the Association of Corporate Travel Executives' 13th annual conference late last month.

Many of the more than 300 buyers, particularly those in high-tech and midsize or smaller companies, told Business Travel News that senior management had mandated a cut in travel spending or approved a tighter policy as a result. When asked whether travel overall would be up or down, these buyers cited pent-up demand and generally said it would increase. Most larger buyers with whom BTN spoke said their companies did not put mandates in place, though travel currently is down at their companies. This group generally expects travel to be flat by year-end.

Of 41 buyers who answered an ACTE poll, 43 percent said their companies had made a decision to cut back on travel in 2001. Of 86 suppliers, 76 percent said they had seen cutbacks from corporate clients, though more than half said the percentage of drop-off in travel through March 2001 was less than 10 percent.

"Make no mistake, we are smack in the middle of an economic slowdown," said Catherine Bessant, president of Bank of America for Florida, reflecting the outlook held by many attendees.

Though Bessant expects a rebound late in the second half of the year, American Express group president of global corporate services Ed Gilligan doesn't expect a "massive return" of business travel in that timeframe.

Gilligan, who joined Bessant and Continental Airlines chairman and chief executive Gordon Bethune as keynote speakers, said Amex has revised downward its business travel forecast to accommodate the economic slowdown here and--over the past two months--in Asia, Canada and Latin America. He said Europe is slowing, but "nowhere near as drastically."

Claiming that corporate cutbacks in travel to the tune of 20 percent to 30 percent are not sustainable, Gilligan called this a "time of opportunity, when action will be rewarded."


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A packed-house seminar on the high-profile debate over Continental's Corporate Insight program (see story, page 9) did not provide a consensual answer to the question, "Who's data is it anyway?," but attendees walked away with a better understanding of the issues at hand after the various interested parties hashed out their opinions.

The panel set the stage for what many expect to become a legal battle as Continental's competitors have promised the market they will cancel clients' contracts if they ignore clauses prohibiting them from sharing transaction-level booking data with Prism Group, Continental's third-party partner.

"Unfortunately, the top carriers have decided to make this a competitive issue," said Jack O'Neill, president of TQ3 Maritz Travel Solutions in St. Louis. "The issue won't be brought to a head until a carrier enjoins a client from participating with Continental or cancels a contract."

Continental vice president of multinational sales Dave Hilfman attempted to assuage the concerns of corporate buyers that "all we see is summary level detail" after Prism cleans up and transmits to the airline the data that buyers produce via their travel management companies.

"We're shocked and appalled," Hilfman joked when asked about concerns voiced by Continental's rivals. "The big three have indicated a concern, but it's just BS. I invited the big three to check it out--we can't see your deals any better than before."

Mark Williams, director of travel for the Americas at PricewaterhouseCoopers, said he did not accept Continental's offer of the same negotiated terms from one contract to the next with the additional requirement of using Prism for data processing. He questioned why Prism should be the sole provider of this service for Continental and its clients.

Hilfman countered that Prism is the exclusive provider because it developed the product using their data export standard. Nonetheless, "We've started a dialogue about how customers might work with other consolidators, such as Hi-Mark and TRX."

Thomson Multimedia manager of worldwide corporate travel Cindy Heston, meanwhile, said she feels as though there already are many eyes on this data and that it's up to Continental whom they contract with to cleanse it.

Robert Brunner, director of business development for British Airways, which has worked with Prism on the technology for five years, said the carrier had some client issues early on. Then, travel management consultant and lawyer John Caldwell of Caldwell Associates, said, "I do think there are significant legal risks, such as tortuous infringement on other airline contracts. I don't think the reaction has been just to make life difficult for Continental."

The last word went to Prism Group founder Michael Whitesage, who said, "Despite what you all say, none of you own the data. These other airlines are trying to deprive Continental of a new innovation and it is anticompetitive behavior." Whitesage credited BA as the pioneer behind Prism's development.

After noting that buyers for the first time will be able to see flown airline data and measure performance by contract term with the Corporate Insight program, Whitesage went on to say, "I abhor benchmarking, it's one of the industry's dumbest practices and the last thing Prism would ever do would be to share data that way."

For her part, TRX data services executive vice president and general manager Susan Hopley suggested that data ownership is different for each aspect of the data, and that the key metrics will change.


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In his keynote later on, American Express' Ed Gilligan echoed PricewaterhouseCoopers' Mark Williams on the data debate: "Only share data when it helps you." He also warned that buyers "need to be prepared for airline consolidation. There will be less competition, but there will be some competition."

For now, at least, the competition is verbal--and particularly stinging from the mouth of Continental's Bethune. In his keynote, the strident CEO slammed United Airlines' service record using a litany of United's bottom-of-the-industry performance statistics that he said would get even worse if it merges with US Airways. In fairness to United, Bethune failed to mention that the airline's numbers have marginally improved of late.

Nor did Bethune spare American Airlines from his barrage, saying, "The tiny little AA-Reno Air merger caused havoc in AA's system--if you liked the AA-Reno debacle, you're going to love the AA-TWA-US Airways fiasco. "These airlines are being driven by testosterone--my runway's longer than yours," he joked. "We're opposed to UA-US Airways, and Congress should just say no."


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"Are you concerned?" asked Lee Macenczak, Delta Air Lines senior vice president of sales and distribution. "You should be." During his address to conference attendees, Macenczak painted an anticompetitive picture of industry consolidation, explaining that American Airlines and United Airlines, following the current proposed round of merger activity, together would control 80 percent of all departures at the four critical slot-controlled airports in the United States. He also explained how the duo would control the business shuttle markets and further dominate U.S.-London traffic.

"Therefore, the option of future mergers and acquisitions must be available to all airlines," Macenczak said, though advocating a moratorium on mergers. "But one thing you can be sure of, Delta will never make a bad deal just because it's a big deal."

Without specifically mentioning Continental Airlines or its controversial Corporate Insight system, Macenczak sounded off on the data privacy issue, stating that all Delta's corporate reporting requirements protect the confidentiality clauses a client may have with competitors.

"Our requirements do not include sensitive, specific data that could enable us to determine the specifics of a competing carrier's deal," Macenczak said. "Rather, the data enables us to measure a corporation's revenue and market share commitments to Delta."

Macenczak went on to affirm Delta's desire for better information on a more timely basis and the ability to track deals, but not when jeopardizing privacy. "We will remain passionately committed to protecting the confidentiality of our agreements," he warned, "and if that confidentiality is violated, we intend to take action."


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Reflecting an increasing interest in strategic sourcing, more than 70 percent of attendees who pre-registered for sessions selected one of two strategic sourcing sessions presented by Scott Gillespie, principal of Ohio-based Travel Analytics.

In "Sourcing and Procurement-Based Travel Management: The New Model," Gillespie said sourcing projects usually begin at the CEO level with consultants who promise fast results and big savings. "External consultants carry a lot of momentum and credibility. It leads to senior management saying we need to get more aggressive," said Gillespie.

Gillespie said travel is an early target for savings because strategic sourcing techniques match up really well to travel. However, Gillespie said consultants often have little travel experience so corporate travel managers may find themselves teaching consultants about the intricacies of travel.

Among the 10 commandments for successful sourcing outlined by Gillespie, was: "Create a righteous travel policy. Unless senior management has a strong travel policy or is willing to implement one, you're not going to succeed." Gillespie underscored another commandment, "Know thy own heart prior to seeing bids," which he said allows for a truly objective way of deciding which supplier is awarded the business.


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ACTE awarded its Business Professionalism Award to Jeff Kurn, Hewlett-Packard global strategic sourcing manager for travel, for leading the HP travel team in sourcing its suppliers, consolidating to one agency and implementing a new travel policy, saving the corporation more than $40 million in travel costs.

The Industry Professionalism Award was given to Scott Gillespie, founder and principal of Travel Analytics, for developing the Tango software program that streamlines the airline bid and negotiation process.

The recipients of the ACTE President's Awards for service to the organization were Sylvia Gray, consultant with Western Management Consultants, for helping to increase membership in Canada; Ian Epps, account manager airlines for Galileo International, for growing Europe, Middle East and Asia membership to more than 700 members; Cheryl Hutchinson, senior principal with American Management Systems, for raising the bar on education and executive forums in the United States; Peter Choo, managing director/CEO of BTI Global Travel, for setting up ACTE's Singapore office; and David Pettigrew, commercial director of BTI, for providing initial ACTE presence in Asia/Pacific.