<B> ACTE Takes World View</B>
<I>Draws Record Attendance In Parisian Rendezvous</I>
By Cheryl Rosen
<I>Paris</I> - At the Association of Corporate Travel Executives' global conference in The City of Lights last month, the talk was of global airline alliances, multinational travel programs and the new trans-European currency.
The switch to the euro will accelerate competition by allowing consumers to buy outside their own countries, said Hervé Gourio, Carlson Wagonlit's president of Europe, the Middle East and Africa. He suggested that the travel industry must begin now to plan for the currency change. "It's very important that travelers begin to ask for ticket prices and prepare expense reports in euros," he said. Carlson will offer customers a "full package" to handle euro conversions by 1999.
At the corporate level, Andersen Consulting partner Jean Claude Guez predicted, the new currency will lead to more global markets, more videoconferencing to stay in touch, flatter organizational models and an overhaul of the distribution channel focused on cutting costs. In a less heralded development, he added, the switch to the euro will save corporations the "transfer charge" that corporate card providers tack onto bills that involve currency exchange--a fee not regulated by any government agency.
Guez called experiments with e-commerce, WebTV, Web telephones, interactive digital television and mobile phones with smart-card slots now being tried in France, Germany and the United Kingdom "pockets of excellence" that will "have a great impact on travel distribution."
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In a breakout session on global hotel programs, an agency executive suggested funneling hotel bookings through travel agencies while a hotel executive suggested bypassing agencies altogether. But a travel manager said the easiest way to cut hotel costs might be to do away with the annual RFP ritual.
Inter-Continental vice president of sales planning and development Michael Prager said his goal is to establish long-term relationships with "very large" corporate customers that "take out costs permanently, in a five-year process." Speaking just a week before the airlines slashed international commissions, Prager called commissions "a silly way to reward intermediaries. We don't think the corporate buyer needs to pay us to pay an intermediary." During the the Q&A at the end of his session, Prager added that "it's wrong to assume the GDS is a fact of life, especially if you know which companies you are going to deal with."
Session moderator Sara Issacs, hotel buyer for PricewaterhouseCoopers, said the accounting giant is attempting to hold down process costs by replacing the annual onslaught of RFPs with multi-year hotel contracts that include an index for raising rates every six months.
Prager responded that Inter-Continental "in principal is extremely receptive to negotiating contracts for more than one year, but it's difficult to find an index we agree on. Usually Finance screws it up on both sides."
While national carriers may dominate the European skies, significant opportunities exist on the ground for pan-European hotel programs, said American Express Europe manager Matthew Davis. Hotel rates rose at about the same rate in Europe over the past three years as they did in the United States--13 percent and 14 percent, respectively--and corporations are driving only 18 percent of European hotel bookings through their preferred agencies.
When putting together a hotel program, he suggested, travel buyers should concentrate on the cities that make up 70 or 80 percent of their total spend, identify their market share in those cities with each hotel company, and produce a "value story" showing the actual and potential share they can deliver--"what you can give and what you can take away." Buyers also should track their compliance rate (total spend at preferred hotels divided by total spend overall) and their coverage (total spend in the cities with a preferred partner divided by total spend) on quarterly reports.
Carolyn Moore, head of hotel product and consulting at BTI U.K., suggested travel managers also follow up closely after the program is finalized, by sending letters to losing bidders "so they don't load rates you didn't approve into the GDS," and auditing GDS rates to be sure they are correct.
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Having begun their programs by focusing on the individual travelers, it's time for the global airline alliances to get their corporate programs in order, said a number of travel managers. At Electrolux in Nurenburg, for example, putting together a program "was a hell of a job, and we had to negotiate for each and every market separately," said global travel manager Jo-Achim Hamburger. "If your program is not ready," he asked vendors, "be a partner and tell us the truth."
Following his own unsuccessful attempts to negotiate a combined program covering Unilever's London and Amsterdam-based travel with KLM, Unilever business services manager Peter Bost agreed that "Pan-European deals are a farce, and still more the exception than the rule."
But even while acknowledging that "is does take a while to fuse six companies with different philosophies, different strengths and different markets," Lufthansa's Margit Napier said the German carrier and Star Alliance member has signed seven global corporate deals to date. Among them, Lockheed Martin's Betty Martinez said her contract "was worth waiting for."
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Digital Equipment Corp. has moved to a global travel sourcing program, but at the same time has kept a distinct strategy for Europe, said Europe travel manager Calin Schau. "During the last four years we consolidated from Helsinki to Johannesburg and from Lisbon to Moscow," he said. Digital began by creating a travel council and relying on its European management team as a business partner offering support and sponsorship. Schau first attacked "the hardest and the easiest" pieces of the program, travel agency and car rental, reducing his internal resources by 80 percent by "splitting the purchasing of travel from the business activity of travel," and outsourcing to an agency.
Next, he negotiated air fares on three levels: A worldwide deal with an American carrier, filled in with European and local contracts. On the hotel side, he found local properties "constantly coming back and offering us better deals than the chains." Still, he succeeded in "totally reversing our market share with preferred hotels in three months." Finally, in a move that proved "more difficult than expected," Digital instituted a single corporate card.
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Corporations trying online booking systems cannot realistically expect to realize savings until 20 to 30 percent of transactions are automated, Motorola global travel manager Colleen Guhin told a session moderated by BTN's Cheryl Rosen. "It wasn't until we put the system outside our cafeterias and showed employees what it could do for them that it started to work. We got 20 to 30 people signing up each day we did that," she said. Guhin suggested travel managers try integrating half-hour automation demonstrations into regular company meetings--especially national sales meetings, where "you have your whole road-warrior audience there." Offering drawings for free airline tickets "didn't do a thing or incentivize anyone," she said.
Thomson Consumer Electronics travel manager Cindy Heston, meanwhile, said that as a result of a meeting with the human resources department, the travel department is shelving a plan to mandate the use of automated booking in favor of paying cash incentives to travel arrangers for making bookings online. "We're a company that believes in cash incentives," she said.