Adidas Travel Management Policy Gains Firm Footing
<B>Adidas Travel Management Policy Gains Firm Footing</B>
By David Jonas
<I>Portland, Ore.</I> - By implementing several time-tested travel management practices, as well as a few newer techniques, middle-market company Adidas has been able to trim T&E costs in several areas and transform a weak program into a more mature one.
Much of the credit belongs to Mike Mary, director of travel services. In just a few years on the job, Mary--who also serves as president of the Oregon Business Travel Association--has slashed air spend by millions, established money-saving property-based hotel agreements and strengthened a travel policy that previously had no bite.
"I came in at a time when the rule was that whatever the traveler wanted, the traveler got, regardless," Mary said. "It's a tough road to change a travelers' behavior. The dynamic is difficult when you take something away that travelers have always had."
Nevertheless, Mary attributed the millions saved on air travel to a few factors, including an 80 percent conversion to net fares, an expanded pre-trip approval process involving department heads and mandates through a stiffer travel policy. The result is a preferred airline usage figure above 80 percent by the company's 1,000 travelers.
Partially as a result of such high policy compliance and the ability to move market share, Mary has had leverage in recent negotiations and struck some good deals. In fact, 99 percent of Adidas's bookings go through its two regional agencies. "If people don't book that way, they don't get reimbursed," he said. "It has always been the policy, but now it's enforced."
Adidas's two agencies, each responsible for one U.S. division, are Piedmont Travel in Greenville, S.C., and Focus On Travel in Beaverton, Ore. Since Adidas now is primarily on net fares, both agencies use transaction fees and both are structured as hybrid rent-a-plates.
Mary has opted away from establishing the company's own ARC-accredited Corporate Travel Department for several reasons. "There are a lot of additional liabilities, including the revenue stream, and it takes an enormous amount of time to set it all up. Even the process of outsourcing is time consuming," Mary said. "Plus, if you have a good relationship with your travel management company, there are more dollars to be saved by focusing on supplier negotiations instead of trying to micromanage the process."
Meanwhile, despite Adidas's policy that permits business class for international flights, Mary instituted a few initiatives to drive costs down. As a general incentive, any traveler willing to fly coach internationally will be rewarded with 25 percent of the differential. And more specifically, Adidas mandated coach class travel to last year's companywide global marketing meeting in Sydney, Australia, attended by 1,000 employees. In planning just a single meeting, Adidas saved $350,000.
On the hotel front, Adidas is focusing its negotiating efforts in key cities rather than seeking out deals at the national level. That strategy, which began last year at three dozen properties, has had immediate results. "Our negotiated rates last year at those properties--usually one to three hotels per market--were 27 percent below the average corporate rate, not the rack rate," Mary noted. "And that's just by going property by property and pledging realistic room night figures."
The local approach will be applied this year to an increasing number of properties. While Adidas is talking with hotel chains on the national level, it is not prepared to make such commitments, especially when the rates have been so attractive on the local level. Mary even has found room to save on car rental costs by selectively using a secondary car rental supplier in certain markets.
Moving forward, several of Adidas's goals, as expected, center around technology. An online booking product, for example, currently is undergoing beta tests. Despite "giving travelers more information when playing the frequent flyer game," Mary said the system further will help mandates by making everything attributable to the traveler. "Overall, with the administrative controls we plan on building in, it will work well," he said.
Meanwhile, the company still is in the process of rolling out Captura's expense reporting solution. Full implementation is expected by next quarter. Also, the company is considering the development of a corporate intranet, though no timetable for that project has been set.
Most recently, Mary last month started using the American Express e-commerce portal offered as part of the corporate card program. "I now can get any of the monthly or by-request spending reports through the portal, in real time," he said. "It's been extremely helpful.