Agencies Answer Client Demand For Global Consistency

By Megan Hjermstad / September 17, 2000

Agencies Answer Client Demand For Global Consistency

By Megan Hjermstad

Corporations are seeking greater global consistency in the travel management company model and agencies have answered that call by extending the standard of services offered in the United States to the rest of the world. Mega agencies--such as American Express, WorldTravel Partners-BTI, Carlson Wagonlit, Maritz Travel GTM, Navigant and Rosenbluth--are focusing on fine tuning technology, service standards and pricing formulas to be consistent across their worldwide networks of both owned and affiliate locations.

However, even as agencies attempt to standardize and centralize processes, many countries are slow on the pick up. Thus, the agencies are taking on a more consultative and educative role to help clients understand certain travel management concepts, which still are relatively new in certain areas of the world.

The same kind of pricing pressures that were put on agencies in the United States several years ago as a result of commission cuts and reductions in overrides now are beginning to hit other regions of the world as well. Commissionless environments have driven agencies to focus on creating standardized fee-based pricing structures and bringing those new pricing structures to all areas of the world.

American Express for the past two years has been establishing a consistent pricing pro forma and separating out direct operating expenses.

"The end price is not going to be exactly the same because of market conditions, but we're doing everything with a consistent methodology," said Steve Power, vice president and general manager of American Express Multinational, which includes companies with two of its three products in four of five regions.

Europe, for the most part, has accepted fee-based pricing and is moving toward implementing online booking systems. Latin America and Asia/Pacific still are behind, but are coming up to speed quickly on their understanding of the fee-based and Web-based environments.

Scott Guerrero, Maritz Travel vice president of business development and consulting services, said it has been a particular challenge to move to transaction-fee pricing in Latin America.

"What this means for us from a consulting point of view is understanding their [Latin American clients'] cost structure and how to put together a consistent transaction fee," he said. "We have been getting them to understand what a transaction fee is and why they have to go to a transaction fee to be competitive. As a result, we are seeing more transaction-fee pricing."

Carlson Wagonlit two years ago had none of its Latin American clients on fees; now it has moved 40 percent of those clients to the fee environment. "They want to know 'Why fees, what's the problem with what we have now?' " said Ross Mersinger, vice president of Latin America Carlson Wagonlit Travel. "Those comments are made out of lack of information. It feels exactly like it did 10 to 12 years ago here. There is a total lack of understanding of what the benefits are."

Meanwhile, agencies have gotten closer to providing consistent global data, but still face the challenge of getting consistent, clean data from mid- and back-office systems from agencies located around the globe. The mega agencies, for the most part, have global infrastructures in place. To varying degrees, they have opted either to own agencies, enter into franchise agreements or become part of global networks.

Maritz Travel--with its GTM partners around the globe--has 1,250 locations in nearly 40 countries and has pursued a franchise structure, rather than an ownership model. "We like the approach we've taken by finding good strong players in each country," said Guerrero. "They know the local suppliers and they know the local business practices. We find that the partners in those countries can deliver quality service."

Navigant International is a member of the Woodside Travel Trust organization, which encompasses 125 agencies in 80 countries. Agency partners, or shareholders, have met a very high level of expectation and recognize there is a certain standard they must meet.

Carlson Wagonlit Travel owns all of its operations in the United States and Canada and has wholly owned, franchise and partner agencies located in more than 140 countries around the world.

WorldTravel Partners-BTI has been taking further ownership of locations with which it has had contractual relationships. WTP-BTI has coverage in 75 to 80 countries and owns operations in 28 countries.

Rosenbluth International owns practically all of its operations in 25 countries around the world. "The fact that we own our operations allows for us to make a decision in one country and have it carried out around the world. It removes all the conflict of interest," said Hal Rosenbluth, chairman and CEO. "If you're part of a consortium, if you're a joint venture, the owners of those companies are going to look out for their own good; we look out for our clients' good. That may mean that in one part of the world we do something that has a beneficial effect for Rosenbluth and in another part of the world it might have a detrimental effect, but in the overall scheme of things, it's great for our relationships with our clients."

Rosenbluth began creating its owned network seven years ago, when it recognized that there would be a natural evolution from domestically consolidated accounts to globally consolidated accounts. "Companies recognized that the benefits they were realizing and accruing from the consolidated domestic program could only and would only be enhanced by doing it on a multinational and global basis," said Rosenbluth.

Rosenbluth has at least 70 multinational clients and about 20 global clients it is servicing in just about every part of the world. Many of the more recognizable global corporations that it handles worldwide are based outside of the United States.

Maritz GTM has about a dozen multinational clients it is working with in Asia, the Americas and in EMEA. Guerrero said the trend that has been developing over the past year among corporations is to take a more regional approach to consolidation.

"What we're seeing is more companies looking at this along regional lines because it appears that's the way these companies are organized," said Guerrero. "I think we'll see more and more companies trying to take this in three chunks instead of one chunk."

Greg Cothern, vice president of global business development for Woodside Travel Trust, agreed that although corporations have an idea that they want to consolidate everything globally, it is becoming more common to view the process on a multinational or regional basis. "We're seeing less of 'Let's do everything' and more of 'Let's do it where it makes the most sense,' " said Cothern.

American Express' Power said what often makes sense is for a corporation to go into Europe--the next largest market after North America--then to Asia and lastly to Latin America. But the order of consolidation depends on where the individual customer will get the biggest benefit. "Customers will want to go into a market where they think they'll get the most support and it's going to be the easiest implementation," he said.

Although a company doing a global consolidation likely will be global itself, it will have more or less success depending on its management structure. "A lot of companies talk about a global bid, but when it comes to execution they can't make it happen," acknowledged Power. "What we look for is: Do they truly have global decision making authority? Do they have support on a global basis? Do they have regional representation, someone in each of the major markets to help manage and implement that program? There is a lot of potential change required within the organization to make that happen."

Amex this year, however, has seen more companies going to bid on global travel programs. The number of global bids across its three product lines--corporate card, purchasing card and travel--is up about 300 percent year over year.

Tom Lacny, executive vice president of international for WorldTravel Partners, has seen 20 to 25 multinational bids over the past year. "Many more clients have been acting on a multi-country basis," he said. "The momentum has been great." Lacny added that the greatest benefit of multinational consolidation is in terms of procurement.

Not all companies, however, are ready to make the necessary investment. Maritz has seen about the same amount of global bids for the past couple of years. Guerrero attributed the minimal increase to an uncertainty about whether a global consolidation can deliver real benefits.

"It still is not conclusive. You're going to get your benefits from your policy, airline negotiations and hotel program, but there is a lot of work that has to go in to deliver those benefits. Companies that are well disciplined get the benefits. Other companies have this glint in their eye about doing the global program but they don't have the discipline," he said. "A lot of folks are learning the hard way that for global consolidation to work, it is going to require a lot of discipline and management commitment."

Rosenbluth has found that companies don't necessarily even go out to bid on global service. "We'll prove ourselves in one part of the world for a client and then they'll ask us to service them in another part of the world," said Rosenbluth. "If you do it right the first time, they're going to want to keep using you in as many places as possible."

Taking a proactive Tact

Where travel management companies have realized that they can really add value is as a partner and consultant to the corporation looking to consolidate. "If you really look at what true travel management companies do, it's consultative in nature, whether it's for a company that has a location in one city in one country or 50 cities in 30 countries," said Rosenbluth. "It's all consultative in one way or another."

Maritz is acting as educator and partner to its global clients. "When we work with a client, our account manager services them on a consulting basis. We say, 'Here's the goals and objectives, here's the action plan, here's what you can expect to get as results, here's what you're going to have to put in as investments,' " said Guerrero. Maritz is deploying its strategic partnering process across its multinational client base and has spoken with four companies in the past 30 days about the global partnering process.

American Express also has taken a proactive approach toward communicating and exchanging ideas with customers. The agency last year surveyed its multinational clients and interviewed 10 to 12 customers on its performance. American Express since then has been focusing on the three areas where clients thought they could add more value: providing more benchmarking data, delivering more consultative value and supporting a strong global support network in all markets.

The company has created a benchmarking database and now is providing high-level benchmark data around its three product lines. The information, updated on a quarterly basis, provides year-over-year trends within the multinational client base.

American Express Multinational also launched a consulting skills training module for its relationship managers to improve their ability to identify customer needs and offer targeted advice to help customers make decisions to move their programs forward. Relationship managers also have access to an enhanced global reference library, which provides global T&E best practices. The group has mandated annual account reviews and enhanced that presentation to make it more global, more consistent and more consultative.

"We're continuing to increase the effectiveness and breadth and depth of our internal organization to be more consultative with the customer," said Power. "At the same time, we've significantly beefed up our consulting services capabilities and they are playing off each other very well."

In response to the request for greater global effectiveness, Power has been leading an initiative to build the infrastructure to deliver global solutions, with standard global products, services, contracts and pricing.

Other travel management companies also have established global service standards for their owned agencies and agency partners. Agencies have had to determine how much flexibility to allow, so local needs and differences in every country are respected.

"I'm one of these individuals who believe regardless of the different nuances in local cultures at the end of the day people want value, they want service, they want to feel attended to and I don't care if that's in Switzerland, the United States or Japan," said Rosenbluth. "People want you to appreciate their business, they want you to focus on it, and they want you to use your expertise to help them become a better company as a result of a global consolidation."

The other challenge is finding a quantifiable way to measure performance. Maritz is in the process of launching its first global customer satisfaction survey via e-mail to travelers. The 10-question survey will determine the consistency of service worldwide with its global customers.

Quality of service becomes a greater concern for companies when travel management companies start discussing the option of call centers.

"I think they're over the local service aspect of onsites versus call centers," said Power. "They understand they're not going to be around the corner like they were before, but they're still going to get the same service."

Call Centers Versus Onsites

Travel management companies also have had to demonstrate to clients the economic benefits of moving into a call center environment. American Express and Carlson Wagonlit are continuing to consolidate onsites into call centers and move clients into them. Carlson in Latin America has two call centers and will have five by year-end. Mersinger said Carlson Wagonlit began slowly because it was uncertain of what the acceptance level would be, but demand has been far greater than anticipated. American Express currently has five call centers in Europe and is looking at expanding one or two more. Amex is continuing to move toward these galaxy call centers, but has found it to be very difficult in some circumstances.

"Local language and currency are issues, especially when you get into Europe. Having a German call go into a French call center is just not going to happen, even if they speak German in that call center," said Power. "We're finding the nationalistic issues sometimes are preventing us from doing it everywhere we thought we could. Origination and destination also become an issue in Europe, so sometimes it's more economical to keep a local agency in that country because you can keep a lower fare."

Maritz GTM does not have any global or regional call centers for cultural as well as economic reasons.

"We've not yet seen the economics justified," said Guerrero. "As telecommunications costs come down and as transborder e-tickets evolve, this could become more possible."

The mega agencies also continue to focus on implementing new technology as it becomes available both on the client and agency sides. They have been helping clients to select and implement online booking tools, and the e-booking engines are making inroads both domestically and internationally, but such barriers as local language and currency have been difficult to overcome abroad.

Liliana Frigerio, executive vice president of global sales and account management for Carlson Wagonlit, said the most significant change over the past year has been the move to self-booking tools in Europe. "We have spent a lot of time helping clients select and implement online booking tools. A lot more companies in the United States have already chosen one, in EMEA they are more in the initial phase of choosing," Frigerio said. "The reason why it is less than in the United States is the usual complexities of the marketplace."

Individual marketplace characteristics, such as different languages, currencies, products and global distribution systems, also make it difficult to get consistent clean data from the back-office systems. Agencies continue to concentrate on ensuring that every owned location or agency partner has the ability to filter information in a consistent format to a central location.

"The number-one focus is still on data," she said. "There's a lot of talk about front-end consistency, but we've not figured out how not to use Amadeus in Germany. You might have a great Sabre product, but in Germany you cannot provide effective service to the customer unless you use Amadeus. That's not as important as the data collection."

HurDling The Data Obstacle

Using its Northstar reporting product, Maritz has been generating Web-based reports for more than a year, but the key has been ensuring that consistent and clean data is going into the system. "The delivery of the reports is not easy, but that's second to getting clean, accurate data," said Guerrero. In countries with large volumes, an electronic extract from their back office puts the data in a consistent format that is read by Northstar. In small countries, some locations have to manually enter the data into a spreadsheet. "If you're only dealing with five tickets a month, you're not going to spend a lot of money to build an elaborate infrastructure to send an electronic transfer of data," said Guerrero.

American Express Global Information Services in August began providing Web-based, ad hoc, queriable reporting for both card and travel information. "All that information is readily available in real time to the client, which is something they never had before," Power said. Clients can drill down and pose what-if scenarios to ensure they are complying with supplier deals and understanding any shifts happening in top city pairs.

Rosenbluth--whose Vision reporting system also is Web-enabled--has brought all of its information into one central database in the United States so clients can get local data for one country or they can get a roll up of information for the world. "Our ability to be able to bring it all together and then share what it means with our clients so they can approach suppliers on a global basis is absolutely critical," Rosenbluth said.

The demand for consolidated data on a timely global basis has risen as airlines have demonstrated more willingness to look at global deals. Data is the essential element for corporations looking to create a global airline deal.

"Like in the United States, it is quid pro quo. If a company can demonstrate it can use the preferred supplier in Singapore, Sao Paulo and Frankfurt, and they deliver, the airlines will negotiate with them," Guerrero said. "If the corporation doesn't have a track record of delivering, then it's really hard to get."

Power said the airlines are working on creating more global deals, but in some instances they don't price as globally as Amex would like.

"They do have alliances that are global in scope but they like to price things locally as well," he said. "Clearly, there are some gaps related to infrastructure and technology, but they are working to improve that."

Corporations, too, have become more willing to accept a select single global supplier. "The use of local carriers in Europe tends to be a barrier," Power said. "Breaking that down tends to be a big-change management for corporations.

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