Brunswick Corp. Consolidates Agency, CRS, Card

<B> Brunswick Corp. Consolidates Agency, CRS, Card</B>

By Sarah Welt

<I>St. Louis</I> - Consolidating its travel management account under a single agency for the first time, Brunswick Corp. wanted a contract that included incentives and penalties for performance. But its contract with Maritz Travel Co. went a step further: Like in baseball, the client said, for this account it's three strikes and you're out.

That was not the only unusual thing about the tack it took, however. Brunswick also mandated that all its reservations be handled through the Sabre computer reservation system, and signed a revenue-sharing agreement directly with Sabre.

Consolidating from 22 travel agencies to one was the first corporate-wide project of a 14-member purchasing council Brunswick formed in July 1997 to try to collect its travel spending data and use it to better negotiate with suppliers.

The council also suggested hiring an outside consultant to help with agency selection; rebidding its air, car rental and corporate card supplier programs; and installing Maritz' point-of-sale tool, ProView, for its off-site agents.

Brunswick hopes to shave 10 percent off its total T&E spend of $25 million in the first year of its new managed travel program, and 10 percent each year thereafter.

"We want to leverage all of our volume so we can go to the airlines and get the best discounts. The only way to get enough information was to go through a consolidated source--one card and one agency," said Nancy Keenan, Brunswick's corporate purchasing manager for travel.

Brunswick hired John Caldwell of Caldwell Associates in Washington, D.C., to assist in the request for proposals and negotiating process. The company narrowed down the list to five bidders it felt would be able to consolidate its $10 million U.S. booked air volume, from a list that included American Express, BTI Americas, Carlson Wagonlit Travel, Omega World Travel and Rosenbluth International.

Bidding on the Brunswick account was "very price-competitive," Keenan said. "If they weren't in our ballpark price-wise, we didn't invite them in."

The company ultimately chose Maritz and in January 1998 signed a five-year, pay for performance contract. Under its terms, Maritz gets paid a minimum fee for every transaction it handles, but also is rated quarterly on its service delivery--and gets paid based on its score.

"Maritz must maintain a certain score each quarter to maintain our business," Keenan said. "If they do well, they get incentive pay. If they do poorly they owe us penalty pay and their whole contract could be in jeopardy. If they don't meet expectations three quarters in a row, their contract would be ended."

Performance-based contracts are increasingly popular in today's fee-based pricing environment, Caldwell said, though they are not new, and he personally has seen arrangements of this kind for the past eight years.

"Travel agencies are more willing to do this now, especially with the commission burden shifted to the corporation," he said, "and some agencies are even offering it in their bids. It is especially important when a new travel agency takes over from an incumbent. It is important for both sides to have mutual business goals with the primary responsibility for service on the travel agency side."

To come up with the rating, Brunswick surveys travelers and travel arrangers and looks at performance benchmarks. Contract goals include calls being answered within three rings, voice mails within 20 minutes and faxes within two hours. Brunswick also rates the percentage of complaints per transaction, with a goal of no more than one per 500.

Even as it searched for an agency, though, Brunswick had been considering a consolidation of CRS services as well. While many of its reservations were already being booked through Sabre, the CRS owned by American Airlines parent AMR Corp., "we had a large portion of the company booking through Worldspan and Apollo," Keenan said.

In contract negotiations, she noted, "Sabre allowed us to come up with a very nice deal regardless of allegiance to airlines because they want us to use their product. They want to keep us as a customer regardless of airline."

Brunswick signed a new five-year contract with Sabre effective Sept. 1, under which the company "shares in the revenue to use Sabre, which also benefits American Airlines, our chosen primary carrier."

Such an arrangement, where the corporate customer rather than its agency holds the CRS contract, is far from the norm in the industry, though it is being talked about more than in the past (<I>BTN,</I> June 15). It's a trend that likely will pick up as corporations get their own ARC designations, though many still question the wisdom of bypassing the overrides that large agencies can get for CRS bookings.

Meanwhile, the firm has negotiated point-of-sale discounts with American but still gets its commissions and overrides back from Maritz. "It says in our contract that all overrides, including CRS revenue, are returned to Brunswick," Keenan said. "All commissions and overrides for everything booked come back to us, regardless of supplier." In addition to American, Brunswick has named Delta as a preferred airline.

As its program with Maritz rolled out, Brunswick closed its divisional onsite travel offices, and now services everyone through a Chicago reservation center, with most offices using onsite satellite ticket printers. It also plans to pilot an automated booking solution at one of its divisions next year, but has not yet made a decision on which one.

On the corporate card front, Brunswick switched from American Express to U.S. Bank Visa in February, distributing the card to 2,600 employees in July. Here, too, "we have a revenue share and rebate program, and the more we spend with the card, we get a percentage back," Keenan said. But the rebate is a secondary goal, and not as important as the consolidated data, she noted.

On the car rental side, Brunswick last month replaced Hertz with Budget as a secondary supplier, keeping Avis as its primary vendor.