<B> Buyers Blaze Asian Trail</B>
By Sarah Welt
Pioneering travel managers at Hewlett-Packard, Thomson Consumer Electronics and Philips Electronics have faced the challenges and achieved some degree of success in bringing managed travel programs to Asia, though they report the going is still tough on the other side of the Pacific.
Travel management in the Asia-Pacific region is still a relatively new concept, even for corporations with a global reach. Pulling together a program involves understanding the cultural differences and how they impact everything from corporate travel policy and charge cards to data consolidation and travel agency contracts.
Hewlett-Packard, for example, manages travel on a regional basis throughout North America, Europe and Asia. Hong Kong is H-P's Asia-Pacific headquarters and therefore its most important focus in the region. Japan, representing 38 percent of the company's total T&E, is second in line.
With a local "cheerleader" to support a centralized travel management program now in place in every major country in the region, H-P almost has reached its goal of consolidating travel under a single agency per country, with the holdouts so far being New Zealand and China. It also has rolled out corporate travel policies and initiated corporate card programs, in one form or another, in every country but Japan and China. Its more leading-edge goals of having transaction fees and net fares have taken root in Australia, Singapore and New Zealand.
Being a data company itself, H-P feels "it is not necessary to have all information go through a single agency for the region," said Asia-Pacific travel manager Fred Swaffer. In addition, service levels of a single global agency can differ markedly from one country to the next, he noted, so H-P prefers the option of choosing its agencies on a country-by-country basis.
The company now consolidates its data in its homegrown Travel Analysis System. Because the system mandates that data be submitted following distinct specifications, it only gets TAS data in one country, though eight different countries now are able to meet its specifications.
"We don't have them in the database yet, but we expect a lot of progress in the next year," he said.
At the same time, Swaffer said, H-P is in the process of deciding whether to continue to warehouse its travel data or outsource the process. "H-P is not a cheap company, and we're finding outsourcing could save some money," he said.
To help get his initiatives underway, Swaffer has found "cheerleaders" in each country, whom he credits with helping win compliance with travel policy throughout their regions. Once cheerleaders volunteer, he said, "it is my job to educate, motivate and manage them so they become the right people for the job."
While the country-by-country approach might work for agencies, Swaffer hopes to standardize procurement on a single corporate card worldwide. His inability to do that as yet has led to "truly fragmented spend data and reservation data" in different formats from different agencies. The company has 72,000 corporate cards in force today--one for virtually every employee, except for regions where the use of cards is restricted. In Singapore, for example, "you can't have a credit card that allows you to charge more than two months of your salary," he said, "and in China, credit cards are nonexistent."
Singapore and Australia, on the other hand, have moved to agency contracts based on per-transaction fees, though the concept remains "very new" to other vendors in the region.
As a result, H-P is spending a lot of time and energy educating not only its agencies, but also its own employees, on the benefits of giving up the traditional profit center mentality. People are having a difficult time "acknowledging the costs that were there all the time, but were hidden before," he said.
Next on Swaffer's agenda is a push toward net fares, following the example H-P set in North America and Europe, where 80 percent of tickets now are issued on a net-net basis. "We think it is the way of the future, but it's also the way of the present," Swaffer said. But here, too, only Australia and Singapore have adopted the western model.
Another of the challenges facing H-P is the fact that there is no common CRS. Japan uses the Japan Airlines res system and Singapore uses Singapore Airlines', while Hong Kong agencies use two or three res systems within the country and a different system for international tickets.
In the future, Swaffer would like to automate the payment of airline tickets, "especially in Asia-Pacific, where in some countries travel agencies prepare paper invoices on a weekly basis," he said. "H-P pays those promptly, but in some cases the airlines don't get paid for 65 or 70 days. In the interim, the agencies have our money and are living off our float. But more importantly, we are at risk if the agency goes belly up before the airline gets paid. In that case, guess who ends up paying for those tickets again?"
Other goals include dedicated IATA numbers for each travel office "to keep our airline contracts discreet and allow us to identify the exact traffic flow" through each office.
<CENTER><B>Thomson Consumer Electronics</B></CENTER>
With its Asia-Pacific headquarters located in Singapore, 5 percent of Thomson Consumer Electronics' $27 million global air volume is spent in the Asia-Pacific region. Like H-P, it has found Singapore to be a leading proponent of travel management and a quick study of the bottom-line benefits of consolidation.
The Thomson program is headed by worldwide corporate travel manager Cindy Heston and a staff of travel managers and travel contacts in North America, Singapore, France and Germany. Thomson's travel is consolidated with Maritz Travel Co. in the United States and is handled by Maritz's global GTM partners around the world, but the account currently is out to bid for a single global agency.
Singapore-based travel has been consolidated, in keeping with a corporate policy of consolidating all headquarter locations. The company plans to decide in the next year which of its other locations to bring into the program.
Thomson offers a global travel umbrella policy that can be altered according to local standards and its experience in Singapore has been extremely positive. "Singapore has the most controlled and the best travelers worldwide, without a doubt. They follow policy to a T," Heston said. Indeed, when a traveler stays at a non-preferred hotel, "people get very upset and contact senior management. It is a big issue."
Corporate cards are more difficult to roll out, however. Heston said that charging airline tickets on a credit card, for example, involves a fee of 2 to 4 percent. Singapore's credit card rules are designed to keep bankruptcy at low levels, and corporate cards are not used in Hong Kong or Tokyo. Instead, Thomson purchases are paid through invoices.
Because corporate card use is nonexistent, data retrieval and consolidation is difficult, even in Singapore. "We retrieve data there because we work with GTM and data is consolidated by Maritz. I receive it every month in a format we agreed to," said Heston. For the rest of the countries at this time, "there is no data retrieval."
Transaction-fee pricing also is not yet a reality--but net fares are the norm. The company has several multinational airline agreements, but "not one that is valid in all countries," she said.
For Heston, one of the biggest hurdles to consolidating travel in Asia is dealing with different local laws. In Hong Kong, "if you have a contract with your agency you have to pay the salaries of the individuals for several years or pay a damage cost" for canceling the contract, she said.
The greatest challenge, however, is "under the table net fares" with the travel agency. "Agencies basically set their commission. They are given certain fares that are very low and they can sell them on the market at whatever rate they feel is appropriate. So if I want a base fare from agency A, B or C, I might get three different airfares," she said. "They are selling the fare at whatever price they feel the market will bear."
<B><CENTER>Philips Electronics N.V.</CENTER></B>
The Dutch company Philips Electronics N.V., based in Eindhoven, The Netherlands, has been in the midst of a global restructuring since selling its company-owned travel agency, Philips Reisbureau B.V., to Rosenbluth International last year (<I>BTN,</I> Jan. 12, 1998). Philips has between eight and 10 travel managers in Asia and offices in almost all the countries in the region, but it is not using Rosenbluth in every one of the countries. As a rule, the company uses a maximum of two agencies per country in the Asia/Pacific region.
"In the first wave over to Rosenbluth we've been focusing on transferring the 15 major spending countries worldwide," said director of worldwide corporate travel Herman Mensink. "Before we started the consolidation process we were using 42 different agencies worldwide."
As one of those 15 countries, Singapore was consolidated last October. Before the end of the year, Mensink hopes to add Japan, Taiwan and mainland China.
Philip's corporate policy structure mirrors that of Thomson and H-P, using a global umbrella policy that can be made more restrictive by individual countries. Mensink, like Heston, said that policy compliance in Asia-Pacific is a non-issue because it is followed "very stringently." On the hotel side, "Asia-Pacific has the highest compliance rate."
While individual travelers do not currently have corporate cards, Philips gets consolidated data by using a centralized American Express ghost card account. The ghost card, unlike individual corporate cards, is not affected by legal limitations. The company also gets data through the Vantage Point system.
Philips now is in the process of "implementing the Amex card for walk-around situations," for employees doing business in countries that do not have legal restrictions, Mensink said.
As with other big corporate buyers, the conversion to transaction fees is the "ultimate goal" for the Asia-Pacific region, though some countries already do have management fees.
Mensink said the company has a model "that allows us to use transactions or a management fee or a revenue share, depending upon the current situation. Rosenbluth allows us to go into a country under a revenue-share construction and gradually change it to a management-fee or transaction-fee structure if we want to do that."
While there are still enough commissions available to continue operating with a rebate arrangement, they are "rapidly reducing over there," as in the rest of the world, Mensink noted. "That is one of the reasons why we are focusing on moving into a management fee or transaction fee situation as soon as possible."
Net fares, meanwhile, are "very common in Asia-Pacific," Mensink said, and Philips has such contracts.