Buyers Consult On Changed Mkt.

Travel managers for consulting companies recently spoke with BTN editors about the changes they have made in their programs as a result of the past year's events. Participants were John Asselta, director of meeting and travel services for Montvale, N.J.-based KPMG; Linda Bice, travel manager for Boston-based Bain & Co.; and Mark Williams, director of travel and meetings management for PricewaterhouseCoopers, based in Tampa, Fla.



BTN: Which policy changes have you put in place since last September?

John Asselta: There was a temporary hold on all travel for a month. People now are asking whether a trip is necessary, but that's informal. When travel resumed a month after the attacks, we started to set up a meetings calendar for this year that we're booking now and starting to roll out. Travel is certainly down, but there's no formal policy telling people not to travel.

BTN: Was there any directive given to division heads to cut spending by a certain level?

Asselta: Just to think about whether the trip is necessary, and use good business judgment on whether to make the trip, the number of people to make the trip and maybe the length of the trip.

BTN: Did you have any pre-trip reporting beforehand?

Asselta: We did not and still don't.

Linda Bice: We also don't have any formal policy. I am trying to get a policy approved about how many people can travel on one aircraft, which we don't have. We did not stop travel. We just said, "If you're nervous, you don't have to go, speak to your manager." As a consulting firm, we have to travel to go to our clients.

BTN: When did your people stop being nervous?

Bice: I don't think I had any nervous people. I do have to say that they are taking the train to New York more so than they would. The biggest issue is the security, the inconsistency and the wait at the airport.

BTN: What about traveler tracking? Do you do any?

Bice: We don't have a pre-trip system. We have cell phone numbers in all employee profiles, so we were able to track people fairly quickly. My travelers are on the road every day, so you get to know the patterns of what they are doing. We were able to find them fairly quickly.

BTN: How many travelers are at your company?

Bice: My office probably handles about 350 travelers. We're an onsite, and we handle about four offices.

BTN: Mark, do you have many more travelers than that?

Mark Williams: We have about 38,000.

BTN: Did you make any policy changes as a result of Sept. 11 and also the economy?

Williams: Well, from the economy more than Sept. 11. The one thing we did change is that we don't allow people to book first-class anymore on a three-class aircraft. On three-class aircraft, they book business class.

BTN: When was that change implemented?

Williams: The policy was formally rolled out in February. That's been the only major change. Like John, we've certainly asked people to be more careful with how they're spending their travel dollars, particularly on internal-firm travel. For serving the client, of course, you're going to do what you have to do, but for internal travel, we're looking at it more carefully. There hasn't been any outright ban or anything like that. The only thing we did was, in the first 30 days after Sept. 11, we curtailed international travel, but then it went back to travel as needed.

BTN: And where are you as far as volume that you were doing pre-Sept. 11?

Williams: In terms of tickets or dollars, because they're two completely different things?

BTN: I guess we'd like to understand tickets first.

Williams: We're down, on a year-over-year basis, about 30 percent.

BTN: When will it go back to where it was?

Williams: I can see that taking into next year.

BTN: John, same question.

Asselta: We have the same answer. I think we're at 33 percent down, year over year. The phones seem to be busy again and I don't know if that translates to percentage of year over year being less now and in the weeks ahead. But we had a busy first two months of the year last year, so there's more activity and it seems there are more meetings being booked and people are planning more travel. It's just that it was such a busy time last year that the percentage is still off

Williams: I would agree.

BTN: Do you have a sense that there is some pent-up demand? People who have been putting off doing certain things that they need to do that they're doing now.

Asselta: Not putting it off, but I think people are making business decisions on how to run a successful practice and they need to travel and they're going to travel. And as we start getting more engagements, and the business keeps growing, hopefully, we'll be able to have more people traveling for more business reasons.

BTN: Linda, do you have the same outlook?

Bice: Yes. Actually going back to policy changes, we did cut a lot of meetings. We were definitely a lot more cost conscious when it came to airfares, and how to get them there cheaper. Before, we held a lot of our training at Ritz-Carltons and we changed that venue and went to some upper upscale hotels once we looked at the prices. We canceled a couple of meetings and we're looking at costs a lot more. We always did for our clients, but I think internally, we didn't and now we are. We're down about 25 percent. The phones are ringing more, but our transactions are still low. We track by transactions because by volume is so hard, especially with negotiated discount rates, group fares buying a coach ticket and upgrading to business class.

BTN: So, instead of tickets, what about dollar volume?

Williams: Well, I hate to look at average ticket price because that's not a really good barometer either. You have to be looking at cents per mile or something like that. Those costs are down probably 20 percent. When you put the two together, overall volume is down more than the 30 or so percent we were talking about earlier. I would guess it was probably pushing toward 40 percent, when we put the two together.

Bice: It depends on if you're doing a lot of split tickets. If you have a negotiated discount on several different carriers, you have to issue two or three tickets, so your transactions are going to be up, but average ticket price is going to be low, and your dollar amounts are going to be much lower.

Asselta: Do you have that many split tickets?

Bice: Yes.

BTN: Do you do any, John?

Asselta: Actually, we do some, but I don't think it's a substantial percentage.

Bice: It depends on where they're going. They take the train to the city and the shuttle back, you can't issue one ticket for those two transactions. It will be two split tickets. Same with Europe, if Europe is cheaper to split the ticket, we'll do it.

BTN: On the hotel side, are they being more relaxed because their business is down so much that they're happy for whatever business you can give them?

Bice: My rates this year are far cheaper than they have been. My rates went down quite a bit, and these are the standard hotels that I have had rates with for 14 years.

BTN: Was that in return for greater market share?

Bice: No.

BTN: It was just to keep the business?

Bice: Right.

Asselta: With airlines, you're constantly talking market share and with hotels, you're talking room nights. We've had a number of hotels come back to us and say our room nights are down. We've had to go back to them saying, "but your market share is up. We can't get people to travel to a city. When they travel to a city, we can try to get them to stay at your hotel." We've had to tell that story over and over again to help them realize that their numbers might be down, but it's not us not delivering any less. In fact, we might even be delivering more.

For example, our room nights in New York are down considerably, so hotels that we gave a large number of room nights to in the past were calling and saying, "I thought we still had high status in your program, what's going on?" We've had to go back to them and say, "actually your market share is up." We just don't have people traveling there at the rate that we did before.

BTN: Does that satisfy those hotels?

Asselta: I think it satisfies them, but I don't think it makes them happy. It doesn't put money in their bank account, but it does explain that we are supporting them. We're as strong a supporter, maybe even a stronger supporter, than we were in the past.

BTN: What about rates? Have your rates gone down?

Asselta: Year over year? Substantially.

BTN: Can you give us a range of how much?

Asselta: Ten percent to 15 percent.

Bice: I agree with that.

BTN: Is that the same for you, Mark?

Williams: It is.

Bice: It depends on the city though, and the hotel chain, and who knows that you're going elsewhere.

BTN: Is there a lot of extended stay on the hotel side because the consulting assignment might qualify as an extended stay trip?

Bice: Not in my case. I guess it depends on the client. There could be a time frame where they're staying a few days every week, or they're staying for a week or two.

Asselta: We define extended stay, which might be considered by others to be a repeat destination, as three or four nights a week, at least three weeks a month, and we have a lot of that. We try to negotiate a different rate than the standard per night rate because it is repeat business and you know that's coming in week after week. But we don't always rent for the whole month.

BTN: What percentage of your business is extended stay—a ballpark figure?

Asselta: Around 10 percent, maybe 15 percent.

BTN: That's a significant piece.

Asselta: We have a desk that just handles that one segment, and they just handle the hotel aspect of it. There's a lot of this that's going on that we don't find out about until after the fact, but now we jump in and try to negotiate on their behalf and get them a better rate and additional amenities, because it is repeat business.

BTN: Are they staying at hotels that are identified as extended stay hotels?

Asselta: Not always. Some prefer full service hotels, and some want extended stay. It's nice to say you want to give them a kitchen area, but they're never going to use it.

Bice: They don't use them at all.

BTN: Mark, do you have a significant amount of extended stay? Do you define it the same way John does?

Williams: I don't know if we define it the same way. I have no reason to think that our percentages would be any different. I don't track that. Ten percent to 15 percent is probably about right. Our definition of extended stay is once you get past two weeks, with flights home on the weekends. We don't secure the room for the long period of time, we secure it for the actual work days, and try to negotiate a better rate, just like John does.

BTN: Do you look at extended stay properties, suite properties, that kind of thing?

Williams: People seem to focus on location, and what's near to them more than anything else, so it's really driven by that.

Asselta: We have a group of 200 people working on a project for more than a year and a half in Philadelphia and they check in Sunday night or Monday morning, leave Thursday or Friday, every week. We have them staying at a number of hotels where we've negotiated rates, but none of them are traditional extended stay hotels. Yet, it's convenient to the site, so they can walk from their hotel or walk to the office where they're working.

BTN: Linda was talking before about trading down. Are either of your companies trading down, as far as price point of hotels is concerned?

Bice: For meetings.

Williams: No, we haven't. We did expand the offerings in the program this year a little bit to bring in some more moderate level hotels, but we didn't do that to the exclusion of the ones we had already had in the past. In the meetings aspect, we haven't changed anything.

Asselta: We also have added more moderate price hotels, and we've tried to, as far as policy is concerned, shy away from luxury hotels. We've tried to define luxury by rate, not by service, so if a traditionally luxury hotel is able to lower their rates for us, it's comparable to another business hotel, then our people can stay there and get that additional service at a business hotel cost.

BTN: Clearly, in the days and weeks after Sept. 11, senior management was more involved in travel. Has that level of involvement stayed in place? How has involvement by your senior management changed in the past six months?

Williams: When we went through this, looking at our overall policy again, we ended up with not that many changes although it was rewritten to be more concise and more accessible. We did a lot of good things with it, even though the backbone of the policy didn't change much. Senior management was more involved than they've ever been in that process before. There's a lot of noise out there and so that was a good thing for me, to be able to say that the CFO had a hand in this. But other than that, he is very interested in pushing more volume to online booking tools to save the money that represents, but those were the only two places I can think where there's more involvement.

BTN: As far as scrutiny of policy, that was concluded months ago and they're not looking at it anymore?

Williams: It's been turned over to us and the expense reporting people to make sure that compliance is held high.

Bice: The gentleman I report to is director of operations and he's always been pretty involved. We started to do some case-team work internally well before Sept. 11 on purchasing, but that's not really senior management. Certainly, they looked at everything and they looked at different ways we were purchasing worldwide. As far as the policy I'm trying to push through, which is about the policy of traveling on aircraft, senior management is looking at that. I have made all the recommendations, I've written the policy, they now need to decide, because it's a private company, a partnership.

BTN: Does your boss report to the partners?

Bice: He reports to the head of the office, who is one of the partners, so it's a slow process. The other thing is security. He is looking at using Kroll's reporting services with other senior people in the firm.

Asselta: We provide monthly reports to management. Previously, they just looked at it. Now they might call us in, and have more questions and want to understand what we're doing, so there's more of an interest.

BTN: Are any of the questions they're asking surprising in any way?

Asselta: No. They're questions they maybe should have been asking all along.

Bice: (Laughs) I agree.

Asselta: Their plates are full, and now they're looking at a lot of ways to save money and now that they realize that travel is a big expense, they'll look at it a little more closely.

BTN: Was that a short-term thing, or is it ongoing?

Asselta: It's still continuing.

BTN: Have you used the increased involvement that senior management has in your programs to drive better compliance? How can you turn that kind of attention in your favor?

Bice: That's what I'm working on now. For instance, the lost savings report, when they don't want to take the negotiated discount, I'm trying to push that in their direction. You're right, they're going to look at the reports when they want to, but I think now, it's an issue.

Asselta: We used to provide exception reports and they never moved on it. Now the chief administrative officer has actually sent letters out to some people questioning why they made decisions like this. He had that data before and didn't move on it, now he's moving on it, so they're more interested. We keep telling them that we can save money if we had these people abiding by the program and now they're more willing to write letters to people, and make some phone calls saying, "we need you to get fully onboard."