Buyers Get Agency Onsites

<B> Buyers Get Agency Onsites</B>

By Sarah Welt

Travel buyers have been installing more onsites, citing quicker processing times, high touch service and a healthy economy.

Close to 800 more onsite locations have popped up domestically so far this year, according to the Airlines Reporting Corp. ARC defines an onsite as a branch office on the premises of a single client, which is dedicated to travel services and does not have to be open to the public. Year-over-year growth for July shows a 34 percent increase in onsites from 2,327 in 1997.

"In RFPs over the past year, I have seen more organizations looking at and implementing onsites," said Carol Salcito, president of Management Alternatives Inc. in Stamford, Conn.

Buyers are more interested inonsites as a result of the reevaluation of agency relationships following a series of commission cuts. Efforts to cut transaction costs accelerated the use of central reservations centers. Onsites offer res center customers a high touch front-end.

Some corporations see more value in the onsite because ARC's electronic processing has improved. Today the processing time for onsites is down and the filing fee for both an onsite and a satellite ticket printer is $495.

Satellite ticket printers, meanwhile, are down slightly, with 13,597 locations in 1997 and 13,297 in July 1998. Most insiders don't see a correlation between a growth in onsites and a reduction in satellite ticket printers. They attribute the dip in STPs to an increase in electronic ticket use and to an ARC cleanup effort to close inactive STPs that accumulate when companies switch agencies.

Barry Lemley, ARC's director of agency accreditation services, said the cost and timing required to process an STP and an onsite is the same.

"We see somewhat of a dip in the number of STPs corresponding to the growth in the number of onsites," he said. "People are seeing the value of the onsite versus the STP. They want the corporate location, which is more than just ticket delivery."

Maritz Travel closed 87 STPs since January. Business consolidation accounts for 62 percent, volume decreases for 27 percent, and account losses for 11 percent.

Travel managers are more attracted to onsites because they are high touch. Buyers receive face-to-face interaction, get a single point of contact, and agents know a client's name and travel history.

"Companies want to talk to Sally or Frank on a daily basis. The addition of onsites is due to a company's perceived need for touchy-feely," said Earl Foster, global travel manager at the New York-based Joseph E. Seagram & Sons. Foster said call center technology isn't where it needs to be and though it was the trend a few years ago to go to "consolidated mega centers," he said, a lot of people left that environment because they didn't like always talking to different people.

"We have a better relationship when we are in the building with people. We have always felt it provided better, more personal services," said Nancy Godfrey, manager of global travel at Chevron Companies in San Francisco. Her company tried travel in a large call center three years ago but did not feel it was as efficient as her current configuration. Chevron, with $60 million in air spend, has had a combination of onsites and a huge dedicated offsite location for several years, as well as some parts of the company calling full service branches of Rosenbluth International. Godfrey said that at one location, Rosenbluth leases space in a Chevron building but is located on a different floor.

Another onsite believer is Dresser Industries. With $38 million in air travel, the Carrollton, Texas-based company went to a 20-person onsite five years ago because "we are committed to high touch, personal service," said travel manager Will Tate. "Having them on our property improves the relationship with the company." Tate said nine months ago he did a cost analysis of central reservations but found there wasn't enough of a financial incentive to make a change.

Onsites are up 30 percent at American Express, said Rick Routhier, senior vice president and general manager of corporate services. Routhier said this is because of a large influx of customers in the $2-5 million range that haven't managed travel before prefer onsites.

Clients with at least $1 million in travel are also interested in onsites, according to Danny Hood, WorldTravel Partners' president, corporate travel and technology. He said onsites account for 80 percent of its new business.

VTS Travel president Vince Vitti added 16 onsites this year and said they were created for clients who wanted that setup after they had been serviced in a res center at other agencies. "We are continuing to develop small onsite branches as opposed to central reservations," Vitti said. He said central res may be lower in cost, but it doesn't provide the same relationship in terms of people knowing the business and company culture.

Travel One cited a different reason for its onsite growth. Charles Roumas, senior vice president, strategic planning, said onsites have increased 33 percent, adding that 40 STPs have been converted to onsites this year. The change to onsites in the last three to six months has been "primarily because ARC has made improvements in their approval process. In the old days, STP licenses were a lot quicker to obtain," he said. Consequently, Roumas said STP applications are down 15 to 20 percent. STPs are being used for small amounts of volume for individuals that still want local ticketing.

Additionally, onsite growth can be attributed to a healthy economy. "When times are good, people pay for service, but with belt tightening, onsites disappear. In the early 1990s a lot of onsites closed because it was cheaper to go offsite," said Harold Seligman, chief executive officer at Management Alternatives. "We are seeing more onsites happening today because of service issues."

Despite the argument for having an onsite, not everyone believes it is the way to go.

Phil Wilson, travel manager for the Palo Alto-based Hewlett-Packard, said 50 percent of the company's tickets come out of some sort of call center, compared with 15 percent five years ago.

Fred Swaffer, Hewlett-Packard's Asia/Pacific travel manager, said while the company has every configuration, "clearly the onsite is not really efficient if it is defined as one, two or three travel agency employees on a corporations' premises. You have to deal with vacation relief, illness relief, keeping agents trained."

Hanna Murphy, Siemens' manager of corporate transportation, began testing call centers two years ago and said while she still has some onsites, any new Seimens company goes straight into a call center because of efficiency and better training equipment.

Some consultants don't think buyers should go the onsite route.

Tom Wilkinson, president of the Travel Management Group in Alexandria, Va., said, "We continue to advise companies to look at central facilities rather than onsites and when they understand the numbers, they decide to back down and pursue the more rational approach in most cases." He said his research indicates that onsites are about 25 percent less productive than reservation facilities and cost more.

And some agencies, instead of seeing a growth in onsites, are seeing different service configurations.

Rosenbluth International's Robert McGurk, vice president of business development, is seeing more of a combination of an onsite and a res center because of companies' rapid growth and a need for the space onsite. McGurk acknowledged that a few years ago, companies had large onsite locations but today, "we are seeing more two, three or four person locations." Clients are reducing the size of existing onsites and opening up smaller locations in key areas, moving the rest of the business to a res center, which may account for a rise in ARC accreditations.

George Hames, director of national operations and field support at Maritz Travel Co., said a lot of clients have a res center but also have onsites to handle top executives. He said the 8 to 10 percent increase in onsites is due to growth.

The onsite category didn't even exist at ARC five years ago. It was introduced in August 1994. Prior to the onsite, ARC had a category that it called the customer premises location. Like the onsite, it was intended to service one customer at a corporate location but required travel services to be in a locked office.

The onsite allowed for a location to be in a cubicle environment. According to George Cromartie, senior manager, new accreditation at ARC, travel agencies were having difficulty getting approval for branch locations because "corporate America was going to a cube environment and offices were generally reserved for management or executives, so they couldn't get private offices." The original onsite allowed for the cubicle but also required absolute ticket liability by the agency, a requirement that was relaxed last year.

According to Airlines Reporting Corp. records, in 1993 there were 110 customer premises locations. That number was down to 102 in 1994 and in 1995, it was zero. Conversely, no onsites existed in 1993 but by 1994 there were 91 and by 1995 there were 718--a 689 percent increase.

Lemley said ARC teamed up with travel agencies in 1995 to get advice about accreditation categories. "We decided to phase out the customer premises location and bring in the new onsite." Lemley said the customer premises location language dates back to the early 1980s. "We just felt that getting rid of the agreement instead of changing it around was better.