CT World: New Starwood Buy, Tech Advances

<B> CT World: New Starwood Buy, Tech Advances</B>

<I>New York</I> - The reigning king of the hotel hill, Barry Sternlicht, Starwood Hotels & Resorts' CEO, stepped up to the podium at BTN's Corporate Travel World in New York earlier this month and addressed issues of inconsistency in Starwood's brands, synergies created by its recent merger closing and a new hotel chain acquisition that may be afoot.

Starwood will implement a policing effort focused on property style, quality and recreational activities which should alleviate concerns expressed by some conference attendees regarding weaknesses at several Sheraton properties. Sternlicht also said the company is considering a ranking system for its individual properties, similar to one used by Holiday Hospitality.

"One thing we haven't done right is keep our consistency," Sternlicht acknowledged. "We need to clean it up. It's a challenge to get consistency when you don't own all your hotels. You might see us grade our properties so our clients will know what they're getting into."

As another means of providing uniformity among Starwood's brands, Westin Hotels & Resorts will share Sheraton's reservation technology. Sternlicht said that Sheraton's superior reservation system, RES4, already is in place at the converted Westin Central Park South hotel.

Although Starwood is the largest hotel company worldwide, Sternlicht told BTN he plans to acquire one more hotel chain in the near future. If Starwood had not been preoccupied with completing the merger with ITT Corp. in the last few months, the company might have bid for London-based Inter-Continental Hotels to expand Westin's international presence, Sternlicht said. Bass PLC, owners of Holiday Hospitality, purchased Inter-Continental last month.

Most analysts found it difficult to speculate on who Starwood's newest acquisition target might be, but they expect the motivation behind Sternlicht's decision to be based on economics rather than market positioning. The company may look more attentively at international properties because of the economic opportunities in those areas, rather than confining itself to searching for a specific price segment chain. "The new purchase may be dictated more by the economies in the buy versus the position in the market," said Don Massagli, managing director of Chicago-based Horwath-Landauer Hospitality Group Inc. "The search might address the flailing markets internationally."

Analysts speculated that the following hotel companies might be under consideration for an acquisition: Fairmont, Nikko, Omni, Sofitel and Swissotel.

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U.S. Bank Corp.'s Ralph Bernstein said the most common triggers of rebidding corporate card programs are substandard service, a real or perceived fall-off in new technology offerings, and expansion of corporations, either through acquisitions or globalization. Colette de Chalus of Diners Club said those seeking a global card program should consider their domestic versus international spend, the impact of foreign exchange rates (converting currencies can be expensive), and the need for local support in such regions as eastern Europe. Preparing an RFP for a global program easily can take 18 months, she added.

Paymentech's David Cramer noted that 25-40 percent of RFPs today ask for a single card to cover T&E, purchasing and fleet. To assess the best solution, companies need to get their fleet, T&E and purchasing heads together in a cross-functional team to decide the degree to which functions can be centralized. "A lot of companies want one card but end up getting two because of one group's unique needs," Cramer said.

Focusing on ways to measure vendor performance, Gunther Bright of American Express suggested looking at technology that streamlines the expense process, customer service to card holders, monitoring of policy compliance and benchmarking in regular reviews of the card program.

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Business travel buyers were split down the middle on the subject of global airline alliances. In an informal straw poll of 15 corporate travel managers, six indicated that the growing number of these partnerships is a positive development, six said they were detrimental and three said they were "undecided" or "unsure" of the effect on the industry or their travel deparments.

Those in favor of airline alliances cited more service, seamless trip experiences and an extension of preferred airline agreements into new markets. An alliance "is especially good if it's our preferred carrier," said Philip Cabibi, who manages travel for Panasonic U.S.A. Corporate buyers disturbed by the trend pointed to decreasing competition and higher prices. "Code sharing is anti-competitive," said Kenneth Lin, project manager for New York-based STV Inc., a midsized architectural firm. "The Transportation Department should make all alliances illegal for anti-trust reasons."

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Speaking on a panel about online booking systems, four travel managers updated the industry on their rollouts. While each company had its own ideas about whether cost or service was the more important issue, all reported generally positive results and expected double-digit usage this year.

Richard Wooten, manager of travel systems for Texas Instruments in Dallas, said TI anticipates savings of over $10 million over the next five years from its ITN system, with usage reaching 30 percent this year, 50 percent in 1999 and 60 percent in 2000. Since December, TI has lost five travel staffers to attrition and not had to replace them. It plans to begin billing units at different rates for the cost of online versus telephone reservations.

Cindy Heston, manager of worldwide corporate travel for Indianapolis-based Thomson Consumer Electronics, said usage of the Worldspan system now is at 15 percent. She expects to reach 35 percent when mandates on using the system for travel among company sites kick in during the second quarter of the year.

AXI user Betty Ryan, manager of corporate travel at Monsanto Business Services, Skokie, Ill., hopes to get 20 percent usage, at which point she'll begin reducing agents through attrition. Linda Bice, travel manager of Boston-based Bain and Co., said usage of BTS is at about 5 percent, but she hopes to reach 20-25 percent.

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Both Sabre BTS and American Express Interactive released new versions of their automated booking systems aimed at convincing frequent travelers that online booking is the fastest, cheapest and best way to book travel. In the new BTS, travelers can view aircraft seating maps and choose specific seats on American, United or Delta flights. Maps of other planes will be added at a rate of about one a month, said Sabre BTS vice president and general manager Sam Gilliland. In addition, the new version automatically will process class upgrade requests for American AAdvantage program flyers, instead of the traveler having to call in 72 hours in advance of the flight. The ability to upgrade in other frequent flyer programs "will be added over time," Gilliland said.

BTS also now features a revamped interface for intranet users, support for Internet Explorer 4.0 and an e-mail link that lets travelers send managers simple pre-trip authorization requests.

For this version, Sabre's goal also was to speed up the online booking process. "Our customers say graphics are interesting, but speed is king," Gilliland said. "So we've improved the process flow to make the booking of car and hotel reservations faster."

The new version of AXI, meanwhile, includes an improved best-price search, direct access to relevant corporate policy, the ability to send reservations to managers for pre-trip approval and to save itineraries of repeated trips, a currency converter and expanded hotel search and group planning features. With the latter, employees can book trips for associates, share itineraries and e-mail their travel arrangements.

AXI now has more than 60 corporate customers, up significantly from just 20 installations at the end of 1997.

In other technology news:

*Unisys Corp., which late last year launched its Unisys Travel Alliance Services end-to-end travel system (<I>BTN</I>, Dec. 8, 1997), has signed on Necho Systems to supply its back-end expense-reporting module. Citing the fact that the Necho product is Web-enabled, written in Java, and able to handle foreign currencies, languages and VAT taxes, Unisys general manager John Haville said the system will be the "only option for expense management" Unisys will offer. Target markets for the end-to-end system are both travel agencies and corporate customers. In addition to UniTrex for expense processing, the Unisys system includes UniRes, a private-label version of the E-Travel booking system; UniView, a home-grown travel reporting and data warehousing module; and UniTracs, back office processing and agency reporting.

*E-Travel has signed an alliance with BTI International affiliate BTI Kuoni of Switzerland and software developer ScandiSoft U.K. Ltd. to supply its automated booking system to Kuoni customers. E-Travel also signed Associated Travel International and The Travel Source of Atlanta as domestic distributors.

*System One Amadeus is marketing a scaled-down version of the Internet Travel Network automated booking system at reduced rates to the 70 travel agency members of its Corporate Circle program. The program will focus on bringing the new technology to midsized companies, rather than the large corporations being targeted by many developers for beta tests.

The customized version is designed to be quicker and easier to use, offering fewer negotiated rates, for example. An agency site license will cost $2,400.

The Amadeus organization in Europe, meanwhile, is launching prototype versions of the booking and management reporting modules of its own end-to-end solution, Amadeus Business World, but is looking to partner with an existing expense reporting system.

*Reed Travel Group's Official Airline Guide now is available in an intranet version, and its 1998 hotel directory includes Africa, Latin America and the Middle East.

*Hi-Mark Systems' Web Manager moves its data reporting system to real time, so travel managers can create and view ad-hoc data reports on their computer screens.

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While hotels ride the hospitality industry high, small-to medium-sized corporate buyers must fine tune their tactics in hotel negotiations by focusing on fewer preferred hotel companies and meticulously tracking their travelers' compliance.

Panelists at a breakout session agreed that smaller companies can receive the same rewards as larger ones if they consolidate their travel volume. Coming to the negotiating table with more guaranteed stays can earn offers whose value equals that of some larger companies. The panel also advised negotiating at the local property level, rather than the corporate level.

"You need to focus on fewer hotels," said Dan Geller, Sheraton's vice president and director of national corporate travel sales.

But panelists said that while consolidating business may help during the negotiating process, small companies also must track their compliance. Compliance figures give hotels a clear understanding of what a company can offer each property.

Smaller companies might consider promising hotels a certain volume of nights during their property lull periods, said Jeffrey Austin, president of Melville, N.J.-based Austin Travel.

The combination of consolidation and compliance tracking not only can lead to better rates, but also better amenities and value-added items. Some hotels base last room availbility and room blocks on leveraging and relationships. "If you have leverage, compliance and a good relationship with hotels, then you can approach them with a room block," Geller said. "That's one way to ensure your travelers a room.