Danish Group Pools Travel

<B>Danish Group Pools Travel</B>

By Amon Cohen

The idea of consortium purchasing remains uncertain in the United States, but a group of travel buyers in Denmark is going from strength to strength and now is looking to automate its entire travel process.

Danish Travel Pool in the past few years has doubled its membership, to 21 companies and 55,000 travelers aggregating their travel purchasing (BTN, Dec. 7, 1998). Combined expenditure in 2000 was DKr82 million (US$9.3 million) and is projected to rise to DKr110 million (US$12.5 million) this year.

Danish Travel Pool managing director Soren Schodt claimed that members save an average of 15 percent to 25 percent per transaction, compared with trying to buy as individual companies.

Most of the members are small to medium-size--;the typical spend being between DKr3 million and DKr15 million (US$341,239 and US$1.7 million)--;which is not surprising when one considers Denmark has a population of 5 million and only a handful of multinational companies.

Nevertheless, some Danish Travel Pool members have offices outside of Denmark and the consortium now serves travelers in Norway, Sweden, the United Kingdom and Germany. Less successful to date has been the strategy to take travelers online.

Danish Travel Pool has used four different online booking systems during the past decade. The first two were provided by Galileo and Amadeus. More recently, DTP tried GetThere for 18 months, but Schodt found it unsatisfactory. "It did not work in Europe, and there was no interest in getting it to work," Schodt said. "Its functionality with Amadeus was not good: Fifty percent to 60 percent of the tickets it issued were the wrong price."

Danish Travel Pool now has implemented Wave from French company KDS and Schodt's initial reaction was favorable. "It is fast and easy to use. For the time being, it is the best European solution you can get," he said. Schodt is aiming to drive adoption up to 5 percent to 10 percent by year-end.

Member companies are incentivized to move online with discounts on their share of the management fee charged by retained travel agency TQ3 Travel Solutions. These are modest targets, but Schodt is determined to switch the entire emphasis of Danish Travel Pool to an automated environment.

"Adoption levels will come, I don't doubt that," he said. "Our whole strategy now is based on online processes because it is the cheapest way to go." As part of that strategy, Danish Travel Pool is assuming responsibility for quality control of online bookings. This is partly because it intends eventually to establish direct connections to key suppliers, which also would need in-house quality control checks.

Travelers already can access several other services online, including obtaining foreign currency, booking meeting rooms--;an estimated 8 percent to 10 percent of Danish Travel Pool's turnover is in the meetings sector--;and ordering taxis from home.

Danish Travel Pool also is adopting Bothell, Wash.-based Captura Inc.'s automated expense management system, which links into an elaborate workflow system built in conjunction with Danish travel technology consultancy Business Travel Consult.

At the center of this is a proprietary database that consolidates information from a variety of sources. This database sub-system, which sits in the DTP back office, consolidates all the data before delivering it into the expense management system.

Danish Travel Pool is extracting numerous benefits from the system, including receiving electronic invoices from its largest suppliers and settling them automatically, automating the traveler reimbursement process and integrating into SAP enterprise resource planning systems.

Schodt added that there is much richer detail in the management information than could be obtained, for instance, from use of a card alone.

Schodt said Danish Travel Pool is a success because suppliers are happy to do business with it, having seen their market share rise. The only exception has been Scandinavia's dominant SAS, although Schodt pointed out that few, if any, companies in the region can claim a substantial discounted deal with the airline. Instead, DTP has gone to alternative carriers and, as a result, has cut the market share of SAS with its members to below 40 percent, compared with the Danish average of 55 percent to 70 percent.

Schodt believes that Danish Travel Pool has succeeded, whereas other larger consortia have failed, for the following two reasons: Smaller companies stand to gain more from aggregating their spend, and DTP is run by a full-time team of staff, effectively acting as outsourced travel managers on behalf of all the members. "Someone has to go in and take control," he said.