<B>Doubles Folio Portfolio</B>
By Bruce Serlen
<I>Endicott, N.Y.</I> - IBM this month expects to more than double the number of U.S. hotels that provide it with travelers' full folio data electronically. This will put the company, which is the number-one buyer of corporate travel in the world, one step closer to realizing a long-sought goal: the creation of a paperless expense reporting system.
"Once we have enough properties providing e-folio data to account for 80 percent of our domestic travel, we'll pretty much have reached saturation and will have achieved our larger goal," said Anthony Angelo, IBM project executive in worldwide employee disbursements.
To reach the 80 percent milestone, the company has targeted 800 hotels. Up to this month, 79 hotels were providing the data, but that number is expected to jump to 170 by year-end. Angelo estimated that the 800 plateau would be reached by the middle of next year. "By year-end 2001, meanwhile, we expect the number of hotels participating to be close to 1,300," he said. "At that point, a number of the national chains we work with will have as many as 200 properties submitting the data."
With airlines and car rental expenses already available through credit card reports, hotels have been the last hurdle to getting expense data electronically, thereby creating a truly paperless environment. "The time savings and other efficiencies you realize from a paperless system are just tremendous at a company like ours," said John Rosato, IBM manager of e-business solutions and strategy, who, like Angelo, is based in Southbury, Conn. IBM has 154,000 U.S. employees and 275,000 worldwide, with the number who travel estimated to grow sharply as the company increasingly moves into consulting and other service-related businesses. Accordingly, the company has been a long-time proponent of promoting e-folio hotel data.
With e-folio, the data gets transmitted automatically from the hotel and is populated directly into the traveler's expense report. What the company receives is a complete breakout line by line, including room and tax, restaurant charges, even laundry and other incidentals such as mini-bar and in-room movie fees.
Four major, multibrand hotel companies presently provide IBM with full data: Bass Hotels & Resorts, Hilton Hotels Corp., Marriott International and Starwood Hotels & Resorts Worldwide. By the beginning of this month, five additional hotel companies, including Choice International, Hyatt Hotels Corp. and Prime Hospitality, had signed agreements to participate. None of these chains' properties, however, have yet done an actual implementation. An agreement with a 10th hotel chain is pending. "A year ago, we only had one national chain signed up, so we're making significant progress," Rosato said.
The properties that have been the first to provide the data have tended to be located in areas of the country where IBM either has major facilities or does considerable business. In both cases, the company consistently books a high volume of room nights. Its world headquarters in Westchester County, N.Y., therefore, would head the list.
"When the project was still in the beta test phase, our properties based close to the headquarters were a natural to participate because of these high volumes," said Ed Skapinok, Bass director of key account sales.
In addition to Westchester, and New York overall, IBM has received good coverage in San Jose, Chicago and Atlanta.
"The chains have mostly given us their flagship hotels in these destinations because there are the properties they tend to have the most control over in terms of either management contracts or ownership," Angelo said.
IBM has found that when it comes to the decision whether or not to provide e-folio data, much depends on the hotel company's other technology priorities. "What it usually comes down to is how they're managing these other initiatives," Rosato said. "In fact, the decision is often a byproduct of things they're rushing to do, such as data warehousing or upgrading the property management system." And, as Angelo suggested, an underlying factor is whether the property in question is a franchise or is company-owned or managed.
Much of the hotel companies' resistance can be attributed to this very inconsistent technology capability, which many inherited as they grew through acquisition. "Fortunately, we were well positioned to move forward because systemwide we only had two PMSs--Geac and Fidelio--which already contained a number of integrated systems," said David Ogilvie, vice president for global corporate travel at Starwood. Starwood introduced its IBM-compatible Folio Express system this summer (BTN, July 10).
For their part, IBM travelers have begun to understand that booking a hotel that provides their folio electronically saves them time and helps expedite reimbursement. "The availability of e-folio at the hotel has become one of the three top guest amenities travelers here look for, rate and location being equal," said Graham Wright, IBM manager of global travel procurement.
The other two features IBM travelers say they value most are laptop-friendly guest rooms and high-speed Internet access. Given their importance to travelers, the company started including their availability in the latest version of its online hotel directory.
"According to travel policy, travelers are permitted to book any of the hotels on the preferred list for each destination," said Wright.
Worldwide, approximately 2,700 hotels were approved by IBM in 2000. "By checking the directory, travelers can determine not only a hotel's price and location, but whether e-folio is available," he said. "From the hotels' perspective, we believe this will be an added inducement to provide e-folio because they'll want to make themselves as attractive a choice as they can to travelers."
Not only does IBM travel policy require that travelers book properties in its directory, but they must be sure they've secured the negotiated rate. They're allowed to book hotels not in the directory, but only with prior approval of management. "This might be a matter of room availability, proximity to a customer or when ground transportation costs such as taxi fare are taken into account," Angelo said.
While the 2,700 hotels provide good coverage, it's not exhaustive. "In cities where there are no hotels listed in the directory, travelers are reimbursed on a reasonable basis, based on prevailing rates," said James Fedorchak, manager of U.S. travel and relocation, employee disbursements services.
The way the company's travel policy is structured, there is a mandate. Travelers who stray out of policy without approval are asked to pay the difference between what they've spent for a room and the amount the company has determined as the city limit for that destination. "In other words, they're not reimbursed for the differential," Fedorchak said.
With e-folio firmly in place, the labor costs and other expenses that go into managing the present paper flow will be transformed. "Once e-folio takes hold, the job function will shift from manager to auditor," said Brad Keller, manager, travel and relocation requirements and system controls, worldwide employee disbursements. "While fewer hands will be required, those who remain will need more sophisticated skills."
At present, IBM sees e-folio as a U.S. initiative, though at some point, it may become global in focus. The company is aware, however, that in rolling it out internationally, it may encounter some resistance. "In certain cultures in Europe, for example, there are privacy concerns that might be affected by something like transmitting e-folio data, so these will have to be addressed," said Michael Gearing, manager of international travel programs, worldwide employee disbursements, who, like Fedorchak and Keller, is based in Endicott, N.Y.
Once a hotel is able to provide IBM with e-folio data, it has the standardized file format required to provide e-folio data to its other corporate accounts. "It's like downloads from a credit card company," Rosato said. Yet, IBM's particular version of the file format is part of its larger expense reporting system, called Expense Reporting Solutions. For its own use, IBM has customized ERS into a program called EA2000, which it presently is rolling out (see story, page 1).
As part of EA2000, travelers can review online the folios that have been transmitted by the hotels, make adjustments, identify personal expenses, etc. Once approved, reimbursement can be made directly to the traveler's credit card company (one of the two stipulated by IBM travel policy), thereby saving additional time.
Not surprisingly, considering it's a technology company, IBM is marketing ERS--which includes its e-folio system--to other companies. Customers include Eli Lilly & Co., Ford Motor Co., and Georgia Pacific.
Similarly, hotels that have begun providing e-folio data to IBM are eager to begin making it available to other of their corporate accounts.
"Not all companies, however, are ready to receive the data," Starwood's Ogilvie told BTN. "Unless they have an automated expense reporting system in place that can adapt to having the information downloaded into it, they'll have trouble.