<B> Europe Ripe For STPs</B>
<I>Belgian Buyer Reaps Cross-Border Savings</I>
By Amon Cohen
Montell Polyolefins Company N.V. has shaved an estimated 8 percent off its European travel budget in 10 months by introducing cross-border satellite ticket printing, e-mail booking requests and a multinational call center.
The polypropylene manufacturer has a Carlson Wagonlit Travel inplant at its European base in Brussels, which also handles travel for its executive headquarters near Amsterdam, a second location in the Netherlands and an office in Brindisi, Italy. Eighty percent of booking requests are made via e-mail and the remainder by telephone to multilingual reservations staff at the Brussels location. Tickets are dispatched remotely via cross-border STPs (known properly as European satellite ticket printers, or EuSTPs).
Montell's general services manager Wal Westhoek expects to add more European locations to the network shortly.
Montell has achieved its dramatic success even though EuSTPs continue to struggle to find popularity among pan-European companies. The International Air Transport Association introduced legislation in August 1996 to allow travel agencies to handle a booking in one European Union country and issue the ticket remotely in another. Since then, though, only 45 EuSTP links have been established, according to Bob Gesinus, IATA director of agency services for Europe, Africa and the Middle East. Germany leads the way with 10 hosts, followed by France and the Netherlands with eight each. In spite of several positive news stories, including a BTN profile of Lehman Brothers, which cut travel bills in relevant locations by 10 percent using EuSTPs (<I>BTN,</I> July 20, 1998), adoption rates remain low.
The original confusion over the legal and technical practicalities of installing EuSTPs largely have been cleared up. The remaining problem seems to be a psychological one--many travel bookers are reluctant to deal with a remote travel agent, believing their relationship with a printer will never be quite as satisfying as with a human being.
Still, EuSTPs may well yet have their day, as companies and employees learn to think pan-European instead of nationally. Even more importantly, falling agency commissions are encouraging European corporations to get serious about seeking cost-saving opportunities, and EuSTPs are one part of a travel reengineering process that they are examining, along with automated booking tools and multinational call centers.
Westhoek is among those executives who believe internal opposition has been the primary barrier. Servicing travelers in the Netherlands and Italy on Belgian national holidays has been the only problem she has encountered. "It was very difficult to convince our people outside Belgium. They didn't like a change to their system," she said. "I had to go to Brindisi, where they had been very happy with their travel agent, and it was hard going. But they are beginning to accept it there. In the Netherlands, they have now accepted it completely. They were worried about what would happen if the printer malfunctioned, but technically it has worked very well."
Costs Cut, Service Raised
Indeed, Westhoek has found the EuSTPs to be a success on every front: They have reduced purchasing and processing costs, and improved traveler service.
Air purchasing costs have been cut in two ways. First, Westhoek has been able to consolidate national budgets into a single deal with airlines. All fare purchases, irrespective of where the ticket is issued, show up on the Billing and Settlement Plan (the equivalent of ARC in the United States) statement to Carlson Wagonlit Travel in Belgium.
The other advantage is that the quality of management information has improved dramatically as a result of transactions being channeled through a single call center. "We have a far better oversight of our travel patterns, so now we can go to the airlines and negotiate," Westhoek said.
The processing savings and service improvements result from consolidating across Europe with Carlson Wagonlit and through automating much of the reservations process. Service from Carlson Wagonlit had been variable in some countries, increasing the risk that travelers would resort to their favorite local agenices instead, thus weakening the flow of management information.
Westhoek, however, knew that the Carlson Wagonlit implant in Brussels offered a top-rate service that could satisfy her travelers wherever they were based. She asked the travel agency to augment that service with multilingual reservations staff, and all calls from locations with STPs now are routed through this center of excellence.
However, only 20 percent of reservations are made by telephone. The remainder come through e-mail request forms, which have drastically reduced telephone costs. Automation of ticket distribution and the concentration of agency staff in a single location have reduced processing costs further.
All flights are booked and ticketed through Sabre, the first global distribution system to introduce EuSTPs, shortly after they were legalized. Sabre has been disappointed with the adoption of the technology but believes this will change.
"I think that we will see more companies adopting this functionality now the euro is in place," said Sabre industry affairs manager Roger Hawkins. "Before, all the tickets were in the currency of the country where the ticket was issued and that might have created accounting difficulties--no one could be sure how much the ticket was worth."
Whatever the currency, another advantage of EuSTPs is that corporations can buy cheaper export market fares for their satellite offices because reporting is made through the host bank settlement plan. For instance, a company in Germany buying Air France tickets for its Paris office probably would be able to buy at a cheaper price than the French carrier would charge in France itself.
Even so, Hawkins believes that a single bank settlement plan for the EU would make STPs even more attractive and has heard "much talk of consolidating data processing functions." Unfortunately, this may be more a case of wishful thinking, not only for Hawkins but for many European travel industry professionals who feel a consolidated BSP would make pan-European travel purchasing considerably easier. According to IATA's Gesinus, such an option is "not in the cards right now" because BSPs have many operational variations from country to country.
Galileo UK managing director Mike Thorne also is optimistic about EuSTPs. So far Galileo only has one in operation--UK agency Gray Dawes Travel provides a link between London-based media company Tibco and its Frankfurt office--and three more in the pipeline.
"We have not had many firm orders, but I have been detecting an increase in interest," Thorne said. "With agencies starting to charge fees to their clients, everyone is looking to get their costs down. EuSTPs linked to remote call centers are one possible solution."
Business Travel International also has been monitoring the progress of EuSTPs and forecasts that they will catch on as European companies wake up to the possibilities of reengineering their entire travel process, as Montell has done. Europe has been much slower than the United States to embrace travel management principles and to automate travel booking, but BTI agrees with Galileo's Thorne that the climate is changing. The agency recently has launched a formalized consultancy unit to help companies make the transition.
Like Westhoek at Montell, BTI has discovered that the largest problem is internal communications.
"Whether EuSTPs will work or not depends mainly on issues such as management buy-in, ability to mandate and the willingness of the whole company to reengineer," said the newly appointed BTI director of consulting, Marc Hildebrand.
Responding to the suggestion that EuSTPs will have a limited shelf-life because of the growth of electronic ticketing, Galileo's Mike Thorne did not agree. He said e-ticketing has not spread as quickly in Europe as in the States largely because itineraries are more complicated and are overwhelmingly for international flights. However, British Airways, Lufthansa and SAS all have introduced it, as have most of the U.S. carriers.
Galileo estimates that 12 percent of tickets issued by BA in the United Kingdom in 1998 were e-tickets--but that compares with e-tickets accounting for 45 percent of all tickets issued by Galileo in the United States that same year.
"E-ticketing is starting to make a dent in the volumes of tickets issued," Thorne said, "but there is a long way for it to go before it becomes a global standard.