GM Travel Program Goes Global

<B> GM Travel Program Goes Global</B>

By Jay Campbell



<I>Detroit</I> - With the willingness to explore imaginative alternatives and the clout to hold suppliers to rigorous performance standards, Kevin Killeen has achieved the buy-in of General Motors employees by delicately tailoring corporate travel policies to account for a wide range of needs. Killeen now is taking that same approach as he coordinates the globalization of one of the world's largest corporate travel accounts.

It's no coincidence that GM, the number-one company on the Fortune 500 list, ranks only ninth in the nation in travel spending, according to BTN's 1998 Corporate Travel 100. In 1998, it spent an estimated $300 million on worldwide air travel for 330,000 airline, corporate jet and charter reservations. The average ticket price it paid--$423 for domestic and $1,781 for international travel--came from combining its size with negotiating savvy.

"What we've put together here is a very cost-effective program that offers good service," said Killeen, GM's manager of global employee business travel.

Killeen last year started the process of consolidating worldwide data using a third-party gatherer that, he estimated, pulled together data on 85 to 90 percent of GM's global spend. European travel management was consolidated two years ago, and now nearly 90 percent is booked with a single agency. In Asia/Pacific, GM is using 15 agencies, down from about 20. Consolidation in Latin America is just beginning.

After hiring a European travel manager Jan. 1 to jumpstart pan-European deals in its second highest-spending region, GM now is looking for managers in Asia/Pacific and Latin America. The lack of bodies is making implementation difficult, since there is no single point of contact, but Killeen is working with purchasing groups there that "do the paperwork and meetings, while we do the contracts, like a consultant."

As he seeks these cost-containment strategies, Killeen also is keen on holding suppliers to high standards of quality. In his latest agency and airline contracts, he set up metrics that link performance to fees. Under GM's first-ever performance evaluation system for agency services, for example, its agency, Total Travel Management, can earn extra revenue for holding costs down, or be penalized for its failure to do so. On the service side, traveler surveys on comment cards and a Web site found that 90 percent of travelers were "strongly satisfied" with the program in 1998. In terms of costs, GM considers average ticket price, fare offered, exceptions and travel agent productivity.

In airline contracts, a "very recent agreement" links supplier performance in industry measurements, such as the U.S. Department of Transportation's monthly on-time flight reports, to a formula affecting discount levels. Insisting on quality performance allows GM to keep current contracts in place and build long-term relationships, Killeen said.

In terms of group travel, Killeen's department handles about two-thirds of the company's meetings, but some of the largest remain out of reach. He is evaluating the need for a centralized meetings management entity, which he hopes to propose to management by year-end. He estimated that a comprehensive in-house meetings management program could save as much as the nearly $2 million the travel department saved on the 2,000 meetings it did handle.

Part of the difficulty with meetings, which applies to transient travel as well, is the sheer size of the corporation and the variety of departments and divisions. "When we started travel management here 15 or 20 years ago, we were under the misguided notion that this is one company," Killeen said. "We learned our travel policies need to have one umbrella that allows each division the flexibility to mold a policy that meets different business needs."

For one recent product launch in Canada, for example, one department ran an air shuttle out of a regional Detroit airport, while another had employees drive themselves.

One area where the travel department's involvement has shrunk is with the GM corporate air fleet, which is being downsized. Killeen had been most actively involved with shuttle operations, which this year will be cut back to make way for on-demand-only flights.

Despite that, his involvement in unique air service operations will not diminish. He hinted that a new twist to his expanding relationship with Pro Air will be announced this year. The five-year contract he signed with Pro Air, in which he helped launch the Detroit-based start-up by guaranteeing an undisclosed monthly payment in return for an unlimited number of seats (<I>BTN,</I> June 22, 1998), saved GM $1.6 million in its first seven months. Without GM's participation, the transaction never would have been concluded, said Business Travel Coalition president Kevin Mitchell, who helped broker the arrangement.

"The Pro Air deal was something that radically changed the perception of how we do business," Killeen said. "Since then, there has been a lot of interest among other suppliers, and a lot of off-the-wall proposals, some good and some bad."

But in reality, the travel program's willingness to step outside the boundaries of traditional practices is nothing new for GM, Killeen said. "We've had a philosophy of seeking alternatives for quite a few years. Probably there was a period where we were overwhelmed with a variety of acquisitions and such, but we're in an extremely competitive business where we're always looking for ways to save every last nickel. Up the chain, the impact of T&E costs has registered, and North America is only a piece of it."

In 1996, for example, GM followed the lead of its former Electronic Data Systems division and rented corporate apartments by the year, managing them like hotel rooms (<I>BTN,</I> Jan. 27, 1997).Total Travel Management president Brent Garback said the program moved so much market share that it brought the hotel companies back to the negotiating table. GM's 1998 average domestic rate was $87 a night on 250,000 hotel and apartment rooms.

"We're out of the apartment business for now," said Killeen, "but the program gave us the clout we needed to gain additional savings without carrying the liability. Now we're looking with a couple of other folks at doing it in tight pockets.