Hotel E-Folio Data Flowing: Payment Systems And Hotel Cos. Step Up Cooperation

Bringing the industry closer to one of its loftiest goals, charge card issuers, payment networks and hotel companies are building relationships to provide electronic folio line item detail to corporate clients, including ConocoPhillips and Rockwell Automation.

During a panel at the National Business Travel Association's annual convention this month in Dallas, representatives from American Express, Visa and MasterCard—the major T&E card networks sans Diners Club—were in agreement on two things: They've been working on relationships with hotel companies to transmit folio data to corporate clients, and the industry most likely will never see all hotel companies electronically transmitting folio.

"We'd all love to give you the level-three data," Rob Sheets, MasterCard vice president of global business development, told a travel buyer during the panel discussion. "We're getting there."

The introduction of e-folio was well received at Rockwell Automation. "Travelers sign off on expense reports through our intranet," said Tom Formberg, director of business services. Rockwell uses Concur Technologies' expense system. "The system allows them to identify any items of a personal nature incurred at the hotel and that they're going to pay separately. The report goes right into Concur for processing. Not only is the tool a timesaver, but it's easy to use."

Rockwell travelers presently only can take advantage of the service when staying at Hilton-branded hotels—where the company has negotiated rates in place—but Formberg expects more of his firm's preferred hotel partners to get onboard soon.

While the objective of creating a paperless expense reporting system for hotel charges largely has been achieved, Formberg noted that some paper receipts still are required. "Yet, this is only for back-up and tax audit purposes, so the pressure travelers had been under to file expense reports largely has been removed," he said.

Visa has been the most active in passing along folio data since it began transmitting line item details from Prime Hospitality last year. The card network in February added Hilton Hotels and this month added Choice Hotels International to the expanding list of hotel companies that can transmit e-folio data to corporate clients. Visa said it now "can provide data from over 5,000 properties," according to Dave Costa, vice president of commercial solutions for Visa USA.

MasterCard also said that it is in the midst of piloting a folio transmission initiative, which it expects to roll out by the end of next month. "We have implemented solutions with a variety of nationally recognized hotel companies to assess and fine-tune the delivery of this data," said Steve Abrams, MasterCard International senior vice president of corporate payment solutions.

Carlson Hotels Worldwide told Business Travel News that it plans to participate in the MasterCard venture.

Likewise, American Express is moving in this direction. "The lodging industry and card issuers are very interested in passing this info" to travel buyers, said Shelle Santana, vice president of corporate card marketing. The card giant is "actively working on solutions with a number of heavily used business travel hotel chains," according to an Amex spokesperson.

JPMorgan Chase this month claimed to be the first payment issuer to transmit hotel line item detail via the Visa initiative to a number of corporate clients, including ConocoPhillips and Rockwell Automation. "Any company with us isgetting Hilton, Choice and Prime data," said Gene Couch, vice president of sales for JPMorgan Chase commercial cards.

JPMorgan Chase also issues MasterCard, though Couch said its portfolio of "existing cards is weighted toward Visa," since it comprises the majority of commercial cards issued to corporate clients. Couch said that, at the moment, MasterCard's e-folio program is "not as well defined or developed."

According to Visa's Costa, the data could be accepted by a variety of financial systems that companies have in place, "whether it be an expense system, an enterprise resource planning or accounts payable system."

Visa specifically has been working with expense software vendors Concur and Extensity to ensure data transfers. "That's part of the philosophy as it relates to commercial solutions: We want to make sure they fit and can be integrated with any existing financial system," Costa said. Most expense reporting software and service providers have created the framework to accept such detailed transactional data.

Carlson Hotels Worldwide eventually expects all of its brands to participate in MasterCard's initiative, but will start implementing e-folio capability at its upscale Radisson Hotels & Resorts unit. "Radisson is the highest priority since it's the brand that gets the most corporate travel," said David Sjolander, vice president of hotel information systems.

Sjolander said he saw the competitive advantage for Carlson's participation as twofold. "Not only can we offer the convenience to the traveler and buyer in term of handling expense reporting, but there's a benefit in data analysis as well. Travel managers now will have considerable information at their disposal as to how total spend at the hotel actually is broken out." Actual room rates are listed, but also taxes, food and beverage expenditures, including restaurants, mini-bars and room service, telephone charges, high-speed Internet access fees and such things as movie rentals.

U.S. Bank—the largest issuer of Visa commercial cards—said that while JPMorgan Chase was using the NBTA tradeshow floor to tout its ability to transmit data, "all the issuers can pass the data along," according to a spokesperson. Other such issuers of Visa corporate cards as Bank One and PNC Bank indicated that they too could transmit the line item folio detail to corporate clients.

However, that does not yet mean companies are receiving the data. "End users here haven't yet seen the data come through on the electronic expense reporting system," said George Odom, leader of Eli Lilly & Co.'s global travel and meeting services, who uses a Visa-branded corporate card and has negotiated rates at Hilton's hotel brands.

Companies also may have security concerns. "Some buyers tell us they're hesitant to disclose name locator files and proprietary credit card data, which is used as the trigger to validate the transmission," said Shannon Rigby Garcia, vice president of national sales for Prime Hospitality.

Yet, sufficient safeguards may be built into the system. "In providing the data to MasterCard, we've made sure all the privacy bases are covered. It's now up to them to make sure they're complying downstream," said Carlson's Sjolander. "As long as it's a corporate—and not a consumer—card that's being used, the data belongs to the corporation and they have access to it. We're just providing that data to those companies."

The e-folio resurgence among card issuers, card networks and hotel companies follows e-folio's slow evolution despite strong interest among travel managers (BTN, Oct. 7, 2002).

IBM played a critical role in this evolution when it incorporated e-folio capability in its Expense Reporting Solution in 2000 and then required its preferred hotel suppliers to be able to provide data for its own travelers this way—if they wanted to keep their share of IBM's significant room night volume.

"IBM really has to be credited for driving the initiative forward," Sjolander said. Carlson, Hilton, Hyatt Hotels Corp., Prime and Starwood Hotels & Resorts Worldwide were among the hotel companies that saw the advantage and complied.

"The IBM experience worked out very successfully for us. Its travelers benefited and we were able to strengthen our relationship with a key account," Prime Hospitality's Rigby Garcia said. "It's been so successful, we remain interested in working with other clients as soon as they're ready to embrace it."

While IBM has made strides within its own travel program to attain the coveted folio data, many companies have neither the volume nor the leverage to make such demands from their preferred hotels. It largely has been left up to charge card vendors to negotiate the data transmissions with hotel companies.

Among the charge card networks, Visa has made the most progress to fulfill travel managers' demands for folio data, but it does not command the lion's share of penetration in the commercial card market, particularly among the largest corporate travel spenders, where American Express is king.

Of the 80 companies in Business Travel News' 2003 Corporate Travel 100 issue (BTN, July 21) that listed a preferred charge card network, about 20 percent said they use Visa, compared with 54 percent for American Express. MasterCard and Diners Club make up about 13 percent apiece.

Furthermore, the hotel companies that Visa has partnered with only comprise a fraction of hotel spend at Visa-using companies—making the folio data transmission the exception rather than the rule for companies capable of receiving the data.

Similarly, all of a buyer's preferred hotel partners will have to participate in e-folio transmission before the buyer sees real benefit.

"Sure, e-folio has been a benefit we've been hungry for because of the various efficiencies," said Colleen Guhin, global travel manager for supply management at ON Semiconductor. "But what good is it if only one or two chains are providing the data? We really need it across the board if we're going to truly change procedures."

As Visa incrementally adds hotel companies that can pass along the data, American Express is holding out for a more comprehensive solution. "Our goal is to get a substantial portion of customers' hotel spend covered by a solution," a spokesperson said. "It's not really solving anything until we get that substantial portion of hotel spend."

Despite its limited penetration in the market, e-folio is expected to grow in the years to come. MasterCard's Sheets estimated that the number of hotel companies transmitting the data will grow by 20 percent annually in the next few years.

Although the travel industry is poised to see a boost in the number of hotels that pass along data, as well as card issuers that can transmit it to corporate clients, any upward progression eventually will plateau.

Consultant David Hillman, president of D. Hillman & Associates Inc.—who moderated the NBTA panel—doesn't expect e-folio transmission ever to go beyond 80 percent of hotel transactions.

MasterCard's Sheets agreed. "Certain hotels never will participate," he said. "The reality is you'll never have 100 percent." Since some hotel chains are franchised and other properties are managed independently, Sheets said it would be difficult for card vendors to negotiate franchisewide deals and receive data across the board.