<B> Leveraging Grows</B>
By Chris Davis
In what seems to be the beacon of a more sophisticated era of meetings management, the number of corporate travel buyers who combine their meetings and transient volume in order to negotiate with suppliers has almost doubled in the past three years, according to a Meetings Today survey.
Aware of the opportunities and cost savings that leveraging can bring, nearly 70 percent of the corporate buyers combine their air volume and 65 percent combine their hotel, compared with only 34 percent and 40 percent, respectively, who did so in 1996.
A number of changes in the travel management landscape have contributed to the shift, including the availability of travel management software that can better capture meetings data and a growing willingness among major airlines to negotiate deals based on the total annual volume a corporation delivers, rather than negotiate meetings contracts on an event-by-event basis. The long-term seller's market also has decreased buyers' leverage over the past few years, forcing travel and meetings managers to become more savvy and creative in keeping expenditures down.
The increased sophistication of today's travel and meeting buyers is one of the main drivers of the trend, said Bill DeRoze, vice president of business development for Maritz Travel Co. of Fenton, Mo. "Very few companies have written meetings policies, but they are paying more attention to managing their meeting programs," he said. "The focus the trade press puts on consolidation spreads best practices around the industry and builds greater awareness of effective programs."
As the latest in a spate of commission caps further decreased the revenue generated by air travel, companies also are looking for more innovative ways to decrease their air spend, with meetings--which can comprise 20 to 30 percent of corporate air travel--being the largest untapped resource.
Corporations also are beginning to realize the cost of not managing their hotel contracts. With the seller's market offering buyers less opportunity to negotiate cancellation and attrition clauses out of their contracts, it takes only one major cancellation penalty to prove the value of paying attention to group contracts, DeRoze said.
Travel manager Misty Gray, for example, has helped Syncor International Corp. of Woodland Hills, Calif., save up to 20 percent on hotel rates by establishing annual volume-based contracts for meetings and transient travel. "Depending on the hotel's automation capabilities, the agency we use will automatically book transient travelers at our negotiated rates," she said. "We'll get the same rate for meetings, but we have to phone those in because the hotels' reservation systems can't handle it."
Syncor also books its group air travel, which comprised about half of its $2.3 million 1998 air expenditures, at a negotiated systemwide corporate rate. "We always check to see if the airline's standard group fare gives us a better deal than our negotiated rate," Gray said, "but it hasn't happened in the last three years."
Dan Baillie, travel manager for Block Drug Co. of Jersey City, N.J., estimated that he has shaved 4 percent off the company's total travel expenditure by consolidating transient and meetings volume in his airline negotiations. Group travel makes up about 20 percent of the air budget.
And Nancy Ayers, manager of executive meeting and event services for Mobil Business Resources Corp. of Fairfax, Va., said that while her department currently functions separately from the corporate travel department, the company is on a path to eventually combine the volumes of the two for better leverage. The company's meetings department, which was centralized three years ago, has been using McGettigan Partners' CORE Discovery software to capture group spending data--a process that eventually "will open the door to the question of consolidating expenditures," she said. "We're not there yet. But anything to help show hotels that we have a lot of room nights to offer, be they individual or group travel, helps."
Ayers said that fewer companies are consolidating hotel spending than air simply because corporate travelers and meeting attendees often are headed for different types of properties. But she also said her experience isn't uncommon. "Corporations have the desire for the best value for their meetings," she said, "and this is one of the last areas left to manage."
However, Dan Lauterwasser, travel and meetings manager with Muscatine, Iowa-based office furniture manufacturer The Hon Co., won't combine his $5 million in meetings and transient air volume. "I don't include them as one number because the airlines don't really like them to be structured that way," he said. "We have a good relationship with the airlines and I don't want to disrupt that.