Managing Meetings At Ralston Purina Co.

<B> Managing Meetings At Ralston Purina Co.</B>
<I>Corp. Mandates Nonrefundables</I>

By Chris Davis

Ralston Purina Co. has shaved about $150,000 off its $15 million total travel and entertainment spending in the first quarter through a tweaking of its meetings program and a new policy that mandates the use of nonrefundable airline tickets and increases the usage of low-cost airlines for both its group and transient travel.

The meetings program at the St. Louis-based producer of pet products and Energizer batteries already was highly centralized, said manager of meeting and travel services Annette Morris. But the company wanted to further tighten its meetings-spending belt. Now, Morris and the two other planners in the meetings department sit down after each meeting and spell out how much their services saved the sponsor in reports for senior management.

"That definitely has had an impact on savings," Morris said. "After each meeting, each planner will do a meeting value report and give it to our upper management. They put a dollar value on what the meeting would have cost without our services and what it actually did cost. They'll highlight what they've negotiated--things like complimentary rooms per 40 booked and the like--that a regular employee negotiating a meeting wouldn't think to ask for."

The value of the professional approach is particularly noted when a meeting is canceled or suffers attrition, leading to penalties being imposed by the meeting facility. The company just recently had a group that was charged a hefty cancellation fee, until the meeting department persuaded the hotel to apply the fee to a future program.

The most significant changes to the Ralston Purina meetings and travel programs occurred in February, when senior management mandated that the pet products division use nonrefundable fares. The company's onsite American Express office also now offers low-cost carriers and alternate airports as options, Morris, said, which was not done previously.

In St. Louis, "low-cost carrier" means Southwest Airlines, but travelers at offices throughout the country are subject to the change, and several low-cost airlines are being used.

To track compliance, Ralston Purina uses American Express's Pre-Trip Power, which notifies the travel department when travelers are not complying with the changes. The travel department notifies senior management, which in turn notifies the traveler's manager.

Morris attributed a little more than half of the $150,000 quarterly savings to the use of nonrefundable tickets, with the remainder coming from the tighter meeting controls and use of low-cost carriers.

The decision to adopt the new nonrefundable-fare mandate for both group and transient travel was made as a way to further control T&E expenses, which is why management rejected an earlier proposal to allow refundable tickets if the difference was less than $100.

"We were concerned about going with the lowest nonrefundable fare, because sometimes employees might just need a refundable one," Morris said. "We tried to put a value on it, but the decision was made that every dollar that we can save, we should. If 1,000 people save $10 each it adds up. Now, if the refundable fare is a dollar more, then we want to know about it."

Ralston Purina headed off employee discontent from the inconvenience of using nonrefundables by e-mailing newsletters before the change that detailed the financial advantages of switching to nonrefundables.

The company's other divisions are still in the process of implementing the new mandates. "When we show them these savings, I'm sure they'll be pleased to do so," Morris said.

Other companies have seen results by mandating, or at least encouraging, the use of nonrefundable tickets. Oracle Corp. of Redwood Shores, Calif., which ranks among the 20 companies that spend the most on domestic air travel (<I>BTN,</I> July 6, 1998), recently marked a year since it mandated the fares. During that time, the technology giant saved $8 million on its $120 million annual T&E spend (<I>BTN,</I> May 3).

While there hasn't been a stampede of companies looking to follow the paths of Oracle and Ralston Purina, consultant Tom Wilkinson thinks that perhaps there should be.

"I applaud what Ralston Purina is doing. This is where a lot of companies should go because nonrefundables based on advance purchase can be up to 60 percent less expensive than full coach tickets," said Wilkinson, president of the Travel Management Group of Alexandria, Va. "They are the biggest source of potential savings out there. If companies are serious about cutting their travel costs, they need their travelers to get on the phone and get those nonrefundables early on."

In order to make the use of nonrefundable tickets successful, though, Ralston Purina needed to ensure that its travel agency kept track of unused nonrefundables in travelers' profiles, so that they are used for future travel rather than forgotten about and allowed to expire.

"The bigger piece is changing the corporate culture," said Wilkinson. "There's never going to be 100 percent of trips booked in advance, because there will always be a need for last-minute trips. But you want to make steady progress in your organization and keep the needle moved as far towards advance purchase as you possibly can."

Susan Stowe, senior consultant for Washington, D.C.-based consultancy Caldwell and Associates, agreed that not many companies are mandating nonrefundables, but noted that more are encouraging their use.

"During the past year, more companies have broadened their policy exceptions, as travelers are strongly encouraged to take nonrefundables, and it's noted to management in an exception report if they don't," she said. The low-cost carrier mandate is not being pursued by many companies, though there are "significant savings" there. If the economy turns downward, she added, "people might want to tighten their belts, and this is a clear way to save a lot of money." In the meantime, documenting savings the way Ralston Purina is doing "is the kind of thing that gets management's attention.