Mega Agencies Pursue Global Strategies

<B> Mega Agencies Pursue Global Strategies</B>

By Sarah Welt

Driven by increasing client demand for service consistency, several mega travel management companies this year have been tweaking their existing global account management blueprints.

That call for consistency also has spurred global travel agencies --American Express, Business Travel International, Carlson Wagonlit Travel, GTM and Rosenbluth International--and their network partners on both sides of the Atlantic to improve existing technology, refine data warehousing capabilities and expand into new territories either through acquisitions or joint ventures.

Although corporations are asking for global data and including global language in their RFPs with increasing frequency, the mega agencies each acknowledged that they serve little more than a handful of truly "global" accounts.

However, megas are seeing more multinational bids than ever. And no doubt this year's introduction of the euro, as well as the ability to use European cross-border satellite ticket printers and the increased usage of e-tickets will help.

For example, "At least 50 percent of the accounts at Hogg Robinson in the U.K. that we bid on have international involvement," said Michael Platt, international commercial director and COO of Business Travel International.

Platt said the trend toward globalization "most definitely" started in the United States, but "now European head offices that don't have a major decision-making influence from the U.S.A." are the ones joining the globalization bandwagon.

President Ed Gilligan said American Express Corporate Services this year has contracts with roughly 400 companies at which the clients are operating in more than one country.

WTP-BTI Americas co-president Danny Hood said, "It used to be that 60 percent of global bids were driven by the U.S. and 30 percent by Europe and 10 percent by the rest of the world. Now we are seeing many German companies driving globalization."

These developments have prompted the megas to reevaluate their existing account management strategies.

Rosenbluth International, for its part, a year ago introduced a Multinational Client Program. The 11 clients who were invited to participate had to meet certain criteria--they had to be serious about managing travel on a global basis, which for Rosenbluth means "managing for a certain degree of consistency in terms of traveler services; managing sourcing--airline, hotel and car rental contracts; and orchestrating resources on a global basis," said director of marketing analysis and planning John Buck. Beyond that handful of clients, "we have at least a dozen or two dozen more at some level of readiness."

As part of the program, Rosenbluth added the role of managing director to create a single point of global accountability. A year ago, accounts were serviced by general managers in each of the countries where the accounts had a presence, and typically one general manager would take the lead.

The agency refined its operations because, as Buck said, "our customers are spending a lot more time thinking about their needs from a multinational or global perspective, and therefore it is the right thing to do to help the client by establishing this single point of accountability. It is more convenient for the customer and more convenient for us. And we find things can be done in an accelerated manner when we have one point of accountability instead of five or six."

American Express also established a single point of contact for global account management during the past year. "Now we have one person in charge of an account around the world who can call the shots," said Gilligan.

WTP-BTI Americas also has gone the single-point-of-contact route for global accounts at the request of two customers--Hewlett-Packard and Electronic Data Systems. "Companies are saying they really want a multinational account manager to manage all of their factories," said Hood, "so we've evolved into a multinational account management team with a single point of contact."

But the concept is by no means a new one, as agencies and global networks have had that kind of structure in place for some time. BTI and GTM, for example, have spent the past year improving their existing strategies. And Carlson Wagonlit has had "quite a few global account managers for our five to six global accounts," said executive vice president of global sales and account management Liliana Frigerio. "We were the very first company to set up international sales and international account management that overrode the national structure."

Clients also are asking for a common technology platform and the ability to access data around the globe, which means the major travel management companies have had to improve data warehousing capabilities.

Amex has been building what it terms "data marts" to integrate card, travel and expense reporting data, and now is able to deliver that information. "The only thing we are still building is being able to access that information via the Web. That is what clients want now," said Gilligan. "We are building all the front-end reporting now to deliver information over the Web, so clients are starting to see big improvements in MIS timeliness and access."

Gilligan said the process of rolling up data around the world has taken three to four years and is just this year paying off. First Amex had to roll out its back-office system across the world, and by the end of last year it had consolidated 98 percent of its business on Global Max. It uses Hi-Mark for data consolidation and has a couple of companies in mind to provide Web reporting.

Meanwhile, WTP sister company World Travel Technologies Group last month acquired International Software Products (BTN, Aug. 2). Noted Hood, "we are finalizing the acquisition in WTT and looking to really promote ISP to WTP and BTI accounts that need data consolidation around the globe for multiple agencies."

BTI member agencies use GEMS (Global Expense Management System) to consolidate data. Hood noted that it is just for BTI agencies, whereas "ISP can take data feeds from Amex and Carlson Wagonlit." Additionally, GEMS only deals with booked data while ISP can handle flown data feeds as well.

Maritz Travel decided to create its own global data warehousing tool. The company has been busy rolling out Northstar to GTM alliance partners. It hopes to have between 12 and 16 countries on Northstar by year-end (BTN, April 12). Maritz president and CEO Mike Boland said part of the licensing requirement is that GTM companies support the system.

Carlson Wagonlit provides global reporting by consolidating data through its own back-office software, WorldOne. The company's two data warehouses reside in the United States and Brussels. While rolling up data globally is getting easier, there are places in the world where it is still a challenge. Both Amex and Carlson Wagonlit noted that in some parts of Latin America and the Asia/Pacific region, "data need to be collected on a manual basis," said Frigerio.

To gain a firm grasp on global capabilities, the mega agencies have opted to either own a location or get an equity stake in one. That holds true for WTP-BTI Americas and Hogg Robinson. BTI in July restructured to give Hogg Robinson and BCD Holdings (parent company of WTP-BTI Americas) each 46 percent ownership in the global organization (BTN, July 19). Said Platt, "The wires are hot between the U.K, and Atlanta, and there is a lot of talk between head offices about how we can obtain synergies."

And Maritz Travel's global network Internet Inc. merged with GTM Travel Management. That rebranding occurred this spring following GTM's loss of WTP last fall when it merged with BTI Americas. Booth said that when the two organizations merged they only overlapped in about seven to 10 countries. Since April GTM has added agencies from United Arab Emirates, Egypt, Thailand, Equador and Columbia.

Meanwhile, Amex has been successful in seeking not only to own locations but also to create joint ventures to gain strong market positions in individual countries. It completed a joint-venture deal in July with Farrington Travel of Hong Kong, which begins operating as Farrington American Express Travel Services Limited next month, which, according to Amex, creates the largest corporate travel agency in Hong Kong (BTN, Sept. 6). Last June, American Express acquired Havas Voyages SA, its French joint-venture partner. And prior to that, it formed a joint-venture partnership with Bank Brussels Lambert of Belgium (BTN, April 13, 1998).

Gilligan believes that Amex is now "number one in most major markets except in Germany," where it hopes to grow.

Rosenbluth has followed a model similar to that of American Express. Chairman and CEO Hal Rosenbluth said the company plans to acquire in Italy, Latin America and Spain by the end of the year (BTN, Sept. 6). Buck said that the company "prides itself on owning the majority of its operations" and "not working through franchises. The only way to guarantee we can deliver quality is if we own the majority of a company. We fully own in 27 to 28 countries."

He added that in some parts of the world where ownership is not possible or not a sensible business option, two levels of affiliation exist--equity holdings and non-equity relationships, or "network partnerships." Rosenbluth has network partnerships in several countries including Argentina, the Czech Republic, Columbia, Denmark, Egypt, Greece, Hungary and Venezuela.

Meanwhile, Carlson Wagonlit Travel has been quiet on the acquisition front this year as it has been focusing on completing the integration of the two companies that merged in 1997 and dealing with major changes at the top of the organization. Following the death of Curt Carlson and the departure of Travis Tanner, the agency has a brand-new management team under president and CEO Jon Madonna. It also is in the midst of a giant reengineering process to centralize its U.S. and European operations.

Carlson Cos. and Accor announced plans last month to create a new segment of their partnership--a separate leisure group in Europe. Currently, both leisure and corporate business fall under the heading of CWT overseas, but the new business plan proposes a separate leisure company, similar to the U.S. model. The new entity will still be owned by both Carlson and Accor, but Accor will manage it. Initially, the company will focus on rolling up leisure business from France, Portugal and Spain. Carlson Cos. spokesperson Doug Cody said, "Carlson is interested in launching more focus on Europe in the years ahead, and we think both sides recognized that the leisure travel market in Continental Europe certainly is ready for expansion and mining. With three key markets already in place, it seemed like the natural thing to do.