NBTA Tackles Competition

<B> NBTA Tackles Competition</B>

<font size="+1"><B><I>Reporter's Notebook:</B> Travel Managers Support Consortium Buying </I>

<I>Orlando</I> - Airline competition issues permeated yet another industry convention as two Congressmen, a Cabinet member, a professor, a bureaucrat and a fuming consortium head debated various aspects of the question at the 30th anniversary National Business Travel Association conference in Orlando this month.

Still, it was NBTA's direct membership that made the biggest news. A lunchtime IRIS interactive survey found that 88 percent of 254 travel managers consider it "very" or "somewhat" important for the government to protect small carriers. Nonetheless, many buyers are convinced they'll be taking things into their own hands. Asked whether it will be Congress, the DOT, the airlines or corporate travel buyers who will eventually solve the problem of high airfares, 46 percent voted for themselves.

The survey also found strong sentiment in favor of consortium purchasing by NBTA on behalf of its members. Sixty-seven percent of direct members said NBTA should develop an industrywide consortium for airline negotiating; 64 percent said their companies would be willing to participate in a consortium; and another 64 percent said they would require employees to travel on consortium-negotiated carriers.

Although buyers clearly are concerned about airline competition, only 7 percent have filed comments with DOT on its proposed predatory pricing guidelines (<I>BTN,</I> Aug. 3). With a Sept. 8 comment deadline looming, U.S. Secretary of Transportation Rodney Slater gave NBTA the DOT's broad view through a satellite video address.

"Today we see signs of declining competition," he said. "Business and short-haul fares already have risen substantially, and we need to take action to preserve a level playing field."

Taking a more direct and comical hit at the airlines was Woodside Travel Trust president Ivan Michael Schaeffer. A lunchtime presentation had Schaeffer's cartooned and bow-tied superhero stopping the airline industry from sucking the business world dry. He also held a mock funeral for the 100-plus airlines that have fallen since deregulation. Unless the prospects for new entry are improved, Schaeffer said, the government should "vigorously reregulate the industry" to create a free and open market.

Later, an armchair debate pitted DOT special council Steven Okun against Professor Robert Gordon of Northwestern University. Though Gordon criticized DOT's predatory pricing guidelines as unnecessary--saying "the two biggest enemies of start-up airlines are the government and themselves"--he revealed to BTN that he agrees with DOT in some areas. "I'm very much in favor of loosening up the exclusive gate leases at airports," he said. He also noted that "the real price gouging, which I admit happens, is on the short-haul routes." Still, when speaking to the NBTA crowd, Gordon asked DOT to "please, don't take my cheap flights away."

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At a breakout session, ARC director of agency accreditation services Barry Lemley said the agency expects by year's end to remove the "pilot" status of Republic National Bank's accredited Corporate Travel Department and allow other companies to apply for the accreditation as well.

Even with its own plates, meanwhile, Republic will continue to outsource parts of the process to a travel agency. Under a new contract, it has switched agencies to Carlson Wagonlit Travel, which will provide a 24-hour emergency desk, MIS, visas and passports, a rate desk and other services, said global travel vice president Andy Menkes. In its first RFP since getting accreditation, the bank asked agencies to price each service individually--and found price quotes varying by over 400 percent, Menkes said. To his surprise, some agencies even thought they would still be keeping overrides. He also signed his own contract with Apollo/Galileo USA for GDS services.

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On the technology-oriented trade show floor, automated booking vendors announced several new clients and milestones. E-Travel said it signed Sonoco, a Hartsville, S.C., packaging manufacturer, as its 200th corporate customer. Internet Travel Network announced Toyota, PeopleSoft, Nike and Nabisco as its newest users. Toyota actually is using the product under the private label of Galileo's Corporate Travelpoint.

Worldspan said its self-booking tool, Trip Manager, is being implemented or in pilot test at four new corporations: The Dow Chemical Co., Wizards of the Coast Inc., MedManagement LLC and the Huntsman Corp., as well as at First Class International, an agency that is evaluating it for corporate clients.

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AXI and Sabre BTS revealed their latest hot feature, wireless connectivity. Laptop users soon will have the ability to access Sabre BTS through the MobileStar network, which will be installed later this year in airports and hotels around the country. MobileStar transmits radio signals to users with radio receiver-equipped PC cards, enabling them to access the Internet without a modem. Sabre also teamed with 3Com to allow one-touch synchronization of travel itineraries to PalmPilot units.

Hand-held computer users already can access certain features of AXI with wireless connections, Amex officials said, but they are seeking customer input to make the booking tool more seamless and useful.

Internet Travel Network also is testing wireless functionality, but company officials declined to discuss details.

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Putting to rest some rumors about Galileo International's corporate strategy, Mike Cavanaugh, senior manager of corporate marketing, said the company issued a request for proposals to develop a front-end interface to its Travelmaster expense reporting product. An announcement and further details are expected in September. Before signing a pact with ITN, Galileo researched the feasibility of buying the now defunct TravelNet booking system to private label as Corporate Travelpoint. In the end, though, the proposition was far too costly.

Trying to eliminate one of the reporting nightmares for corporations and agencies alike, Galileo this fall plans to test a product that will add structure to the reservation and ticketing data in each passenger name record. "At the end of every transaction, the software would write in structured data," Cavanaugh said, referring to fields that could contain such things as lowest fare at the time of booking, why the traveler refused the lowest fare and even cost centers. The problem is that most agencies--or even worse, offices of the same agency--have yet to standardize what is reported in each field, causing errors and omissions in reporting.

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WorldTravel Partners and Travel Technologies Group of Atlanta are trying to help corporate decision-makers sort through the often-confusing array of automated booking and agent productivity tools with a new guidebook they commissioned from travel technology consultant Norm Rose. It compares six top booking engines: American Express' AXI, E-Travel, Internet Travel Network's Global Manager, Sabre's Business Travel Solutions, Xtra On-Line's PowerTrip and TTG's ResAssist. Called "The Lab Notes: A Useful Analysis of Automated Booking Systems and Agent Productivity Goods," the book outlines the strengths, weaknesses, market position, architecture and background of each product and compares 20 top features. Lab Notes is free to decision makers.

In an enhancement to TTG's Screen Highlighter offering, an administrator now can distribute highlights of preferred vendors across the CRS enterprise-wide, to quickly adjust preferred vendors.

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There was a strong consensus among travel buyers, sellers and analysts that corporations must look for alternative inventory--including blocked and leased rooms--to offset rising hotel rates and decreasing availability. As an extra bonus, companies can receive a tax break for leased rooms in some states, including New York and Illinois, after more than 30 days.

The low supply in the upper-tier market is attributed to the high barriers to entry and the long lead time involved in new construction. Buyers were advised to seek out new venues for their travelers.

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Following interviews with 500 travel managers, NBTA in September will publish a study summarizing job responsibilities and pay ranges. David Domsch, vice president of Lawrence-Leiter and Co., which conducted the research with NBTA, said the low-end salary was $35,000, while the mean was $58,600.

Twenty percent of respondents, he said, made $45,000 while another 20 percent made above $71,000 and 10 percent receive over $84,000 a year as a base salary. In East and West Coast cities like Washington, D.C., Boston, or parts of California, travel managers earn 20 percent more than the national average.

Domsch noted that in general, "your boss and H.R. don't really understand what you do, and that correlates to pay systems." He suggested that travel managers make sure their job descriptions match the reward and suggested "rewriting the position description to emphasize those things the pay system can reward you for."

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The NBTA airline committee distributed a series of white papers on airline-related issues including alliances, electronic ticketing, competition, the Internet, net fares, benchmarking air policy and constructing airline RFPs. All will soon be available on NBTA's Website (www.nbta.org), including an Excel spreadsheet for calculating net fares.

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In a session on ground transportation, Wall Street analyst Robert Marshall of Wheat First Union was bullish on the newly public Carey Limousine, calling the stock "very attractive." In an industry just beginning to consolidate (see story, page 5), the top three players command more than 20 percent of the market, and no smaller player has more than 3 percent.

With the segment as a whole growing 9-10 percent, Carey's been growing 14-22 percent, "demonstrating that its management team is adding value," Marshall said. As the segment's only public company, Carey has the pick of acquisition targets and can hold the price down because no one is bidding against it. In addition, a strong technology system gives it "one less thing to worry about," Marshall noted.

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Do you think your company is too small to have clout with technology vendors? Perhaps individually it is--but not as part of the rapidly growing "emerging enterprises" market of companies with less than 500 employees, said Worldspan's Jeff Hoffman. Players in the "e.e. market" should look for flat site licenses for software rather than paying transaction fees he said--and remember that in the $250 billion technology market, $200 billion is spent by small companies.

This year, tech vendors from Microsoft to IBM and from Oracle to SAP are targeting small companies (<I>BTN,</I> July 20), and Big Five consulting firms are offering services. Hoffman "highly recommended" that corporations considering travel technology products buy a day or two of a consultant's time and have him draw up a complete technology plan. And, he said, "forget about not using Internet-based systems 'because they are too slow.' We're seeing cable modems where you turn the computer on and the Web is there without your having to dial in--at 100 times the speed of a phone modem."

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The lack of travel agency buzz on the trade show floor left many believing that a lot of merger and acquisition activity was going on behind the scenes. Some travel management companies said they were on the acquisition trail, with announcements coming soon.

Maritz Travel Co. president Michael Boland said the company could close one or two acquisitions by the end of this year. Journeycorp was looking to acquire Arrington Travel, which was just acquired by Navigant International. Travel One said it is close to a deal in Northern California, one in New England and another in Houston. And Travel and Transport is also planning to close some acquisitions --it is looking to expand the Southern market around Wichita, Kan.

Linda Garback of Total Travel Management told BTN her agency is now in the process of expanding into South America and Mexico. Meanwhile, Ultramar Travel Bureau of New York is expanding and opening Southeast offices.

In other agency developments, Journeycorp recently signed a partnership with Unisys to offer its Unires and Unitrax products for online booking and expense reporting. It was previously using Xtra Online for booking.

Maritz unveiled its Intranet travel home page prototype (<I>BTN,</I> Aug. 3) as an out-of-the-box tool. Maritz plans to offer the standardized page on a service bureau basis by the first quarter of 1999.

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Speaking, ironically, just a day before the Dow dropped 300 points, American Express Corporate Services president Ed Gilligan predicted a negative turn in the economic tide. He questioned whether the Asian crisis would spread and cited other reasons for instability, including the year 2000 problem and the introduction of the euro in January--both representing enormous costs to businesses.

On the online side, Gilligan said the Internet is "the most profound business development we've seen in our lives" and advised attendees that "getting your travel management process connected to the Internet should be your first priority for cost control and service improvement."

Lastly, Gilligan said consolidation both in the travel agency community and the airline industry will continue, and predicted that just "three to four global airline alliances will emerge."

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Choice Hotels International early this month named Charles Ledsinger, Jr. as president and CEO. Ledsinger, 48, will assume control of the company at the end of this month. Most recently, Ledsinger was president and COO of St. Joe Company, a private landowner and developer of master-planned communities, commercial and industrial facilities, resorts and location-based entertainment in Florida. He was former CFO of Promus Hotels Corp.

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Wyndham International by early September will launch a prototype Internet Website to house electronic requests for proposals. The site can be hyperlinked into the hotel company's corporate and brand Websites. It plans to work with five or six major preferred customers during the original beta test phase.

Wyndham also plans to beta test a customized yield management system in four Wyndham Garden Inns during the next few months. The new system will be installed in Sunnyvale, Calif., Neighborville, Ill., Las Calinas, Texas and Northwest Chicago.

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NBTA president Mark Johnson said sticky summers in Orlando, St. Louis and Dallas have led NBTA's board to again designate the dress code for the July 1999 convention as business casual--despite the cooler weather anticipated in Minneapolis.