Philip Morris' Online Usage To Triple By Year-End
<B> Philip Morris' Online Usage To Triple By Year-End</B>
By Sarah Welt
Since implementing an online booking system last December, New York-based Philip Morris Management Co. expects to save about $500,000 a year off its $69 million travel budget because of lower ticket prices offered via the Internet.
The company has 20,000 travelers using Oracle E-Travel's product so far and usage is up to 6 percent, but the goal is to roll out the product to the rest of the travelers and get usage up to between 15 and 20 percent by year-end.
On choosing E-Travel, travel manager Donna Muhlhausen said, "We didn't want an agency product or an airline product. We didn't want to marry a particular vendor. We wanted to be able to go out and change agencies or airlines and not have that impact the booking system."
When it came to getting E-Travel implemented on the company's intranet, none of the various operating companies within the United States had access to the same technology platforms. "It was a challenge to get out there and speak with all the IS departments and get everyone access to the booking tool," she said. Luckily, she had buy-in from the three other U.S. travel managers who helped facilitate the project.
Incorporating corporate travel policy into the booking system has been crucial in keeping costs down and making sure travelers book preferred vendors. "It displays preferred vendors first. They have to take an extra step to see other vendors and you have to put in a reason code as to why you are declining a preferred vendor," she noted. Policy compliance already has resulted in decreasing average ticket price by 5 percent.
On the airline side, the company has negotiated one deal with a carrier that is part of an alliance so its discount is accepted on the alliance carriers. Because of the commission cuts, the company has made a concerted effort to go net. Sixty percent of its air volume was net as of Jan. 1. Net fares are expected to save the company $1.1 million this year.
Moving from a profit center to a cost center was another big change. "Last year, we were collecting commissions from the airlines to pay for our travel department and now we write a check to the agency every month," Muhlhausen said.
Even though different travel agencies are used overseas, Philip Morris recently signed an umbrella car rental agreement, in which "our local agreements are reciprocal amongst operating companies, so anyone in the U.S. gets the U.K. deal and vice versa," she said.
Philip Morris signed with American Express for its corporate card in April, while two operating companies continue to use Visa as their preferred payment system.
Its agency contract with Amex is up for bid next summer, Muhlhausen said, and "we have looked to maintain relationships, but at the same time we don't blindly resign contracts."
To keep costs down, Amex services the account in an offsite call center in Omaha, Neb., with 67 dedicated agents.
The company also is studying direct links. "We think it might take some costs out of the booking process," she said, noting that the company will go direct "as soon as the technology is available.