Seagram Sees Deal-Driven Savings

<B> Seagram Sees Deal-Driven Savings</B>

By Sarah Welt

<I>New York</I> - Less than a year into a massive global consolidation, Joseph E. Seagram & Sons Inc. is on target to exceed by $2.5 million its goal to save $15 million by July.

And as the company rolls out automated booking and expense reporting later this year, a unique pilot with card vendor American Express will test the concept of billing back different fees for online versus telephone transactions to individual travelers' credit cards, highlighting for them--and for their managers--just how much more electronic travel purchasing might save.

In the first round of cost-saving initiatives, air deals have made up the bulk--fully 55 percent--of the expected $17.5 million, said Seagram's global travel manager Earl Foster. Net deals with travel suppliers for the company's $200 million total travel spend have generated a large portion as well, and changes in Seagram travel policy added another $4 million.

Foster restructured the travel policy by moving to a two-tiered platform with three time frames. Where once "everyone flew first class," the new policy has top tier travelers flying business class for trips up to eight and a half hours, and first class only on longer flights. In the second tier, the time frames are the same but travelers fly coach for trips up to six and a half hours and then business class. All travelers can fly business class on overseas flights.

Pre-trip exception reporting is a Seagram practice and, said Foster, "we call all travelers that are an exception and attempt to convert them to a non-exception." But to keep exceptions to a minimum, the company has been focusing on traveler education with the introduction of a global Web page, and offers all travelers instant access to travel team members on a global basis.

To win support from Seagram companies, "our whole philosophy is to return all value directly to the travelers' location. Nothing sticks in corporate," said Foster.

More cost savings have been realized through Seagram's global net airline deals. Seagram uses United as its primary and Delta as its secondary supplier, and also is working with the Star Alliance in Asia and Europe for intra-continental deals, some of which are on a net basis.

"With every supplier I sit down and talk to, the first thing I talk about is doing net deals. If it is possible to do nets in a region, that's the relationship we enter into," said Foster. If not, the company negotiates a different relationship, with the understanding that "we need to change the paradigm real quick over to one that's net."

On the hotel side, 80 percent of negotiated rates are net. Seagram last month finished its entire global preferred hotel program, which now includes 100 properties. Again, travelers are required to stay in Seagram properties and are subject to pre- and post-trip exception reporting. The hotel directory soon will be posted on the travel department's intranet site.

Carlson Wagonlit Travel, Seagram's new global travel management provider, handled the entire hotel bid on an outsource basis--"the first time we used a travel agency to outsource the whole process," Foster said.

As a follow-up, the two organizations met last month to discuss which parts of the hotel RFP were successful and which need improvement next time around. His attempt to "take the NBTA RFP and modify it--take an industry standard and bastardizing that a little bit"--was perhaps an error, Foster acknowledged, and the two new partners "stumbled a bit between who had ownership of every different stage," though Foster accepted responsibility for "not properly setting expectations."

As far as its global agency consolidation, the organization is completely consolidated with Carlson Wagonlit in the United States, as well as in Asia, with the exception of Australia, said Foster.

The Land Down Under will be brought into the Carlson Wagonlit fold in the next four to six months, and Latin America already "is in transition," Foster said.

The conversion has not been a hard sale internally because "all Seagram employees are really focused on cost." However, the high-touch entertainment side of the business will continue to use the Los Angeles-based Hoffman Travel.

On the technology side, Seagram this month is rolling out the electronic OAG, as a general flight look-up product, as part of its intranet site. In six months, Foster plans to have investigated and selected a self-booking product as well, and to add it to the intranet site for those travelers who wish to use it.

Expense reporting is also in transition. Seagram has been using American Express's Expense Manager product in North America for the past three year, while Europe used a second product, called Beratech, from a London-based company of the same name. However, since American Express recently stopped offering its product, Seagram now is in the process of choosing a single global expense system vendor, whom it expects to name in the next 60 days. With reimbursement of travelers tied to expense reports, "we can't afford not to" automated that process, Foster said. By the year 2000, he plans to link the booking product and expense reporting systems in a single end-to-end solution.

Already, he is laying the groundwork to encourage a shift in traveler behavior away from telephone--and toward electronic--reservations. In a trial test in Europe, Foster has worked out a deal with American Express to take a feed from the travel agency and bill the fee for each reservation to the individual traveler's credit card, so they "automatically have it when they get prepopulated expense reports." Having each traveler--and his manager and finance office--see the savings in processing costs of electronic versus telephone reservations will clearly highlight the benfit of moving online, he said. Seagram plans to have this project become a companywide initiative over the next six months.

The American Express card program, meanwhile, is being rolled out to the Asia-Pacific region, with the goal of increasing the number of users from the current 10 percent to 50 percent of Asia-based travelers, accounting for 80 percent of the region's travel spend.

As far as data, Seagram has outsourced data collection and warehousing to Washington, D.C.-based International Software Products, and now has in excess of 18 months of data online. IPO receives data downloads from Seagram's travel agencies, airlines, credit card and car rental companies, and will add major hotel suppliers over the next three months.

Foster summed up this first year of consolidation as a "building year" saying "you've got to hit it hard--get every bit of that low-hanging fruit and take the next wave out, and do all of that in one year."

Meanwhile, Foster has been busy wearing another hat, which he donned anew following his recent reelection as president of the Association for Corporate Travel Executives, where he has taken a global focus. The Paris-based French corporate travel organization GEODE joined ACTE last month, and "ACTE in Asia is starting up as we speak." While "there is not even a small complement of travel managers available" yet in Asia to recruit as members, Foster sees only opportunity. A director for ACTE Asia also is currently being sought.