Security Drives Mandate - 2005-06-20

One of the largest buyers of business travel, with worldwide transient travel spending of $210 million, London-based BT Group, formerly British Telecom, used to have a travel policy compliance record that was little short of woeful. Two years ago, BT's 30,000 regular travelers, accounting for 30 percent of the workforce, made fewer than 30 percent of their bookings through the group's preferred travel management company.

Today, that has shot up to 89 percent in its highest-spending business unit, Global Services, and travel manager Jan Tucker-Jones is reaping the benefits of improved negotiating leverage with suppliers. "Before, there wasn't any respect for us—suppliers regarded us as very weak," said Tucker-Jones. "Now, they can see we mean business." Tucker-Jones said BT made savings of £7.5 million (US$13.6 million) on its travel budget in 2004.

There are two main reasons for BT's success in turning around compliance. The first was that it has split its travel booking process among three intermediaries: American Express for air—and hotel if booking a flight as well—Hotelscene for accommodations, if no flight is required, and, on a trial basis, Thetrainline.com for rail. Tucker-Jones is convinced that niche specialists give better service.

The second reason is even more fundamental. In October 2004, BT's human resources leadership team took the historic step of approving a mandate that employees must use the group's preferred TMCs. Although the business case for mandating always had been strong, BT senior management previously resisted the idea because, as is often the case in Europe, the idea of compelling employees to follow a strategy was anathema to group culture.

The catalyst for change proved not to be economics but duty of care. BT's security department successfully argued that it was responsible for monitoring employees and needed to see bookings routed through recognized channels from which it could take a direct feed.

However, Tucker-Jones stressed that the duty of care imperative would not have been enough to win the change in strategy. She quantified for senior management the savings that would result. She also reassured management that the booking service for travelers was good enough to mandate without generating too many complaints.

American Express and Hotelscene—an agency specializing in hotel booking based in Bristol, U.K.—won BT's global contracts in mid-2003 and Tucker-Jones took great pains to ensure service was good enough to win over travelers. "I instilled into Amex the importance of getting their service right first time," she said. "We worked very hard for them to understand the BT culture."

Both Amex and Hotelscene introduced self-booking tools early in their tenure. Amex offered GetThere, while Hotelscene provided a self-developed product called Xtranet. Xtranet proved an immediate success, with adoption hitting 40 percent in two months and currently standing at 80 percent. GetThere was slower, but now stands at 57 percent adoption. Tucker-Jones has found that booking air online is a more erratic process than for accommodation, with issues such as availability of non-global distribution system airline inventory creating difficulties.

She also said there is potential to make more than 90 percent of hotel bookings online, but the limit for air is much lower. For instance, there is one group of BT employees which flies regularly to India. They are allowed to fly business class, but there only is a limited budget. "We told them that we could find them discounted business class fares but they would have to fly indirectly," said Tucker-Jones. "They agreed, so we ring-fenced them and gave them dedicated Amex staff to find consolidated fares. The best carrier will vary each time, so we think there is value in using specialist people for bookings like this instead of making the reservations online."

This is just one of several examples of Tucker-Jones' pragmatism. It also is evident in her deliberations over how heavily to wield the mandate. With the Global Services division, which is responsible for the bulk of BT's overseas travel, hitting 89 percent compliance, she now is looking at the U.K. divisions, which have compliance of about 80 percent. "If 20 percent are booking EasyJet and budget hotels directly, is it worth beating myself up about that?" she asked. Not only is the duty of care requirement less urgent for domestic travel, but savings that can be produced in return for the transaction fee are more questionable.

Since unleashing Amex and Hotelscene on its U.K. workforce, BT also has introduced them in the United States, plus eight more European countries and about one dozen countries in Asia/Pacific. Now that she can show compliance, Tucker-Jones' next target is to source multinational supplier deals. She also is consolidating internationally by agreeing on a single worldwide policy. BT's travel procurement officers are discussing best practices.