Small Corp. Advances Program Via Local Agency
<B> Small Corp. Advances Program Via Local Agency</B>
By Sarah Welt
<I>Dortmund, Germany</I> - In its first consolidation, ITK Telekommunikation AG has proven that even a small corporate account can garner significant savings by consolidating its travel.
ITK's travel manager, Marina Nadke, decided in March 1997, to consolidate the company's $560,000 in travel spend with a single agency. Since that time, the company has instituted a formal written travel policy, negotiated discounts with air, car rental and hotel suppliers, and built a travel intranet site that includes a travel application, approval and order form.
Even this early, Nadke said, "there is no question about the effectiveness of the centralization. All bookings for staff in France, Britain, Holland and Denmark are now funneled through my office and the company is gaining from the established contracts with the service suppliers."
Prior to the consolidation, travelers from ITK, a global company in the computerized telecommunication market, made all travel arrangements through their secretaries. Nadke began by researching the booking behaviors of these travelers and secretaries before putting together a proposal suggesting consolidation as a way to achieve savings for the company, and presenting it to the board of directors.
Nadke, who is solely responsible for her company's day-to-day travel operations, "tried out about five different business travel agencies, including the big ones like Amex, Hapag-Lloyd and FIRST," she said. "They all do a very good job, but for their business ITK is just a little fish."
In the end, she signed with the small German agency Oberhausener Reisebüro, a 12-person operation. "For my small agency we are the most important customer," Nadke said.
That unique relationship has resulted in a number of innovations for the two. First, there is no written contract and everything is on a "handshake basis."
"We have to trust each other and we don't need paper--we need people willing to work with each other," Nadke said.
Additionally, Nadke offered the Reisburo a management fee, along the American model, which it declined. Instead, the company continues to receive a rebate.
For the first six months of the new program, ITK was able to see savings of over 30 percent. "To achieve this," Nadke said, "it was necessary to constantly refer to the travel guidelines and make staff members feel comfortable with the new regulations. And it was very important to have regular contact with the executives of the company and to get the back-up of the Board of Directors in cases where some staff members tried to make their own arrangements for personal benefit."
According to the company's travel policy implemented in July, if travelers go out of policy they may have to pay for extra expenses.
For this year, Nadke's goal is to get a travel approval form up on the ITK intranet, which went up in January. Currently, travelers go to the travel section on the Web to make their selections, which are then e-mailed to their managers for approval and to Nadke. Since the agency is not Internet-enabled, Nadke now calls in every reservation--but by summer she plans to have travel requests e-mailed direct to the agency.
But that's about all the interest Nadke has in technology for now. She said that an automated booking product for the company's 50 frequent travelers does not interest her, because she is better able to control expenses by checking requests herself. She is, however, interested in putting an expense reporting system on the intranet, and is looking at German software providers that understand German tax laws.
ITK "hopes to have expense reporting in place by the fall and have everything in one big form by the end of the year," Nadke said.
On the negotiating front, the company began talking to air, car and hotel vendors immediately after its travel policy took effect, and went out to bid simultaneously for all three segments.
Negotiating with regional airlines was not difficult, but "with someone like Lufthansa you don't have to try--there is no chance," Nadke said. "We are a member of their company program but do not have special arrangements."
On the hotel side, the company is working with one hotel group in Germany--Steigenberger Reservation Service Hotels (SRS Hotels). Nadke said, however, that she is having a more difficult time negotiating with Marriott in the United States because, "I have to negotiate with each individual hotel."
Around the world Nadke said the company normally uses the corporate rate of its travel agency, though she has negotiated some destinations herself. "With more than 300 nights at one place, I was always successful to get a better rate. The agent is not involved when I negotiate; sometimes I even negotiate their commission," she said.
Car rental negotiations took place last fall and the Reisburo helped with that process. Currently the company works with Alamo and Avis.
On the global level, ITK Telekommunikation's U.S. holding company, ITK International in Boston, maintains its own travel program. The U.S. travel policy "is quite different from ours, and each person who is traveling does their own thing. They have a travel policy like we had before but no one is looking after it," Nadke said.