Spun-Off Firm Launches Independent Travel Program
<B> Spun-Off Firm Launches Independent Travel Program</B>
By Sarah Welt
<I>Rolling Meadows, Ill.</I>- Resource Group, a provider of training and consulting to the retail automotive industry, has rolled out its first travel management program and aims to cut $1 million from its $5 million T&E tab by year-end.
With 400 employees and a client base of more than 3,000 automobile dealers, Resource Group split off from its former parent, Aon Corp., in July 1996. On its own, it created a travel policy and negotiated with air, hotel and car rental suppliers. In its first agency bid in January 1997, it considered Aon's incumbent agency, BTI Americas, as well as Carlson Wagonlit, to which Aon now is switching, but opted in the end for an independent path, and chose Corporate Travel Services of Englewood, Colo.
"Obviously the negotiated financial portion with CTS we thought was superior," said Resource Group's senior vice president John Serafin. "And because they were a medium-sized travel agency, we thought they would give better service to our employees and clients."
Like Aon, which had its own travel department staffed with Aon employees, Resource Group has one of its own employees booking travel, in conjunction with two CTS onsite agents. Under the new contract, Resource Group pays CTS a percentage of its air, hotel and car rental volume out of its commissions, and keeps the balance. Said Serafin, "We thought a percentage would be easier to track."
The company, which buys 6,000 room nights in Rolling Meadows alone, has negotiated with three hotel chains on its own. It also uses CTS's relationship with Woodside Travel Trust to get additional negotiated rates and is going to try to negotiate a nationwide contract with one chain before the year is out.
On the air front, Serafin said one of the challenges the $2 million account has had is keeping costs under control as airfares escalate nationwide. To that end it set up "a daily reporting system that goes out over Lotus Notes to management throughout the company." These reports detail travelers' names, the airline flown, the date of travel and the reason for the trip.
Serafin said the reports monitor all travel, weighing "the benefits of each trip against the costs of air travel." Resource Group has a strict travel policy, with travelers expected to take the lowest airfare. "Basically, all employees fly coach, or else they pay for their own upgrades or use those provided by the airlines," Serafin said. Travelers are expected to purchase seven- or 14-day advanced tickets. "A lot of training contracts are done on fee plus expenses, so it's very important for us to keep costs down for the benefit of our clients," he noted.
If employees consistently travel out of policy, travel coordinators first call Serafin. Following that, employees likely will get a letter from the company president asking why they are not booking earlier and if there is any way to pre-arrange some of their maintenance visits with clients.
As of January, all air tickets are billed to an American Express ghost card. Employees do not have corporate cards.
On the car rental side, Resource Group has moved most of its business to National. While Aon's primary vendor was Hertz and there was not much difference between rates, Serafin said he found National's rates more consistent and liked the fact that they had insurance coverage built in.
Despite the company's Lotus Notes backbone, Resource Group is not interested in an automated booking system at this point. While Serafin acknowledged that some travelers might like to book their own trips online, the company feels it has more control and is better able to enforce policy by having travel go through a select number of people. "I can't see 200 people booking their own reservations," he said.
Nine months through its first year, Resource Group is on target to meet its cost-avoidance goal for the year. "We are running on target at 25 percent below 1997," Serafin said. "We are right on track.