TV Station's Consolidation Reaps Savings
<FONT SIZE="+3">Business Travel Europe
<B>TV Station's Consolidation Reaps Savings</B>
By Paul Needham
<I>Frankfurt </I>- Sat 1, one of Germany's largest private television stations, has saved 10 percent on its overall travel spend through a consolidation during the past few years.
By consolidating travel with one agency and paring down its list of suppliers, Sat 1 has proven that a company need not be a large multinational firm to organize travel spending. The station spends more than $4 million (including $3 million on air) on some 10,800 corporate trips a year.
The company took its first steps toward restructuring the company's travel management in 1993 and 1994, with the introduction of a travel policy, consolidated purchasing and American Express cards for individual travelers.
The policy, which applies from director level downward, covers booking procedures, preferred travel agencies and suppliers, available classes and maximum prices. Implementation and acceptance of the travel policy took about five months, and compliance now lies at 96 percent, said Sat 1's general administration manager, Wolfgang Winkler, who oversees travel.
A major target has been to maximize consolidation of business with key suppliers. Sat 1 has saved between 7 and 13 percent on airfares since 1993 by switching business from a multitude of carriers to Lufthansa and its partner airlines-which include United Airlines, SAS and Thai Airways-as well as to Delta and Continental.
"Lufthansa and its partners are now so comprehensive that we can do a lot with them," Winkler explained. "We have a much clearer reporting on what is happening, and we have a clear preference of at least 80 percent for the preferred carriers."
In the hotel sector, the TV station has fixed a room-night price maximum within Germany of $135 a night and has slashed its number of hotels in Germany since 1993 from 350 to 70, working closely with Steigenberger, Hilton, Radisson/SAS and Holiday Inn.
"Before, we had a lot of individual hotels, and now we work with chains and some individual hotels where appropriate," Winkler said. "We have reduced the average daily costs in Germany from DM250 to DM200 [$170 to $135]."
The company's travelers also are taking more day trips, contributing to the decrease in hotel spending, he said.
Since 1993, Sat 1 has renewed its car rental agreement annually, and currently works with Avis and Europcar, having previously used Hertz and Sixt/Budget.
"The golden rule is to have at least two suppliers so there is always a competitive situation," Winkler said. Travelers cannot spend more than $58 per day on a car.
Sat 1 also has completely reshaped its travel agency relationship, putting its travel services contract out to tender and switching from a traditional commission-plus-kickback situation to a management-fee contract with FAO Travel in Frankfurt. The company also works with Dusseldorf-based First Group, with which it maintains a traditional commission arrangement.
Sat 1 puts its travel account out to bid every two years. "Our business is to make TV programs, not to play at being a travel agency," Winkler said.
Sat 1's transaction-fee contract with FAO Travel saves it 17 percent of agency costs for the same service. "We are convinced the agency of the future can no longer live in the old way," Winkler said. "The partnership must be that the service supplier is paid, and all discounts go to the partner who has the right to have them-the company."
All travel expenditure is booked through a personal American Express card, which has three main corporate benefits: The company does not need to provide pre-trip cash advances, individual travelers have an incentive to turn in their travel expenses quickly and the company can monitor travel spending through a single instrument.
The Sat 1 1997 travel services tender will stress reporting, quality standards, reduced workloads and simplication of procedures through greater use of electronic communications and information transfer, Winkler said. A future priority is to use smart cards -probably the Lufthansa ChipCard, following satisfactory participation in the ChipCard trial between Frankfurt and Berlin last year.