Travel Pro, Team Restructure EMI Travel Program

<B>Travel Pro, Team Restructure EMI Travel Program</B>

By Megan Hjermstad

<I>Los Angeles - </I>Two years ago, when Maureen Schultz returned to EMI Recorded Music North America and reassumed responsibility for travel as vice president of procurement, EMI was using 52 travel agencies across its nine business divisions. Since then, she has consolidated with one agency, negotiated preferred supplier agreements and implemented a single mandated travel policy for all nine major North American record labels.

"Basically we looked at our spend and we felt that we could really see a lot of savings and we could have much better negotiations if we could consolidate," said Schultz. "Then I had to go sell it to management."

Initially, management laughed but they gave her the green light. Having seen the substantial savings she has achieved--$3.9 million on its midsize air volume for the fiscal year April through March--management has become much more supportive. "The management at EMI is very aware now of the fact that we can get huge savings by consolidating our spend and that's made a huge difference," said Schultz. "They are very supportive and therefore the employees tend to comply better."

Schultz in 1991 attempted to consolidate agencies at EMI and at that time brought on American Express. She left the company four months afterward and with no one to monitor the program, it fell apart. "They were supposed to be using American Express at some of the labels, but there was no one really policing it so people were just doing what they wanted to do," said Schultz.

After a consulting stint, Schultz returned to EMI in January of 1998 with a renewed commitment to making the consolidation work.

EMI in April of 1998 went through an intricate RFP process and narrowed down the field to four agencies that came in and gave presentations. EMI awarded the contract to WorldTravel Partners, in part because a senior executive of the company, John Snyder, came to the presentation.

"He appeared to be a very hands-on executive. We really liked him and we liked their approach. They brought in the team that we would be using and we thought that was great that they had thought ahead," said Schultz. "The other companies just did not come in and blow our socks off." For example, American Express came in with an overhead presentation. "In a world of electronics they're doing overheads still," Schultz said.

She then created a transition team that consisted of representatives from EMI's newly selected travel card, GE Capital, WorldTravel Partners and one person from each internal business unit. The team spent almost three months deciding how the program was going to work and rewriting policy. On Jan. 1, 1999, the team turned on the switch.

Schultz traveled around the country to all the different business units in North America and gave a presentation of the new travel policy, which was mandated across all business units. "Everyone was told, as of Jan. 1 you will comply with this policy, and if you don't comply you won't be reimbursed." Schultz said the company has never acted on the nonreimbursement policy but spreading that message to the travelers "kind of scared them."

Even with the mandate, Schultz said it was difficult getting the different business units to cooperate. "The policy was extremely tough compared to what it had been. For example, VPs could not fly business class unless the flight was over three-and-a-half hours; before they could fly business no matter what. So that was a huge change for them and they weren't happy about it," said Schultz. "It took a good four months to get everyone to the point where they had figured out they really do have to comply. But I think we really do have almost everyone in compliance now."

Travelers must book through one of five onsites: three in Los Angeles, one in Nashville and one in New York. Onsite agents know to use preferred vendors and cannot make reservations outside of policy without senior management approval.

Preferred vendors include her top airline, United, with whom Schultz negotiated a net-net contract, and Continental. On the car rental side, the preferred vendor is Hertz, and National is the backup.

Schultz also has negotiated rates at about 40 preferred hotel properties in major cities. Previously, EMI was averaging $385 for a hotel room in New York; the company now is paying around $225. EMI also saves money by using the WTP rate in cities where it doesn't have enough room nights to warrant a hotel agreement.

Despite her willingness to mandate policy, Schultz has not mandated use of an online booking tool. Travelers have access to the ResAssist online booking tool, but usage has been minimal at best.

"We tried to get them to use ResAssist, but we just can't get them to do it. It is sad because it could save a lot of money," said Schultz. "The problem is that our travelers are not people that are going to get on Web sites. We've done everything we possibly can to get them to use it, and I just don't think they're going to."

Schultz expects to get better traveler acceptance of the automated expense reporting system that she hopes to have in place within the next two to three months.

"The system that we're trying to go with is fabulous," said Schultz. "I think it will make life so much easier for them.