U.K. Co. Moves To Consolidate Agencies, Card
<B> U.K. Co. Moves To Consolidate Agencies, Card</B>
By Amon Cohen
A British travel manager has invited his American boss to fly to the U.K. with $3 million in banknotes, put them in a wheelbarrow in the car lot and set fire to them.
''That is what we are losing in the U.K. each year through not having a managed travel program for our $30 million spend,'' said Robert Daykin, who at the end of last year became U.K. travel manager for oil and gas industries products and services provider Dresser Industries.
Since burning the dollar bills would have given an unwelcome new gloss to the phrase ''hire and fire'', the chief executive of Dresser declined Daykin's offer and instead mandated him to press ahead with a radical overhaul of the company's U.K.-based travel arrangements. Europe eventually will follow and Daykin ultimately hopes to consolidate a vendor selection program with that of his Dallas-based boss, Dresser travel manager Will Tate.
For now, however, vendor selection is the one part of Daykin's four-point action plan that is on hold. He said he has been unable to negotiate from strength with suppliers until the other three elements are firmly in place. These are a card program, a travel policy and--most crucially--consolidation with a travel agency. At present, Dresser uses nine different U.K. agencies for 19 of its businesses across 31 locations.
Daykin, who made a name for himself thanks to his unconventional thinking at the Liverpool-based gambling-to-retail group Littlewoods, plans to take an original approach again. A noted critic of management fees, he is looking for an agency that will act purely as a service provider for a fixed fee.
The agency will provide ticketing, reservations personnel and management information. Daykin will manage the process and will not pay the agent for account management, consultative services or help with vendor negotiations.
Dresser also is considering assuming much of the booking responsibility itself, and Daykin is looking hard at systems like Amadeus Corporate World, which provide online booking for travelers and comprehensive information for the purchaser. Management information from a single card vendor also will give him plenty of data to work on and lessen the need to use the agency's information.
Daykin does not believe in management fees because of the unnecessary expense they create for the corporate client. ''The financial arrangement that Dresser chooses with its travel agent will be finite and clean,'' he said. ''I have seen management fee contracts where there is an element for head office overhead--let's discuss that. I've seen contracts where there is an element for research and development. Let's talk about whether we need that too." He has seen charges as high as $30,000 for account management, he said.
Daykin said he "will be discussing every single cost element and will only pay for the ones I want to pay for. The service provider has to generate drastic added value to win our business."
Management fees transfer the risk of commission cuts from the agent to the corporate client, Daykin maintained. Under the contract he is looking for from an agency, all commissions and bonuses will be passed on to Dresser. But Daykin will reduce that exposure by establishing a firm travel management program, putting him in a strong position to eliminate the uncertainties of changeable commissions through net-net fare deals with airlines.
Talks are under way with a number of interested travel agencies, including American Express, Carlson Wagonlit Travel and BTI Hogg Robinson--plus some leading U.K. independent agencies and Phoenix Travel, arch-proponent of another solution in which Daykin is interested: travel management through a joint-venture travel agency.
He will allow up to six companies to present proposals to Dresser's recently formed U.K. travel council in May. The winner will supply staff and work under the name Dresser Travel Services. All personnel will be vetted by Daykin.
''Dresser Travel will be located wherever we can find the right people. We are looking for staff that are high quality, enthusiastic and not too expensive, so they probably will not be found in London, where personnel are expensive and the service is mediocre,'' he said.
In addition to basic reservations services, Daykin also will look for benchmarking information from the chosen agency. ''We will ask our agency to name the best rate achieved by its clients at a hotel and we will make that our target,'' he said. There may also be specific consultative projects for the agents--but again for a fixed fee.
Daykin clearly is talking tough, but claims he's not unreasonable in his demands. ''It is incumbent upon me to ensure that the agency makes a profit--but not too much profit,'' he said.
All the above details were thrashed out at the first meeting of Dresser's new U.K. travel council, which Daykin formed to ensure he understood the needs of company employees. Dresser's corporate culture does not permit him to simply dictate changes to its travel policies. Each business division has its own management team and budgets, and Daykin will have to sell his solutions to them individually.
This decentralized environment is creating particular problems in devising a travel policy. In one division, all the personnel fly economy; in another, 90 percent of the tickets purchased are in business class. Daykin therefore is working on a flexible policy that will lay down minimum criteria on such details as class of travel, but will establish standardized operating procedures.
Daykin certainly will have his work cut out if he is to meet his target of opening Dresser Travel Services by next January. Meanwhile, it seems the company parking lot will be deprived of its $3 million bonfire spectacular.