BTN Internat'l Travel Manager Of The Year: Electrolux's Hamburger
<B> BTN Internat'l Travel Manager Of The Year: Electrolux's Hamburger</B>
By Amon Cohen
Jo-Achim Hamburger, the global travel manager of A. B. Electrolux, holds a degree in psychology, and seems to have put his understanding of the human mind to good use in communicating the travel management priorities of the parent company to 20,000 travelers in 460 subsidiaries worldwide.
Hamburger has started to turn the screw on travel expenditures through the classic route of consolidating card and agency suppliers to improve management information, then using the data to negotiate outstanding deals with airlines and other suppliers. And he has achieved high usage of preferred vendors without mandates, by securing traveler compliance through clear explanation of how the program helps to reduce costs. "If you can't stand up in front of an audience and explain the benefits of a travel program, you shouldn't be in the job," he said.
Clearly, the benefits of his approach are starting to show. This year, Hamburger said, Electrolux became the first company to hammer out a triple-net deal (net of commission, override and end-of-year corporate rebate) with Air France in France and Iberia in Spain, and a similar deal with Lufthansa. In all, he negotiated net deals in eight countries and "incentives in others."
All the agreements are based on market share rather than flat volume thresholds, since the amount of business that any company can move is subject to such wider strategic issues as acquisitions and downsizing. "I cannot commit on a volume amount because I am not the CEO," he said.
In exchange, he promised the airlines a central decision-making mechanism at Electrolux, plus the ability to track and steer traffic. To that end, he succeeded in moving travelers in Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Norway, Spain, Sweden, the Netherlands and the United Kingdom onto a single card and 75 percent of his European spend to a single business travel center in each of those countries. The center in each country handles all reservations, steers traffic, communicates deals, makes travel policy visible and generally ensures consistency. As a result, the head count of staff servicing his $80 million account (70 percent of it in Europe) fell by 83 agents.
His program has saved Electrolux $3.1 million over the past two years, but the real benefits should kick in now that the airline deals are falling into place. "Our potential for avoiding travel cost is $20 million," Hamburger said. For senior management support, he has set up a steering board including the company's senior vice presidents of finance, purchasing and human resources.
Yet, he regards himself primarily as an integrator, not a communicator. Based in Sweden, Electrolux owns many familiar consumer brands besides the vaccuum cleaners that carry its name, including American Home Products, Frigidaire and AEG. It is "one of the most fragmented corporations I know, because it has grown through acquisitions, not internal expansion," he said. "Each of the 460 different companies has its own mentality, its own structure, its own history."
Hamburger joined AEG 10 years ago, became European travel manager for the entire Electrolux group in 1995, and was one of few Europeans to be named global travel manager this year. He has formed an international travel management board that includes representatives from France, Germany, Italy, Spain, Sweden, the United States and the United Kingdom.
"You cannot force anybody into something if you do not have ambassadors," Hamburger said. "When we sign agreements with suppliers, we do road shows and ask our travelers for their support to help us reach our goals."
The travel management board decided on two priorities: To develop consistent management information and to reduce the number of travel agencies being used to achieve consistent service.
The key to collecting data was to adopt a single worldwide payment card, and the bid was won by American Express because it "proved able to deliver consistent data," Hamburger said. "It is not the Garden of Eden, but as a bank it does deliver us information from a single source."
He also is pleased with the coverage the card offers. "I am not interested in the underwear shop around the corner," he said. "We get 85 to 90 percent coverage by travel suppliers, and that is what I need."
Amex also figures as one of only two travel agencies mandated worldwide, the other being Carlson Wagonlit Travel. The one exception to this rule is BTI Euro Lloyd, which continues to be retained in Germany, a country that often seems to buck global policy when it comes to agency choice. Electrolux formerly used 83 agencies worldwide. All arrangements are on a management-fee basis, since Hamburger believes sharing revenue does not make sense in an era of commission caps and direct deals.
In addition to following the basics of sound travel management, Hamburger also occasionally slips into the creative. Ever one to focus on hard data, for example, he this year hired a student from a nearby college to build a mathematical algorithm for determining which combinations of airline net fares and travel agency management fees add up to real bottom-line savings.
Despite his impressive achievements to date, Hamburger still has an extensive wish list of projects. The first is to remedy what he regards as an early mistake in not including all territories on the travel management board from the very beginning. The smaller countries that were left out now are giving him the most trouble in his efforts to consolidate globally.
He also wants to increase usage of the Amex card and shift liability from the corporation to individual cardholders. The next step then will be to automate the expense reporting process, though that is not likely to happen before 1999 is over.
Finally, Hamburger is convinced he can achieve even better air deals, even in the face of what he regards as the anti-competitive nature of the global alliances. He wants to emulate another International Travel Manager of the Year, Hanna Murphy of Siemens, in securing a pay-as-you-fly deal with Lufthansa. "I don't see why we should pre-finance a ticket," he said. "When you take a bus ride, you don't pay for the ticket before you get on board."
He also would like to buy set seat allocations on flights, something which Amex introduced recently for customers in the United States and for which European travel agents have long expressed a desire. So far, European carriers have shown no sign of yielding to this request, but with his track record for getting what he wants, don't bet against Hamburger's achieving it by the time BTN chooses its next International Travel Manager of the Year.