Profiles In Travel Management: Lego Builds Self-Booking Tool - 2006-06-19

Company: The Lego Group
Headquarters: Billund, Denmark
Annual Air Volume: $5.2 million

Refusing to accept many of the orthodoxies of travel management, toy company Lego runs its own in-house travel department and—in conjunction with Copenhagen-based Business Travel Consult—has built its own self-booking tool. The tool, TravelWeb, is a hybrid of online reservations for direct flights and electronic trip ordering for anything more complicated.
Lego travel manager Else Marie Madsen said that managing a travel department and booking tool in-house is saving the company 1.9 million Danish kroner (US$325,000) per year in administrative costs alone. Lego’s annual air spend is $5.2 million. Seventy-six percent of the bookings it routes to travel management company BCD Travel are touchless, the fees for which are 80 percent lower than those requiring BCD intervention. On top of this are savings in lower fares through smarter buying and better policy compliance. In addition, Madsen also claimed to save time for Lego personnel because TravelWeb is simpler and quicker to use than conventional booking tools.

Lego introduced TravelWeb as an ordering system in 2003 and added the self-booking element last year. It has operated an in-house travel department since 1993. Both the department and Lego’s travel volumes have reduced greatly since then owing to severe cost cutting. Between 1996 and 2006, the number of air tickets Lego buys has fallen from 18,000 annually to 10,000 and the travel department has been more than halved to the equivalent of 3.8 full-timers.

Madsen is a staunch supporter of insourcing for numerous reasons. Primary among these is her passionate belief that corporate clients must remain independent of all suppliers and intermediaries. Business Travel Consult built Lego a data warehouse that allows Madsen to generate her own management information and ensure the company always is in control of its data. “Companies should always have their own management information system so they can compare their data with that of their travel agent,” she said. “When I have checked my data against those of airlines or TMCs, it has not always been the same and sometimes we have got money back. I don’t understand how any big companies can be without such a system.”
Madsen also is skeptical about whether travel management companies always make supplier choices for travelers in the interests of their client, rather than their own. Furthermore, she is convinced that it is easier for in-house staff to find than travel agents to refuse requests for bookings that breach policy.

Lego also appropriates and recycles its employees’ frequent-flyer mileage for use by the company. Madsen thinks this can be managed more easily in-house.

The same independence of mind is evident in Lego’s approach to online booking. In a sense, having an internal travel department is comparable to having a self-booking tool in that both reduce a TMC’s responsibilities for an air reservation to licensing and fulfillment. Madsen’s challenge was to consider where there would be value in allotting some of the tasks undertaken by her in-house travel staff to the travelers themselves. One thing she definitely did not want was travelers to spend more time than was necessary on reservations. “We asked ourselves whether we really wanted our engineers, designers and top management to use their time finding out how they should get to New York,” she said. “We decided no, especially as my staff knows how to find cheaper fares.”
Nevertheless, Madsen did identify areas where self-booking could add value. The first was in straightforward direct trips, especially those from Billund, the commercial airport situated next to Lego’s headquarters. The company has preferred supplier deals with most of the airlines that fly to the airport. Travelers are allowed to consult schedules for these routes on TravelWeb and make the bookings themselves.

If there is no direct flight—there are only around 20 routes from Billund with regular weekday service—then travelers do not make their own bookings. Instead, they fill in a template on TravelWeb stating when and where they want to go. They also can make special requests, such as for the hotel to be near an airport. The travel department will then research the best route options and make the reservation for the traveler.

Regardless of how travelers make a booking, they do not see the price in TravelWeb. “We don’t show the price because we don’t want the traveler to have to think about the booking too much,” said Madsen. Instead, the travel department checks direct bookings as they appear in its chosen global distribution system, Amadeus, to ensure they are compliant with policy and whether it can find a cheaper alternative. Lego has a licensed version of BCD Travel’s PriceBuster tool to help it search for better options.

For indirect bookings, the travel department considers price as one of the main factors when selecting the most appropriate flights to suit the traveler’s request. To help find the best price, travelers are asked on their electronic order form whether they have any flexibility in the day or time they fly. This has enabled the travel department to save up to 50 percent in some cases. Madsen said TravelWeb saves time for both her department and the travelers. It is faster for the travel department to process than an ordinary free-form e-mail trip request, while she estimated that it takes travelers an average 2.5 minutes to do their part of the job. “If that is 10 minutes quicker than using an ordinary booking tool, that is a huge amount of time saved,” she said.

At present, 22 percent of flights by Lego personnel are booked directly online through TravelWeb and another 50 percent are requested. The remainder are booked by phone or through free-form e-mail requests. Regardless of the method, all reservations are integrated into a trip approval and expense management program called Voyager. Before being transacted by the travel department, all online bookings and trip requests are routed to their departmental chiefs for approval. Once approval is given, the trip receives a Voyager reference number. Details of the trip and its cost also are fed automatically into travelers’ Voyager online expense claim reports.

Madsen said that opting for a homegrown travel management solution proved valuable. “It needs very active project management,” she said. “It is hard work to implement, but it is better than using the TMCs with take-it-or-leave-it options. When we balance the cost of our in-house team and use Business Travel Consult against outsourcing to a TMC and a self-booking tool, it is well worthwhile.”

Lego pays Business Travel Consult $0.45 per transaction. Business Travel Consult managing director Brian Ranch claimed that R/Soft, the generic name for the system it customized for Lego, would provide a return on investment for any optimized travel program in less than one year.
—Amon Cohen