Profiles In Travel Management: Tommy Hilfiger Trims One-Quarter Of Its Travel Figure - 2009-03-16

Company: Tommy Hilfiger
Headquarters: Amsterdam

With a senior management directive to reduce the company's travel and entertainment budget by 25 percent from the previous year, the Tommy Hilfiger travel program tweaked its travel policy, leveraged its hotel volume with a key Asian supply chain partner, contracted with a new airline for premium-class transatlantic travel and installed a global data and reporting platform.

The apparel retailer has considerably expanded its midmarket travel footprint in recent years as it bought some licensed operations and opened stores and distributor relationships in new markets, enabling Amsterdam-based Tommy Hilfiger Europe travel manager Richard Veenstra to leverage some of these relationships to generate savings. Last fall, the company combined its European and U.S. hotel programs with the Asia/Pacific hotel program of Li and Fung, its Hong Kong distribution and sourcing services partner, giving both companies access to locally negotiated corporate rates.

According to Veenstra, the combined program saved the company 15 percent to 20 percent on its previously negotiated rates.

Even with the leveraged volume savings, Veenstra saw a larger opportunity in the deteriorating hotel market. As average daily rates fell below negotiated rates, he sent the global preferred hotel list to travelers, telling them that "this is your rate for the hotel, but due to the economic slowdown, we right now will always book the best available rate," said Veenstra. "It creates mega savings right now compared to what we had negotiated with our corporate rate."

Veenstra said the attitude toward travel has reversed since his arrival at the company in 2000. "People are willing to change behavior because it is now either people losing their jobs or sitting in the back of the plane. They prefer the latter. The mentality change is coming bit by bit."

Heading into 2009, the company also made several changes to its air travel policies, including shifting from flexible economy class tickets to a cheapest-fare policy. In addition, travelers are booking with low-cost carriers for additional savings. Business class is restricted to vice presidents and higher-ranking executives on flights of at least six hours. Other employees must receive approval for premium class travel.

Travelers also fill out travel request forms, which can be declined by managers. "It used to always be flexible economy and we were easygoing as far as what types of fares were issued," Veenstra said. "Now, if you don't check the box that you want a changeable ticket, it will be the cheapest one."

As an alternative to Air France-KLM, the company's top preferred carriers, Tommy Hilfiger contracted with premium-class British Airways subsidiary OpenSkies for senior managers on the Amsterdam-New York route. The agreement includes standard pricing regardless of point of sale. "A lot of companies say it's not the right time to introduce such an airline. But when is the right time? It's added value to our program," Veenstra said.

As the Tommy Hilfiger employee base has grown to 8,000 worldwide, Veenstra has taken a "local knowledge with a global overview approach." GlobalStar Travel Management agency network partners The Advanced Travel Partner and Ultramar Travel Management are the company's travel management companies in Europe and the United States, respectively, while other countries contract with their own TMCs and use a variety of payment systems.

Last year, Tommy Hilfiger rolled out the AirPlus Information Manager to capture global spending. It uses AirPlus' lodge card in Europe for air payment. Veenstra said 80 percent of trips are to major European business centers, with 10 percent each to the United States and Asia/Pacific.