Profiles InTravel Management - 2005-11-14

Savings Overtakes Online Reluctance
Company: Phillips-Van Heusen
Headquarters: New York
2004 U.S. Booked Air: Less than $10 million

Midmarket fashion and apparel firm Phillips-Van Heusen during the past two years saved $1.3 million in travel management company fees and airfare expenses through a long-resisted implementation of online booking and subsequent mandate of its use for domestic air travel.

PVH, which licenses such apparel brands as Calvin Klein, Kenneth Cole and Sean John, cut its transaction-fee expenditures in half and drove a much higher percentage of its 1,600 business travelers to its two preferred carriers following the March 2004 implementation of GetThere's DirectCorporate self-booking tool, said PVH director of corporate travel Tiffany Vargas.

Vargas said for two years she resisted the type of companywide online booking rollout recommended by Ultramar Travel Management, the agency PVH in 2002 selected to manage its travel, following a full request-for-proposals process. The apprehension, she said, stemmed from a belief that the fashion industry's typically high-touch approach to travel would not translate well to an online application. Ultramar, however, one of the agency resellers on GetThere's roster, services several fashion-industry firms and was able to compile extensive industry online booking benchmarking data that convinced her otherwise, she said.

The January 2004 implementation generated a quick 13 percent adoption rate—PVH calculates "adoption" as a flat percentage of total company transactions—but a subsequent decision to mandate use of the tool for all domestic flights, combined with senior management support of the policy and the tool, has boosted adoption to 63 percent as of June 2005. About 58 percent of PVH air travel is on international routes, which do not fall under the terms of the mandate.

As a result, Vargas said, PVH saved 50 percent of its agency fees, including savings generated from a cutting of after-hours help calls in half. As the tool biases its display to more prominently feature major preferred carriers American and Continental airlines, booking compliance with those two carriers has increased to 90 percent from 65 percent. "Visual guilt is a great tool," she said.

The mandate is not without teeth, Vargas said. A traveler's first offense of booking a domestic ticket through a live agent earns a phone call from Vargas to stress the policy, but second and third offenses merit notification of the rogue booker's manager and the CFO, respectively.

Vargas credited the support of PVH senior management, which approved the online booking implementation and policy mandate and backed it with an extensive communications program and usage incentives for employees, an online booking primer for new hires and involvement in enforcement.

About one-quarter of Ultramar's corporate clients are in the fashion and apparel industry, and others previously expressed similar hesitation about the potential conflict between online booking and high-touch preferences as PVH. "I was a little nervous about it," she said. "Creative people don't want to change. I was reserved and didn't feel comfortable with it, but Ultramar was very persuasive."

"It's the nature of creative folks," said Ultramar president and CEO Peter Klebanow. "If you can make online booking work in the fashion industry, though, you can demonstrate some good stuff."

Ultramar offered industry-specific data concerning potential savings and the impact on contracts with preferred airlines. "When you have senior management on your side, it's great, but Ultramar had to make them comfortable, as well," Vargas said. "Once they bought in, we were set." She said it became clear that some employees were perfectly willing to find Web fares. "People were going online, using Expedia or something, so why fight it?"

Vargas' next travel management frontiers include expanding the mandate to cover online hotel booking and further increasing compliance. "Who knows, maybe we can get it from 63 percent to 93 percent," she said. "To date, I am thrilled. The fashion industry is very demanding and likes customer contact."

Vargas' experience is included in a compilation of fashion industry online booking best practices offered by Ultramar and GetThere following similar implementations at several apparel firms. For example, Tommy Hilfiger Corp. booked 32 percent of transactions online on the first day of DirectCorporate implementation in 2004 and increased compliance to 60 percent within six months.

Ultramar recommended a companywide online booking rollout, as opposed to a piecemeal departmental or regional implementation and a single Web page for all travel-related activity, which can help to create more detailed and easily transferable profiles than are in an HR database, for example. "Going to the same place for your profile and for booking is a major piece," Klebanow said.