Jeff Kurn
Speaking last week at The Beat Live, Hewlett-Packard global travel strategist Jeff Kurn discussed the travel management challenges ahead for the company as HP's budget remains tight. The implementation of HP's telepresence product, Halo, has cut internal travel to 20 percent, from 50 percent of total travel, but finding year-over-year savings on client-facing travel remains a hurdle, Kurn said. He also discussed tighter traveler controls, airfare and hotel rate parity, and merchandising.
In terms of your reporting, do you have to show savings year over year, or are you able to show this year compared to 2008 or a peak year?
We will be forced to show 2010 versus 2009 year-over-year savings. In terms of what we are buying, our company as a procurement organization needs to show that we are saving money year over year. We have less control over demand than the cost of what we are buying. When I am talking about reduction in travel and entertainment, it's the cost of the hotel room, it's the cost of a car rental rate. We do have impact a little bit on demand. If you roll back a couple years, [HP] was 50/50 internal travel versus customer-facing travel; we are now 20 percent talking to another HP person, 80 percent visiting a customer--that is huge. There are a lot of things that we in travel did to impact the type of travel that is out there to make our spend a little more efficient. We are obviously pushing HP's Halo telepresence rooms, so there are opportunities to eliminate travel. We are measured internally as providing true incremental savings. If we used to spend X dollars on the airline ticket last year, we have to get X minus some percent. [Senior leadership] doesn't care that hotel prices are going up as expected this year; they want us to see a reduction in hotel average daily rate. One of the things that we are concentrating on is the nomenclature--changing the term average daily rate to maybe average cost of stay because of all the things that go into a hotel stay. The same thing with average ticket price; it's not as important to us as maybe the average cost of a flight because of all the ancillary fees or merchandising fees. We have to do all these in a package and demonstrate to our managers and our shareholders that we are truly combining a reduction in rates--not just going with the flow and seeing prices increase year over year--while maintaining safety and security and traveler efficiency.
In terms of your internal controls, do you have a formal approval process?
There is always going to be the debate of whether you do active approval, passive approval or what type of approval happens. HP is in the passive approval mode in the sense that we don't ask a senior manager to approve a trip unless it's far outside of the policy. If they want to fly business class, they need certain types of approval. Throughout the booking process, you are informed about the policy and there are suggestions to use Halo if there are two different cities that both have Halo rooms. But if you do not follow our strict--what we call our lowest proposed policy, versus lowest logical because it's not always logical--your manager will get an email that day saying you paid $400 when you could have spent $100. No matter what, that next day your manager will get a copy of that reservation so they will have time to change behavior if necessary. We went from $1.3 billion in T&E to $800 million in T&E from 2008 to 2009, so we did have a strong ability to ratchet down travel with a lot of messaging from our senior leadership saying, "Don't travel unless you have to travel." But we are also concerned that most of the tickets that we buy are nonrefundable, because of the pre-trip approval. We do lose some of these advance airfare purchases, but most of those are going to go through anyway, which is why we are mostly in the passive mode.
What are your predictions for the next 12 months?
We are going to provide more controls than ever around the choices that we provide to our travelers. That is the only way we are going to be able to negotiate better rates. We are going to be able to consolidate spend into a fewer number of suppliers whether they be airlines, car rental or hotels. The volcano--that was a wake-up call for us [this year] in the sense that we were kind of a little dumb, fat and happy in terms of our travelers. We had [air] tickets, we thought we knew where [the travelers] were, the volcano happened and suddenly people were flying into London and from there we didn't know necessarily where they were staying. We are making a little bit more concerted effort to know where people are booking hotels through our travel agencies. We are making a more concerted effort to make sure that we have their cell phone numbers.
What are some challenges with the technology provided to you by your travel management companies?
Half of our T&E is outside the U.S. and growing as a percentage [of total global T&E spending], so we had to work with our TMC providers, our online booking tool providers and our global distribution systems to make sure that we do have a global presence. We now have two hubs, one in Poland and one in Vancouver. Anyone from anywhere in HP, except for some exclusions in China, can call into one of these two hubs, which means we need to have dedicated technology that can support this global presence. One of the issues is content outside the U.S. You have someone sitting in Singapore, someone sitting in India [with offers that are] not in the GDS. How do we get access to that and that technology? It's [about] bringing that content in to the travel consultant. The online travel booking tools have been critical to us, and we're pushing some of the suppliers on that. We want to get the best that is out there, whether it be the HP negotiated fare or a spot fare. The competency of our organization is critical, and if the traveler is able to go on a Web site not affiliated with the corporation and get a better rate than our large-volume purchaser, that makes us look silly and we don't want to look silly. I am not saying that 100 percent of the time we will always get the cheapest rate. What we are getting today is a crapshoot in terms of what we are buying and at the price we are buying it, and our management expects us to get that lowest price more often than we are today. When [travelers] go on the airline Web site, they usually get lower fares. We have to find a way to bring those types of fares into our booking process. We are working with the suppliers, asking for rates to be loaded in the GDS. We have 80 percent compliance through the online booking tools, which we are using globally. We need to make sure that the lowest fares possible are loaded in that tool and in the GDS. In terms of data, we also have requirements for our travelers to make sure that their data is protected.
What were the most important things to come out of this conference for you?
I learned the word merchandising. Ancillary feesmay be considered a bad term and merchandising is turning into a more positive one. And the problem for us is that it may be 1 percent, 2 percent or 3 percent of the [total] cost ... but we are heading toward the ten-digit travel T&E bottom line, so you are talking serious money, and there is little that we can do. These are fees that we are going to absorb, and we have very limited ability to change people’s behavior when it comes to ancillary fees. It's important for us to understand what it is, how it's charged, how do we get the data to know what we are paying, which we do not know today.