ACTE/BTN's Corporate Travel World Reporter's Notebook: Buyers Brace For Managing Demand

Washington, D.C. - Travel buyers are bracing for the difficult economy through tighter controls on expenses as well as reducing the number of trips through remote conferencing, according to a panel of Corporate Travel 100 travel managers meeting during the Business Travel News' Corporate Travel World and the Assocation of Corporate Travel Executives' Global Education Conference collocated here last month.

Debra Goldmann, senior specialist of travel services for Verizon, said her team is employing a number of tools to push travelers to virtual meetings whenever feasible, particularly following a cost-analysis study regarding the associated savings. "We found a face-to-face meeting is five to 35 times more expensive than a Net meeting," Goldmann said.

Verizon launched a variety of virtual meetings tools, including audio- conferencing appropriate for weekly meetings, videoconferencing good for one-on-one reviews and Web- conferencing tools good for training seminars, she said. In addition, the team modified Verizon's travel policy for soft mandating, including recommended use of the tools and a pre-trip approval process in some groups, Goldmann said.

The team now is looking at further synergies with its booking tool, GetThere, for enhanced messaging to notify travelers of the virtual meetings options when they book travel, she said.

John Guarneri, vice president of global travel services for Philips International, said his company also is using remote conferencing technology as one of several strategies to reduce travel costs by 20 percent.

Philips also has been reviewing such policies as the allowance of business class travel, cracking down on travelers who do not book more than seven days in advance and reducing the number of refundable tickets purchased, which he said was costing the company in the long run. "Out of those people buying them, 65 percent never changed their reservations," Guarneri said.

Debra Reid, U.S. travel services manager of Shell Oil Co., said her company is pushing virtual meetings as well, to reduce travel costs and the company's carbon footprint. Although her industry is not as affected by the downturn, Reid said buyers should not wait until difficult times to employ demand management strategies.

"Like most companies, we've enjoyed very lenient and generous policies in recent years, but there's always room for change," Reid said. "We're making changes now, before it becomes a mandatory situation."

"Companies are deriving significant and rapid savings from rigorous and comprehensive demand management programs," said Tony D'Astolfo, vice president of worldwide sales for Rearden Commerce. "Demand management enables travel procurement organizations to extend and leverage their capabilities."

Softening in the hotel market is anticipated, said two Corporate Travel 100 buyers and a hotel executive.

"The industry's going to see a softening," said Richard Wooten, director of corporate travel services for Lockheed Martin. "We're all anticipating increased airfares and with that we're going to see a significant slowdown in the travel industry."

Maria Chevalier, manager of travel services for Johnson & Johnson, added, "We're seeing greater controls on our organization from demand management. Our expectation is we're going to be flat."

"We're starting to see a softening on the demand side," said Mike Fegley, vice president of global sales for the Americas for InterContinental Hotels Group. "We were hoping to see a better comeback in the third and fourth quarter. That right now is looking a little more uncertain."

Hotel rate loading continues to be a challenge. Johnson & Johnson has implemented a penalty system in order to ensure hotel rates are loaded properly, Chevalier said.

"We do the standard auditing of hotels to ensure our rates are loaded and loaded accurately," she said. "Those that have failed the audits have been penalized financially and we will continue to do that because of the cost for our organization."

The European Union and the United States are involved in "intense negotiations" as the EU wants "a free market as far as aviation is concerned," said Ambassador John Bruton, European Commission head of delegation to the United States and former prime minister of Ireland. The EU is calling on the United States to loosen restriction on foreign ownership in U.S. airlines, allow EU airlines to bid on U.S. government business, allow visa-free access for all 27 EU member states, halt the fingerprinting of EU visitors upon U.S. departure and enable European aircraft maintenance stations to work on U.S. airplanes without additional inspection from U.S. officials. U.S. agreement to these concessions would save the airlines millions of dollars, create a more competitive market and shield travelers from pass-through costs, according to Bruton.

"The fact that an airline may be owned by a European shareholder, if it is operating in the United States, it is subject to U.S. law. There is no need to restrict ownership to ensure U.S. law, in a matter of national security, would be applied," he said.

Cynthia Shumate, director of travel services for Estée Lauder Cos., received the ACTE Corporate Social Responsibility Award for her efforts in developing surveys in the company's hotel requests for proposals to measure vendors' green initiatives as part of her monitoring her company's carbon footprint.

One of the original 10 ACTE members, Michael Spooner, manager of travel and relocation for JCPenney, received ACTE's Advancing the Industry Award for his 20-year contribution to the association, including co-authoring its initial bylaws, articles of incorporation and accounting manual. Spooner served in various board roles.