The recent mergers and acquisitions activity among the largest travel management companies is prompting some renewed interest in ARC's eight year-old Corporate Travel Department program, ARC officials said. Nevertheless, existing CTDs at an advisory group meeting last month asked ARC to better market the program.
There are now more than 140 organizations using the CTD designation, which allows them to issue tickets and track supplier commission payments independent of their travel management companies by using their own ARC number. For some, it means they act as their own TMC. For all, it means they have more control over financial aspects of their supplier relationships.
But growth in the program has slowed in recent years. "You would not call it a robust market," said Hogg Robinson Group North America Consulting president Andy Menkes, who launched the first CTD as a travel manager with Republic National Bank. "It's never really been marketed." Added Travel Solutions Inc. CEO Tammy Troilo-Krings, who helped promote the CTD program as a consultant, "I don't think it has gotten near the traction that the industry had expected."
ARC is now trying to change that, keeping in mind that the program will never be for everybody. Jeannine Rehel, ARC managing director of national accounts, this week agreed that the program could use a boost. "The CTDs are [asking] what we can do to put some spark back into the program," said Rehel.
To grow general industry awareness and to respond to the advisory group's desire for improved understanding of the program among suppliers, ARC is planning an enhanced presence at the National Business Travel Association convention in July. ARC also now is exploring ways to globalize the program. "It is something we have heard about from CTDs for some time now, and so we are heading in this direction," Rehel said. "ARC is looking at what makes sense, and it looks like what makes sense is multi-currency. We are moving forward with some customers."
A big part of what brought attention to the CTD initiative during its early days was the controversy surrounding it, as some TMCs viewed it as a threat. On the whole, Rehel said, TMCs now support the program.
"If the true financial model is 100 percent pass-through of any and all supplier revenues, then TMCs should have no problem with the CTD," said Menkes, adding that since the dawn of negotiated airfares net of commissions, most of the TMCs have "mellowed out."
"There was a lot of emotion in the industry around it, and I really just saw it as an inevitable evolution," said Troilo-Krings. "Not that I think everyone should move into the CTD--because I don't believe even 20 percent of the market should even consider it--but the pieces and parts of that evolution were about control. Corporations wanted to control more of the financial implications of their programs, and the resistance they got from agencies that prevented them from doing that drove some corporations to look at the CTD option."
While pockets of resistance from TMCs remain, the biggest challenges to the CTD program today include lack of awareness and the oscillating conventional wisdom on outsourcing versus in-sourcing. One factor is the growing influence of procurement practices.
"It comes down to cultural acceptance and how much control a travel manager is given," said Mat Orrego, president of Cornerstone Information Systems, which has a handful of clients that use the CTD designation or its cousin, the "rent-a-plate" model (in which a client "borrows" its TMC's ARC number). "For those that are CTDs, it's in their culture. What's tough is that it's in juxtaposition to where many Fortune500 companies are going, which is toward procurement and outsourcing. CTDs have to justify handling things in-house, and they have to be careful not to over-service employees and let costs get out of control."
This applies more directly to those CTDs that run their own day-to-day travel management functions, even employing their own travel agents. But managers do not necessarily have set it up that way, Rehel noted.
"Larger CTDs [tend to] outsource most of the functions, but that doesn't mean we don't have large CTDs that in-source everything," said Rehel. "Smaller and middle-size ones in-source most of the functions. Twenty-four hour service is outsourced no matter what the size."
She said most large CTDs outsource because they may not have the physical space for, or the desire to hire, many dozens of travel agents. One exception is Wal-Mart ( see story), which has in-sourced everything. Chevron and Siemens outsourced, while the International Monetary Fund outsourced but located the operation on its own premises.