Travel managers in Latin America are under increasing pressure to improve compliance to their corporate policies, but heavy-handed procurement techniques can backfire when unhappy travelers book out of policy, buyers said during the Association of Corporate Travel Executives' May conference. Presenters shared tips and best practices on how they reduced out-of-policy bookings and improved adoption of preferred technology with flexible policies and internal marketing efforts.
Michele Leao Roldao, travel and hotels manager for Sao Paulo-based Unibanco, Brazil's third largest private bank, told attendees that company travel managers in 2006 identified out-of-policy bookings as a main challenge for this year. Non-compliance rates averaged 14 percent last year and hit a high point of 17 percent in June 2006.
"There was a lack of orientation among our customers," Roldao said. "They didn't comply with our travel policies."
Unibanco also was in the midst of a companywide initiative to reduce the number of contracted suppliers, to 4,000 to 5,000 from 26,000. The travel department tracked $19 million in travel expenses in 2006, with 58,000 air tickets booked.
In response to the tightened procurement initiative, the travel team drafted a new policy in which the TMC notified senior departmental management each time a ticket was booked out of policy, quantifying the lost savings opportunities on negotiated rates. Focusing on tracking rogue tickets also showed which airlines travelers preferred.
"By knowing what we were purchasing, then we could concentrate our volume and have a win-win situation," Roldao said. After implementing the new procedures, "we now have only 2 percent of tickets booked out of policy," she added.
One way to ensure compliance is to allow travelers to book when and how they want. Julian Benavento, corporate travel leader for Argentina's Exiros/Techint Group--Latin America's largest steelmaker--said the company began to reexamine its travel expenditures in 2005. At that time, the travel department managed seven countries with $25 million in annual travel expenditures. Now, the department handles 16 countries with $40 million in expenditures. The company does not have a global travel policy, though each country follows similar guidelines.
"It's a flexible travel policy because our company is growing so fast that we need to make changes quickly," Benavento said.
"We don't have preferred suppliers," he added. The company takes an unconventional approach to contracting by negotiating directly with each supplier despite agreements with two multinational travel management companies. Benavento said that in Latin American countries such as Argentina, employees must be free to choose any airline they wish. Load factors in Argentina average 86 percent, he said, making availability tight.
However, the TMC does provide benchmarking information ahead of supplier negotiations to ensure the company gets a fair deal, Benavento said. The TMC, which deals directly with company travelers, also provides feedback on employee satisfaction.
"For us, it's a fundamental part of knowing how well we are working with our suppliers," Benavento explained.
With commissions still in place for travel agents in many countries and low labor costs that encourage companies to continue manual processes, there is resistance to the use of self-booking technology in Latin America. The first booking tool available for the Latin American market debuted in 2000 in Mexico; a number of tools have since been developed for the market, though adoption rates have been slower than expected, according panelists at the ACTE conference.
Juan Guillermo Restrepo Uribe, director of resources for Colombian-based paper products manufacturer Productos Familia Sancela S.A., said his company adopted the GetThere self-booking tool at the beginning of this year to streamline the company's $1 million in annual travel expenditures. A number of strategies were used to increase adoption to 80 percent by May, he said.
"We attacked it from the front and also from the side," Uribe said. "We had direct implementation of the technology and training with 100 percent support from the travel agency and we also started a parallel campaign of internal communications. We invited people to abandon their traditional scheme of asking for travel through their secretary so that they would look for the benefits through the tool."