A string of severe storms hammered Shell Oil Company's operations in and along the Gulf of Mexico during the 2005 hurricane season, leaving travel professionals struggling to accommodate displaced workers. Learning from the tough lessons, the company has since established new agreements with preferred hotel chains that ensure availability, guarantee rate discounts and ease cancellation fees.
The new lodging arrangements dovetail with Shell's other risk management initiatives and coincide with implementation of a new travel management company in the United States. Carlson Wagonlit Travel, already used by parent Shell Group in the Netherlands and the United Kingdom, ultimately will handle the company's travel in 25 countries.
While the global TMC consolidation takes on a more measured pace, U.S. emergency evacuation plans are more time-sensitive as the height of the 2006 hurricane season draws near.
Even before last year's hurricane season was over, Shell began discussing with preferred hotel companies the notion of formalized emergency evacuation agreements. These agreements--master deals with business unit-specific terms beneath--are proactive measures ensuring the company can accommodate displaced employees. Shell is using short-term group bookings to block sleeping rooms needed in the event of a natural disaster.
"The reason for doing this was to give us a priority should an event like a hurricane occur this year," said Shell U.S. travel services manager Debra Reid. "We'd already have had discussions with the hotels. They would know how many rooms we would need and what our rate was going to be. And we would already have our cancellation policies. We started discussions back in October and November, but now in July, it seems like a lot of the major companies in the area are striking such agreements with hotels."
The cancellation policies, in particular, presented a challenge in dealing with hotels reliant on standard group agreements. "Typically, with a group agreement, if you cancel, you are responsible for 100 percent of the rooms, the catering, etc.," Reid explained. "In our instance, if we were to book a group and cancel--because the hurricane did not arrive--we would not be subject to 100 percent cancellation fee." Instead, at Texas properties, Shell now would be responsible for only one night if canceling rooms within four days, and for three nights if canceling within 24 hours.
Shell employees would use the transient Shell rate, if one is available for the property in question, or a discount off the best available rate at the time of booking. "That is crucial, because a lot of people got gouged last year," Reid said.
Shell's agreements with preferred chains Hyatt and LaQuinta are based on availability, and therefore differ from typical hotel deals. "Every last hotel we talked to fell back on a group agreement, because that is all they knew," Reid said. "We spent months with them, trying to make them understand. We really had to bring the hotels up to the speed we were going."
Shell also had to bring a level of understanding to the table. "We are dealing on a national level with both chains and it is subject to where they have rooms," Reid said. "For example, if they have rooms in Chicago, then we agree to move our group to Chicago. It gives the hotel more flexibility. It would be preferable that they would put us in a close location, but we understand it could be Los Angeles."
Meanwhile, Shell has taken other steps to develop contingency plans and manage risk. Last year, for example, it used an internally developed call center (staffed with outsourced "professionals"), rather than services from its previous travel management company, to help "reconstruct people's lives" in the aftermath of hurricane season. Reid said the center was designed to help employees understand corporate policies and benefits, housing and relocation, financial resources and compensation, and other sensitive human resources topics that the TMC was not comfortable discussing.
Today, the threat of an avian influenza pandemic is top of mind in Shell's risk management circles. The travel department participated on a committee spearheaded by the health and safety department that led to the creation of "battle boxes." To be located in each company building and maintained by each individual business unit, these boxes include such essential items as rubber gloves and hand sanitizers.
"You need to have a collaborative plan with more than just travel," Reid had said during a May presentation at the Association of Corporate Travel Executives conference in Atlanta. "Protection of human assets is a multidisciplinary effort."