June 2003

Case Studies in Travel Management

On Tuesday, April 22, 2003 Northwestern Travel Management Corporate Account Services hosted a travel forum focusing on capping costs.

Seventy-four NTM customers or prospects attended the half-day workshop at The St. Paul Hotel. The forum was an opportunity for NTM customers to hear about case studies in travel management from other NTM customers. According to most attendees this was considered the “best NTM forum, yet!”

NTM’s main purpose for hosting this forum was to provide NTM customers and prospects details about real-life scenarios and policies that other NTM customers implemented to reduce costs. As the forum began, NTM showed a KARE-11 news report, a recent two-part series highlighting one reporter’s findings when talking with travelers, comparing airfare prices and wondering why do travelers pay different prices when flying on the same flight, going to the same destination.

Video Part 1: Airline Secret Revealed

• Large variety of fares, even within the same day on same flights
  • Travelers reported 50 different prices on same flight ranging from $181-1100
  • 1,369 possible fares in the computer reservation system (CRS)
• People flying further sometimes pay less
• Booking in advance usually guarantees a better fare, but there are exceptions
• Airlines don’t expose pricing strategy too much

Video Part 2: Best Travel Deals

• Airlines are the last place people should buy tickets
• Listen for details on fees
• Saturday-night stays are not always cheaper
• Purchase in advance (2-3 weeks out is best)
• Follow low-fare carrier routes
• Know that hub markets generally cost more

Click on either of the two titles above to the KARE 11 video that was shown at the forum. From the link, find the blue "Watch this Extra" box and click on one of the three options for viewing the videos. Note that for OPTION 2 you'll need to download the (free) Real Media player from www.real.com unless you already have it on your system.

Case Studies in Travel Management

After reviewing the highlights of the videos, NTM customers took to the stage to explain their travel challenges and how they were able to take action and find results. Regardless of titles—travel mangers, purchasing administrators, accounting/finance personnel, and buyers alike face unique challenges specific to their role with travel. They all had one similar goal, though – to reduce costs. Below is an overview of each presentation:

Influencing Traveler Behavior to Control Costs (Jan Shoemaker, Travel Manager, Land O’ Lakes)
In 2002 Land O'Lakes addressed a company-wide cost-savings initiative (“Fit to Compete”). They formed a cross-functional team to review the current travel policy and solicited feedback from other companies in the Twin Cities. From that they developed a new "best of the best" travel policy. They rallied support from senior management, which is critical. With this information they redefined a weak travel policy and communicated the expectations to travelers. They focused on the way travelers purchase travel and mandated that travelers must take the lowest logical fare. In first quarter 2003 they lowered their average ticket price, reduced the savings lost, and increased savings.

Partnering with Your Travel Agency (Steve Schuster, V.P., Treasurer and Corporate Secretary, Plato Learning)
Plato Learning was challenged by travelers wanting to book travel on the Internet because the perception that they could find lower fares. They wanted to partner with an agency that could help them combat this perception, institute cost saving measurements within their overall program, and educate travelers on the benefits of using preferred supplier agreements.
A new policy was written and published on their Intranet and they established guidelines for policy exceptions. They implemented an automated expense reporting system, enrolled in small business programs, and communicated this information to their travelers. These efforts resulted in a decrease in departmental expense, less time spent in administration, and happier, well informed travelers.

Managing Meetings (Pat Habeck, Senior Buyer, American}
American Medical System questioned the need for a full-time meeting planner versus outsourcing all meetings. They needed someone with meeting planning expertise, supplier contacts, and knowledge of meeting contracts.

They formed a team involving three key areas from AMS; sales forces (international and national), marketing, and administrative assistants. From that they decided to outsource all meetings. This resulted in timesavings for their employees to focus on their core responsibilities. It also saved money by reducing salary and increasing contract savings and returned hotel commissions.

Shifting Corporate Cultures to Control Costs (Nancy Koski, Travel Manager, US Bancorp Piper Jaffray)
U.S. Bancorp Piper Jaffray recognized an opportunity to overhaul the expense management processes and policies due to a flagging economy. Their objective was to show an overall reduction in T&E. This started with managing the expectations of the varying divisional cultures within the company.

The initiatives to ignite these changes in travel spend behavior started with educating the travelers, communicating successes and implementing new policies that restricted purchasing behavior that was formally within policy. This included non-reimbursement for policy exceptions.

Working in tandem with the NTM agent team proved to increase results. Participating in the monthly staff meetings provided a venue to communicate any policy updates and/or changes. Exception reporting provided by NTM assisted U.S. Bancorp Piper Jaffray with the tools to identify non-compliance.

Results for U.S. Bancorp Piper Jaffray have been significant. The average trip price has decreased by $100. Increasing use of advance purchase tickets and discount fares have contributed to this success. They have also realized an increase in car supplier compliance of over 20% and have lowered their average hotel rate by 15%.

The Impact of a Negotiated Hotel Program (Kerry Miller, Travel Manager, Best Buy Enterprises)
When Kerry Miller was hired as Travel Manager at Best Buy, one of her biggest challenges was developing the Negotiated Hotel Program. Best Buy had no centralized list of their negotiated hotel rates, no nation-wide hotel program in place, no tracking of savings and the travelers and travel arrangers didn't understand the concept of a preferred program and the benefits it could yield for Best Buy.

Compiling historical data on hotel usage, soliciting feedback from travelers and arrangers, and centralizing the hotel bookings through NTM were the first steps in creating a comprehensive hotel program.

The first year (2001) in developing the program provided a baseline or starting point for the years to follow. It was a very manual process with NTM handling the data entry and follow up with incomplete RFP's, negotiations and rate loading into the reservation system. In 2002 the process was less painful. Best Buy started the project in August and implemented an electronic template to expedite the RFP data and populate it into a database. In addition, Best Buy used the reverse auctioning process for the Twin Cities market.

Best Buy has achieved savings amounts up to 23% of overall hotel spend. They are also able to track traveler behavior with reason codes for non-compliance. These results are shared with upper management which has also resulted in a higher visibility of the program and it's importance to the overall travel spend at Best Buy.

Online Booking Adoption: Making Your Program Work (Kathy Niccum, The St. Paul)
The St. Paul has some aggressive adoption rate goals for online booking to reduce transaction fee spend and average ticket price. And since the transaction fees are not allocated amongst the departments it was imperative to reduce the cost of travel service paid by Administrative Services at The St. Paul. The first initiative was soliciting senior management support.

After the online booking tool was introduced to the traveler base and training was conducted, the NTM agent team helped support the efforts to increase use of the online booking tool, by surveying each traveler if they weren't using the Trip Manager tool. This helped build the awareness of the online booking product as well as support The St. Paul's goals to promote use of an online booking tool. The St. Paul was creative with their training curriculum. Not only were live and web meeting training sessions offered, but on-demand training tutorials were created to provide one-on-one training opportunities any time of the day.

Developing meaningful adoption rate reports were critical in measuring their goals and identifying reasons why an online booking tool can't always be used. Monthly and quarterly adoption rate reports are provided to all the business unit leaders. This helps each group identify their current adoption rate and opportunities for improvement.

NTM Tips

It is increasingly more important for a travel manager to demonstrate cost-savings in order to measure either the status quo or the successfulness of a cost-savings initiative. We highlighted a number of ways in which we've partnered with our customers to present data to senior management:

Pre-Travel Reporting - Review the data BEFORE a traveler embarks on a trip for the best opportunity to influence a behavioral change. There are a variety of reports available to flag policy exceptions and to seek out possible group-rate opportunities.

Web Fares - The "I found a better fare on the Internet" issue still surfaces from travelers, which is why some of our customers employ the AgentWare search tool. Lower "Web" fares are found by the system only a small percentage of the time; however, the data will provide you with additional ammunition for your managed travel program.

Accounting Reports - Commercial Account Reports (soon-to-be named Transaction Activity Detail) are available electronically so that you can manipulate the data as necessary. These reports show both the original ticket purchase price and any reissue costs, which provides a more complete picture of the entire trip cost. The "Allocations Spreadsheet" allows for a more efficient method to allocate monthly statement fees to various cost centers. Credit Card Match continues to be very popular in the facilitation of monthly credit card reconciliation (ask your corporate account manager for more information).

Policy Compliance / Exception Reporting - Rather than always sending just the "numbers," try translating them into colored charts. It's also a great way to show behavioral change across reporting periods (quarters, months). For example, showing the number of tickets reissued plus any additional costs (additional collection on the airfare, change fee, transaction fee) and comparing them to the average price of purchasing a refundable ticket before purchase can provoke interesting discussions. Unused tickets (and values) are important to show because it’s money tied-up in tickets with the potential of being wasted. Granted, airline rules have changed and the opportunities have changed, but it still makes sense for a number of customers to track this. On the other hand, there is some merit to showing the LOST value of non-refundable tickets that couldn't be used, especially to educate travelers on how to manage their own travel patterns.

Hotel Reason Code Reports are helpful if you have a managed hotel program. They can flag specific types of traveler behavior or isolate pockets of opportunity in untapped markets.

Airline Contracts - Look more closely at carrier feasibility in your top markets. A value can be assigned for each carrier to assess their strength/service (e.g., 2 = direct non-stop; 1 = reasonable connection; 0 = bad connection or no service). Totalling the points by carrier might flag direct competition or service potential from another carrier that you might not have considered in the past. NTM has also done a number of airline contract analyses to determine the savings potential from a variety of airline contract proposals. Analyze the savings your top markets based on moving "x" percentage of business to low-fare carriers.

Savings Measurements - Consider your opportunities for showing the following savings: negotiated airline fares; unused electronic ticket tracking; negotiated hotel rates (savings over corporate rate); meetings management (negotiated airfare savings, negotiated hotel rate savings).

Data Extraction - NTM is currently beta testing its newest version of NTM Report AdvantageSM, NTM Report Advantage PlusSM, scheduled to roll out this summer. In addition to the standard reports that are available, NTM Report Advantage PlusSM provides you with additional pre-formatted reports, built on ever-changing needs. The real value of NTM Report Advantage PlusSM is the ability to run ad hoc reports from a large pick-list of data fields. The output can either be a text file or an Excel spreadsheet.

Capping Costs

Travel managers need to find ways to measure savings and travel policy impact – after all, if you don’t, who will? Decide how much time and resources you have available to do measurements and decide how important is it to establish your value. If you’re not sure how to assess value, ask for help from your peers, your NTM Corporate Account Manager and NTM Consulting Services.

Forum Sponsors

The NTM ‘Capping Cost’ forum sponsors were National Car Rental and The St. Paul Hotel.

Forum Gallery

Click to view a gallery of photos from the forum.