Monthly Archives: April 2016

ExpenseBot Plies Both Human Support And Tech

Dakota Software finance director Nick Lay canceled his Concur Expense implementation two months ago, but he still gets monthly bills. This, he said, is a sign of a provider that’s too big for a small enterprise like his. On the other hand, new supplier ExpenseBot takes his phone calls and emails. ExpenseBot’s founders consider its technology a differentiator, but their help desk seems to make them most proud.

Both Ohio-based companies, ExpenseBot and Dakota Software have no other relationship than that of vendor and client. ExpenseBot asked Lay if he would speak to the media, a tall task for many companies. He was happy to oblige, but not because he’s a Concur hater.

“I came from a company that used Concur,” said Lay in an interview last week. “I was on the road for a year. I loved what it had done for us. It was basically hands-off reporting — electronic receipts, etc. At month’s end, everything’s there.”

ExpenseBot

Image: Thinkstock

When he joined Dakota a year ago, the company was processing its reports with spreadsheets. Employees were scanning receipts. Accounting personnel were buried in data entry. This manual processing cost the company at least $10,000 a month in manpower alone.

Lay said that after a demo from Concur, Dakota was “off and running” on implementation. The first issues, he said, came when implementation sessions required hours of phone time. “I didn’t think it would be that much of a hassle,” Lay said. “I wasn’t told a lot of things. They didn’t respond to basic requests. I realized they wouldn’t give us the control and attention we needed.”

Having heard of ExpenseBot from a “random local email chain,” Lay reached out and immediately found the company “much more helpful.”

Set-up for 35 Dakota users was easy, he said. It was done within 24 hours. “Say you have a $50 limit on meals per day,” Lay explained. “You type in $50 on the relevant line item, fill in some account numbers and that’s about it.” He recognized that superior customer service — “the best I’ve received by far with software companies” —  has a lot do with ExpenseBot’s modest operation. Concur, of course, “is a massive company now.”

Lay also acknowledged that Concur can scale up for global organizations with complex needs. “Absolutely,” he said. “If you’re owned by SAP you’re not going after privately held software companies in Cleveland.”

Concur disagrees with that sentiment. “Concur is committed to delivering the highest levels of service to all customers,” according to a spokesperson. “Small- and medium-sized businesses are an important part of our business, and we are actively working with this customer to resolve the issue.”

Lay said every feature his company wanted from Concur was available in ExpenseBot. Managers now are looking more closely at submitted expenses than they were when Dakota manually handled them. Importing expense data into the company’s bookkeeping software fell to minutes from days.

Lay didn’t attempt a hard calculation of return on investment, but at $8.10 per user per month (Concur had charged per report), ExpenseBot is an obvious improvement over the wasted manpower pre-automation.

Dakota Software spends $30,000 to $40,000 a month on travel and entertainment. It has considered but doesn’t use a travel management company. It does have discount deal with Hertz and encourages employees to book air travel in advance.

Disrupting Procrastination

Co-founders Ed Buchholz and John Siladie created ExpenseBot in 2013. That was five years after Deem predecessor Rearden Commerce acquired ExpenseWire, where they worked together. In between, they created and sold an unrelated financial tech startup.

The partners envisioned a “robot that does your expense report,” but it had to be more than that, said CEO Buchholz. “It’s not easy to break into the expense management space with a nifty gadget.”

They decided they needed an expense system that rivals Concur’s functionality for the midmarket, learns how the user typically categorizes personal or corporate card charges, begins to do that automatically and then takes the concept to a concierge-type level. The last part is coming this quarter.

“Not only do you get all the best of what a CFO needs and a great user experience, but also we’re providing a proactive, bite-sized approach to getting an expense report done,” said Buchholz. “Expensify CEO David Barrett calls this ambient computing. I call it context-driven artificial intelligence.”

Whereas traditionally charges pile up and are submitted manually, he explained, ExpenseBot will submit automatically once the amount due to the user hits a predetermined threshold. Hence the move away from per-report fees.

The software will integrate with email applications, calendar data “and GPS passively to do cool things like the automatic expense,” Buchholz said. “We see charges that hit your card and can ask the user if they want to submit those. ‘Expense it’ versus ‘Don’t expense it.’ And we learn over time based on how often, when and under what variables you choose to expense. At 78 percent to 79 percent ‘expensability,’ we begin to automatically add that for you.”

Got a lunch meeting in your Google calendar? Notifications remind you to snap a photo of the receipt or, if appropriate, track mileage. Email addresses of participants build fields of meeting colleagues. Microsoft Exchange support is coming soon, said Buchholz.

Additional iterations of the software will know if your expense should go to a different division’s P&L or a different general ledger item, or if it’s client-billable and to whom.

First-generation expense management automation took users a long way past the manual processes that once bogged down Dakota Software. But Buchholz believes there’s another leap underway. “The biggest blocker is the user having the impetus to make it happen,” he said. “You decide to log in. You decide to delete that one line item because it’s a payment. That one over there was a client, you enter their name. ‘Yes, it’s okay, add those …’ This is the 2003 interface. It’s a commodity at this point. That you had to come up with a reason to sit and do this is what is to be disrupted.”

So far ExpenseBot has “a couple hundred” small and medium enterprise customers. The very smallest of them pay nothing unless they need advanced capabilities, under the so-called freemium model. The sweet spot, Buchholz said, is companies with 100 users. That’s where he wants to focus for now but “we do intend to go upstream.” He acknowledges that ExpenseBot doesn’t yet do what some larger clients and some industries need. It’s not Sunshine Act-compliant, for example.

Although Concur is clearly the biggest, the expense management market has dozens of competitors. These range in sophistication from the one-off app for personal budgets up to large enterprise providers including Oracle, Coupa and Chrome River.

Acquis Consulting CEO and managing partner David Kaufman hadn’t heard of ExpenseBot and said they seem “very small.”

“I like their messaging and the concept of the bot and the AI,” he said. “It’s great that a lot of entrepreneurs are building things and it’s good for the industry, but as an organization you want to be on the leading edge, not so much the bleeding edge. Even for midsize companies, you want to know the provider’s software is for real and works well and has been tested. More and more, IT plays a role even in smaller companies in asking, ‘Is there a risk here?’ People are storing confidential data — who they’re meeting with, the business purpose. I don’t know how secure they are but as a company, I’d want that level of comfort.”

Those are understandable concerns that ExpenseBot’s team can address, Buchholz said.

He is an admirer of Expensify. “Some people prefer our interface,” he said. “I like theirs. So I say it’s like BMW and Audi. But our sales and support team is second to none. We pick up the phone when people call. Support is near real-time. I view it as a cultural differentiator for us.”

ExpenseBot started a TMC partnership program in January, evidently investigating the integration of travel and expense. Buchholz said the company is “talking in-depth with multiple partners on the travel side to do cool things with itineraries.”

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ARC Aims To Clear The Air On Benchmarking

On average, how much are you paying for airfares? It’s probably one the easiest travel metrics to understand and a seemingly simple approach to benchmarking. The problem is, average ticket price is a flawed measurement. Many travel management pros know it doesn’t account for several important variables, though C-suite leaders may not. So what’s better?

Some procurement people like cost per mile. As with some other metrics, it works best when an organization’s travel patterns and buying behaviors don’t change much year to year. Another is net effective discount, or average weighted discount — basically how much less a company spent than it would have without preferred airline contracts. Scott Gillespie’s tClara consultancy built a new set of reports with ARC that focuses on price gaps against market averages and delves into their causes.

Buyers and program managers use lots of stats for both internal and peer benchmarking. TMCs and several third parties offer related data aggregation and analytical services. ARC lately has tapped its vast airfares database to create a line of new products. TClara’s Air Clarity is the newest available. Another is ARC’s Corporate BI tool, slated for release this summer.

benchmarkingThese products are meant to help buyers gauge the effectiveness of their contracts and travel policies. Maybe they need to update senior leaders. Or maybe there’s a suspicion that tweaking company rules can affect buying behaviors in a positive way.

Usually the most visible metric in reporting, average ticket price has its place once you account for the variables. It provides “some directional accuracy if you know the buying patterns,” said Ascend Materials director of global indirect procurement Tom Barrett.

“CFOs are generally focused on the bottom line results for the periods in question and what’s driving them,” said Jorge Gomez, head of travel management for the Americas at Mondelēz International. “We are looking at the lowest fares and why people aren’t taking them, and whether we need to change policy. ATP is a main component. While not perfect, it will drive behavior toward the ultimate objective, which is hitting budget goals.”

Travel Consulted’s Grant Caplan said organizations also can use ATPs “between two airlines sharing the same market so we know better how to negotiate.”

ATP comparisons between airlines across an entire corporate travel program, though, are faulty. Airline A could have a better schedule and more utility than Airline B for short hops on competitive routes (where fares may be lower than average). Airline B, meanwhile, may be used more in longer-haul, less competitive markets (where fares would be higher than average). The list of possible differences is long.

Similarly but counterintuitively, the average ticket price on a preferred airline can be higher than on non-preferred airlines. GoldSpring Consulting’s Neil Hammond explains: “Mathematically that’s going to happen because you just give top-level fares to the preferred, the high-yield stuff. Where there is no discount, that’s not high-quality stuff. It seems cheaper because it’s all the lower fares.”

In addition to properly qualified ATPs (including the average price for a policy-compliant ticket), Caplan said he likes to measure spend as a percentage of corporate budget and average total cost including change fees, travel agency fees and various other baked-in expenses (total cost of ownership).

For its clients, Egencia tends to look at cost per mile “because you can typically group types of markets and purchase patterns together,” said director of client services Nathan Brooks. “We will stage length-adjust those cost per mile metrics in order to account for international traffic and then determine the drivers of spend. This is how airlines are determining the success of their revenue management teams, so it is critical to evaluate spend on the same terms as the carriers.”

Peer Benchmarks

It’s tempting to benchmark these metrics against peers, but deriving anything meaningful requires many controls. Where you fly is of course the chief determinant. Is much of your travel through a hub dominated by a single airline with pricing power? Are low-cost competitors present on your most-traveled routes? How often do you need connections? How much is international?

What you buy (fare types based on class of service, refundability, etc.) and when you buy (how far in advance) are other key factors. Some of that gets into booking behaviors and travel policy discrepancies.

“If someone buys restricted economy, they’ll have low discount levels, but if their buying behavior is all far in advance cheap tickets, they may do well against a benchmark,” said Advito vice president Bob Brindley. “Compare that to a financial services company buying a lot of business class in a different mix of markets. That’s a very different average ticket price, but not because one program is better managed than the other. They are just very different programs.”

That’s one reason Brindley isn’t a big fan of peer benchmarks. Another, he said, is airlines don’t usually give them credence during contract discussions. “A lot of clients want to see it; it’s human nature,” he said, “but you have to be careful.”

“I’ve always found some of the benchmarking not as relevant,” added Michelle De Costa, Liberty Mutual Insurance’s senior category strategist for talent and enterprise services. “Unless another company is flying the exact same routes I am flying at the same frequency, it’s not all that useful.”

For some of the same reasons, Gillespie doesn’t believe in benchmarking contracts against each other. “It’s immoral and may be illegal,” he said, referring to confidentiality clauses in agreements, “but mostly it’s ineffective. There are lots of variables that make benchmarking of discounts worthless.”

Mind The Gaps

TClara’s Air Clarity report can establish for clients peer groups to benchmark price gaps, but Gillespie said it’s not a standard part of the product. Instead, the focus is on comparing a client to overall market averages, by city pair and by airline, and looking into the reasons for the differences. Gillspie describes it as an explanatory rather exploratory approach. “The objective,” he said, “was to build a tool that answers some fundamental questions very clearly for non-travel people and doesn’t require or get into the complexity of drill downs.”

Leveraging heaps of current ARC data, an advantage Gillespie claims over all other corporate benchmarking services, Air Clarity determines the make-up of those price gaps. If a client company’s price gap is positive (higher than the benchmark), maybe that’s due to product mix. In other words, on average it may buy more premium class, more expensive coach fares (perhaps purchased within just a few days of travel), more nonstop versus connecting tickets, and so on. That produces some fairly targeted opportunities to adjust product mix and close the price gap.

The share a company gives a specific airline on a specific route also is a factor, as are flight lengths and program complexity (i.e., how many complex itineraries).

Then there’s the “procurement gap,” essentially the impact of negotiated contracts. If, after accounting for the other factors, the price gap is above average, there may be opportunities for better deals. If the price gap is negative, it’s an indicator of good contracts.

To calculate average segment prices and prices per hour (based on elapsed flight time), Air Clarity uses a subset of ARC data that Gillespie calls “clean and simple.” It’s derived only from corporate agency transactions and includes only one-way and simple roundtrip tickets. The transactional level detail encompassing all ARC corporate agencies isn’t sold to TMCs. Due to competitive sensitivity, they can only get granular data on their bookings and higher-level data on the rest.

ARC’s forthcoming Corporate BI product isn’t just a report delivered to clients. It’s a tool that will let users slice, dice and customize. It’s meant to provide more granular data than ARC’s pre-existing Faresight benchmarking tool. Corporate BI users will be able to manipulate the data to view averages and trends for their spending by airline, route, trip type, cabin class, date range and more. The tool also will provide comparisons against the corporate market.

“It will allow corporate travel managers to dig deep into the data and see why certain travel behavior exists,” said Arun Gupta, ARC director of product management and strategy. For example, traveler profiles will show how far in advance they booked, the types of routings they chose and how often they exchanged tickets. “Also, we are giving them all the ticket transactions for a certain O&D, all the ticket details including tour codes and the fare basis.”

ARC also offers a similar Agency BI tool so individual TMCs can analyze the details of their performance, by route and by airline, and measure it against peers.

With all these benchmarking and analysis tools, “the goal is transparency in the relationships” between airlines, TMCs and corporate buyers, said Doug Mangold, ARC’s managing director, product. “We hear that corporations and airlines spend a lot of time in quarterly meetings determining if the data is right. We provide unbiased data; you are all looking at the same numbers. We are trying to take some of the noise out, and if we can get them data sooner they can make mid-quarter adjustments.”

Additional info: Gillespie said price per hour is the same metric as price per mile, with a different denominator. For domestic, economy-class U.S. travel on network airlines, he puts the average at $105 per hour.

Air Clarity excludes bookings beyond 45 days in advance, which can be anomalous. It also benchmarks itself. By overlaying a client’s citypairs with an airline’s network coverage, a determination is made on the sample size of tickets. “When there are too few tickets we have to give ourselves a lower score for the quality of that benchmark,” Gillespie said.

Missing from the ARC dataset are tickets purchased at non-U.S. points of sale, bookings in supplier-direct and consumer channels, and much of Southwest Airlines’ ticketing data. Southwest doesn’t settle through ARC but some TMCs provide ARC with their GDS-booked Southwest transactions. Mangold said that represents “a smattering” of Southwest activity.

Air Clarity prices range from $750 per quarterly baseline (simple) analysis for the smallest corporate buyers (based on ARC volume) to $24,500 for four quarterly executive (in-depth) reports for the very largest buyers.

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Podcast 10: Flo Lugli, Tom Botts, Chris Vukelich, James Filsinger and Elizabeth Grygo

Join us as we talk to travel management professionals about business travel services, expense management and careers on The Company Dime’s podcast.

Our tenth episode features the first installment of a panel discussion recorded this week on hotel pricing and distribution strategies. The expert guests are new Miraval Group SVP and CMO Tom Botts, Yapta president and CEO James Filsinger, Navesink Advisory Group’s Flo Lugli and industry veteran Chris Vukelich.

They talked with Jay Campbell and David Jonas about channel conflict — mostly a result of hotels grappling with frenemy online travel agencies — and Hyatt withholding exclusive loyalty program member rates from GDSs. Speakers also delved into the future of hotel commissions in light of Hilton’s trial balloons for lower rates. And they talked about new twists on hotel pricing, including adjusted cancellation policies.

That’s followed by an interview Jay conducted last month with Elizabeth Grygo, director of procurement and travel solutions at Reinsurance Group of America. Elizabeth explained her career progression, from road warrior to finance pro involved in expense management and ultimately to a procurement and travel management practitioner. She also discussed why collaboration is so important, how millennials aren’t much different than their older co-workers and what concerns her most — data quality as it relates to travel risk management and duty of care.

Download the audio file here.

Here’s more on our guests…

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Willing To Negotiate, Lyft Cultivates Friendly Image

On-demand ground transportation company Lyft is gaining momentum in corporate travel and is open to negotiated benefits based on volume. Sources said the company is proving easier to work with than bigger rival Uber.

Uber declined to comment on whether it works with negotiated benefits. Its website indicates it does not offer corporate discounts. “We’re taking a different approach,” said Uber’s press official, without elaborating.

Lyft isn’t offering discounts, either.

“There’s no preferred rate sheet,” said Lyft director of enterprise partnerships Amit Patel. “And what we offer wouldn’t be relevant to small and medium-sized businesses. But for the Fortune 2o00, say, the amount of volume they could commit to us is enough to have the conversation on some sort of earned rebate structure or milestone goals. We stay away from discounting. Nothing changes in the end-user pricing experience.”

Lyft driver app

Image: Reuters/Stephen Lam

If a client spends enough on Lyft, it earns credits to buy more Lyft. Patel said there’s now one such customer, but also that Lyft has signed business clients “without having to commit to that.”

Whether or not companies qualify for earned credits, the move is an indication of Lyft’s interest in flexibility with corporate accounts. “We want to be the better provider — more responsive, collaborative, creative, building things for the procurement team,” said Patel.

According to travel buyer sources, the approach is working. Some are struck by how different the company is from Uber. They report that Lyft is more responsive to business prospects and less uptight about revealing information than its more storied rival.

Lyft has increased its presence on the corporate travel conference circuit during the past year. Data released Thursday by Certify show Lyft is growing in the business market. According to their websites, both Lyft and Uber are available in more or less 200 North American municipalities. Only Uber is available globally.

The latest version of Lyft’s app more prominently displays options for business profiles. This allows users to direct ride expenses to a central card or company account, depending on how the administrator set it up. Like Uber’s, Lyft’s business program can assign charges to a certain card or debit from a billed account. Both allow for charges to be applicable only at certain times, which is appealing to typically HR-run commuter programs. It was for that purpose that Lyft’s “for Work” program originally launched in November 2014, but Patel said the company always had its eye on business travel.

Available data from Lyft includes pickup and drop-off locations and manually entered reasons for the expense. As with similar Uber reports, data is downloadable in CSV format.

Ongoing Concerns

Since the rise of ride-sharing, most corporations have held off on addressing it in their policies, preferring to remain “silent” out of fear for liability. But that number appears to be shrinking. Among 30 companies contacted during the past four months, 11 created a policy — more permissive than not — though many come with buyer-beware warnings.

Last August, 13 percent of 350 surveyed travel managers said their organizations had made policy provisions for ride-sharing options. Conducted by the Association of Corporate Travel Executives and American Express Global Business Travel, the poll also found another 13 percent planning to address the topic in policies in the coming year or two. Thirty-nine percent were not exploring the option.

The ride-sharing companies have proven their case among some organizations, but safety concerns remain for others.

Clients also worry about surge pricing or, as Lyft calls it, Prime Time. It’s at these times of peak demand when ride-sharing becomes notably more expensive than a typical taxi.

Comments by two speakers at an Institute for Supply Management conference in Miami last month highlighted some differentiation in perspective.

Jorge Gomez is head of travel management for the Americas at snack giant Mondelēz International. From a travel management point of view, he sees no reason not to use Uber and the like. Gomez appreciates the cost savings, likes the technology and reports, and doesn’t worry about how the process for driver background checks may differ from those for taxis.

The security department at his company has other concerns.

“That’s because of the potential impact from an external source,” said Gomez. “Uber is a disruptive supplier that changes the game. Not everyone is a supporter, and not everyone demonstrates that in a peaceful way. We don’t want our people involved as bystanders when someone is targeting Uber. We say we will not reimburse.”

Several attacks on Uber drivers have occurred in the past six months alone, including in California, Florida and Virginia. Some argue there are no more such examples than there are with taxi drivers, but Uber draws more attention because of the controversies over ride-sharing. Anti-Uber protests are commonplace.

J.M. Huber Corp. has a different outlook than Mondelēz. Senior director of global purchasing Brian Bender, who spoke at the same event, said he has doubts about the experience levels of ride-sharing drivers.

But the savings opportunity meant the company decided to permit the services. “We went back and forth quite a bit, and the economics weighed in pretty good,” he said.

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The Grey Areas Of Noncompliance

Policy compliance remains one of the biggest challenges for corporate travel buyers. There are lots of old and new reasons, from the practical to the psychological. Most notable is the complexity of business travel. Throw in various other factors and the notion of leakage is becoming ambiguous.

If your company neither endorses nor prohibits Uber, is using the service noncompliant behavior? What about when you book outside the corporate program but send back itinerary information? Depending on an organization’s goals and culture, that can be a policy grey area. Some instances of noncompliance are codified as official exceptions, but what good is that if no one is minding the data on the back end?

“Compliance probably is the area that companies struggle with the most,” said Harriet Washburn, global strategy leader for travel and expense at IBM Procurement Services. “The definition of what constitutes compliance has become more blurred and complicated. You are dealing with a whole new generation and a plethora of new tools that have kind of changed the rules.”

Nowadays, there’s a million ways to book travel and buy upgrades and add-ons. Booking outside designated channels is easy. It’s also tempting, considering the pull of loyalty programs and other directly marketed benefits. Corporate tools, though, can be frustrating, especially for hotel shopping.

Image: Thinkstock

Image: Thinkstock

Much has to do with education. A common sentiment is noncompliant travelers would have done the proper thing had they only known what that was (and the reasons for it).

Last-minute, mission-critical travel can be another leak, albeit an acceptable one. Same with disruptions. “Unless you have exceptionally good trip disruption services, things can happen and you are outside of the corporate bounds,” Washburn said. “That’s why these new click-to-chat mobile apps are so hot.”

What about when a business traveler wants to add a personal component? It’s not always clear how they should book (and expense) that trip. Is it noncompliance when you use a personal vehicle for more mileage than you expected, rather than renting a car?

Other infractions aren’t so innocent. “There’s just plain and simple circumvention of policy,” said Pearson travel services manager Mitchell Stern. “If I want business class but I am not allowed by policy, I can book with the carrier, expense it and claim insanity later — if anyone even notices. Most companies are too busy, but we are combining card, expense and agency data to catch this.”

So it’s not surprising that almost three-quarters of respondents to a 2015 Association of Corporate Travel Executives/American Express Global Business Travel poll said their organizations’ compliance is not where it should be. Twelve percent “believe they have a lot more work to do to reach their goal,” according to the report.

Psychology

In a pair of studies published in the Journal of Business Ethics in 2009 and 2010, researchers for South Africa’s University of Pretoria explored two sets of travel policy noncompliance factors: corporate and personal.

The personal side gets into the human psyche. The authors argued that an individual’s values, morality, self-interest and self-satisfaction play roles. People not satisfied with their jobs are more likely to ignore rules. Dissatisfaction can result from an employer not meeting employees’ “psychological needs.” If companies tried to address those needs, they may cut unnecessary trips, help workers avoid weekend travel and approve time off following travel, according to the studies.

The authors also cite research from social scientists who find that “people are deceitful when given the opportunity.”

Perceived fairness is another factor. It may not play well with lower-rung workers when employers apply and enforce policies unevenly. “The travel policy is an ideal opportunity to express rebelliousness through relatively trivial transgressions of company rules,” according to the authors. “Revenge against the organisation is a very common theme in the dishonesty literature.”

Travel management pros said they don’t see much of that. Policy stratification, though, requires some consideration.

Perceived safety is another motivation. Some travelers might book away from a preferred airline because they have concerns. Or, for the same reason, they may not book a compact rental car despite being told to do so.

Travel managers don’t need to know the science behind it to recognize some of the resulting behavior. Travelers have preferences. They lean toward suppliers with which they have status. They will make noncompliant — if not nonsensical — purchasing decisions to build more loyalty points.

“There’s definitely a mindset of, ‘What’s in it for me?’ and a sense of entitlement,” said Cindy Shumate, an industry veteran now managing travel and meetings at Regeneron Pharmaceuticals. “People just like to be in control.”

The studies from University of Pretoria researchers also delved into corporate factors like culture and business ethics. “The ethical climate of an organisation,” according to the authors, “may be predictive of both ethical and deviant workplace behaviour.”

Also on the corporate side of the slate are poorly written, communicated and explained policies. More complex, restrictive policies will lead to more violations, whether due to employee misunderstanding or frustration. Some employers should more closely track policy compliance and actually use any pre-trip approval processes that may be in place.

At Microsoft, “we’re throwing out reason codes” from booking tools, said global travel and venue group lead Eric Bailey during this week’s ACTE conference in Dallas. “No one ever did anything with them.”

In other words, if policy exceptions are rubber-stamped, why bother having the policy?

That’s why Washburn said companies should be more diligent in using exception reporting via expense management systems. Sometimes who approves expense reports is a murky area. “You can have policies to require approval on exceptions but we see in a lot of cultures, no matter what you do, it’s always approved,” she said. “Increasingly, the best practice is the expense solutions quantifying the number and dollar value of approved exceptions. Then you can go back to the manager and look at what’s been happening.”

Harman International is on top of that. Global corporate travel director Sally Abella during a June 2015 BTN Group/BMO Financial Group webinar explained the company’s “bad boy/bad girl list.” New hires (nearly all from Gen X and Gen Y these days) are on that list for the first six months of employment. They are “100 percent audited.” After that, those with few policy exceptions are removed. Harman’s T&E auditors decide which employees are relisted based on subsequent exceptions.

What’s Fair In The Air?

The biggest issue with program compliance for airfare purchases generally isn’t the channel but rather exactly what and when travelers are buying. Does the policy stipulate lowest logical airfare? How easy is that to police? With a growing number of fare types, bundled services and ancillary options, it’s getting harder for travelers to know what is off-limits. Prohibiting premium-class airfare purchases always has been a key tenet of many travel programs, but when and why are premium-economy hybrid options acceptable?

The U.S. Federal Travel Regulations require travel agencies servicing the government to use exception codes when travelers don’t book coach-class airline tickets. Many codes are similar to those used in the corporate sector: no “reasonably available” coach-class choices; premium class costs less (“by avoiding additional subsistence costs, overtime or lost productive time”); the flight time for an international trip, with stopovers, exceeds 14 hours.

FTR also notes that more expensive economy-class seats including early boarding, extra legroom or other add-ons like aisle seats “may be paid for by the government whenever agencies determine them advantageous.”

Other common corporate travel exceptions are when a preferred airline’s schedule requires a connection or otherwise doesn’t meet the traveler’s needs.

Meanwhile, if your company has price assurance tools working for it, how important is adherence to lowest-price-of-the-day policies? Must you agree to switch suppliers if one of those tools finds a cheaper fare?

Travel managers also constantly struggle to get employees to book as far in advance as possible. Sixteen percent of 504 travel management professionals responding to a spring 2015 BTN Group/BMO Financial Group poll listed that as their top compliance challenge.

Feelings of Attachment

Lodging is more problematic. Thirty percent of the BTN/BMO respondents identified booking preferred hotels as their top compliance challenge. A Global Business Travel Association December 2015 survey found that 71 percent of hotel reservations at respondents’ companies occur within approved channels, and 72 percent are with preferred hotels. Other industry figures peg out-of-program hotel bookings around 50 percent. For some it’s even higher.

The biggest reason is conference hotel rates booked directly with the property. Others are when travelers can’t find a preferred hotel close to their meetings or book rates exceeding market caps (if their companies use them). Then there’s Airbnb, an attractive option for some that may not be covered by the travel policy.

Bob Jacobsen manages T-Mobile’s travel, expense and card program. He reports generally strong compliance but said one reason for noncompliance is “repeat business — people that regularly stay at the same property. They develop a relationship there and it’s easier for them to just tell the front desk they’ll be back next week. So, they still support the preferred, they are just booking it out of the tool, agency, GDS. It would be awesome to have them in the travel data, but the expense data is inclusive of every dollar they spend at that hotel and that is what I really rely on.”

Another travel manager requesting anonymity said employees book directly at nonpreferred hotels because clients or company suppliers have special rates there. (This company also currently is examining leakage by comparing card data with expense reporting data, which the travel manager said is “hard to do.”)

Given the challenges, some travel managers watch and try to raise attachment rates: how often a traveler books a hotel when booking an airline ticket.

Advito vice president Bob Brindley said client attachment rates range from 30 percent to 70 percent. In some cases, “travelers don’t always know what hotel they want,” Brindley said. “Or there could be a level of comfort in always staying at same hotel in a city. They may know it’s preferred, so they just call the hotel or book directly.”

Improving attachment rates is one goal for Travel Leaders Group’s new multi-source Pinsight program. “It is difficult for agents working in a GDS to know where a customer should be staying,” said Erick Rodriguez, Travel Leaders Group’s senior vice president in charge of the Hotel Division. “Markets are complex; hotels are changing flags, brands and affiliations; and pricing is very dynamic.”

The idea behind Pinsight is to arm agents with complete info to help travelers make better-informed hotel choices. It provides inventory from 100,000 properties worldwide. Pinsight currently is accessible through a dedicated website or “overlay” for Sabre GDS users. Travel Leaders said similar Amadeus and Travelport interfaces will be ready in early 2017.

Additional info: ACTE and American Express GBT conducted the poll in August 2015. They collected responses from 350 travel buyers and managers. About half said they tapped out opportunities for wringing more savings from supplier negotiations. Instead, eight in 10 indicated a deeper focus on demand management and travel program compliance.

University of Pretoria’s Anneli Douglas and Berendien Lubbe authored “Violation of the Corporate Travel Policy: An Exploration of Underlying Value-Related Factors” (published January 2009) and “Personal-Related Factors as Determinants of Corporate Travel Policy Non-Compliance” (published March 201o).

The GBTA December 2015 study found that travelers from 103 respondent organizations booked through approved channels for 92 percent of trips. They used preferred airlines 83 percent of the time.

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Hyatt’s ‘Book Direct’ Program Targets Global Distribution Systems

[UPDATE, May 9 2016: Hyatt reversed course on GDS participation for member rates.]

Like two of its rivals before, Hyatt Hotels on Monday announced a marketing and rate program specifically for loyalty program members. The companies are attempting to neutralize online travel agencies. However, unlike Hilton and Marriott, Hyatt’s discounted rates of “up to 10 percent” off for Gold Passport members are not available in global distribution systems. Hyatt suggests travel agents go to its website to book the rates.

This breaks bunches of managed-travel processes. The rates are not in corporate online booking tools, which is the preferred method of booking for many firms. No longer can these bookings attach easily to airline reservations for servicing by travel agents in case of problems. No longer can the purchasing data be easily consolidated for corporate spending, risk management and policy management. No longer can agents and booking tools conduct proper rate comparisons.

Meanwhile, Hyatt saves a few dollars on GDS fees.

“They are playing with fire,” said Executive Travel president and founder Steve Glenn. “If you have a limited channel to find the lowest fares, people will move to other properties. They are trying to be Southwest Airlines without the business model to support it.”

HyattWhile Hilton is considering paying lower commissions on the member rates, it has not moved from the standard 10 percent. A Hyatt official confirmed that its member rate program is commissionable. Agents are expected to book on the website using their IATA number and the traveler’s membership program details.

Sabre declined to comment. Travelport did not immediately respond.

The Hyatt site already offers the discount to members. A search for Denver next Wednesday, for example, displays a $160 “king den” rate at the Hyatt House with a 24-hour cancellation rule. That’s $10 less than the advance purchase rate and $39 less than the standard rate with an equivalent cancellation rule.

Needless to say, that’s a substantial discount. Corporate negotiated rates or other rate programs may offer the same for less. But not all trips, even at large or heavily managed programs, can take advantage of negotiated rates.

The American Society of Travel Agents has been fighting hotel “book direct” campaigns because they are “misleading,” according to ASTA vice president of industry affairs Mark Meader. “Major hotel chains are making these discounted rates (or free Wi-Fi, depending on the promotion) available through some agents [but] this fact is nearly invisible to the consumer.

“Hyatt tells us that while this new promotion is commissionable to agents, the agent can only obtain it by booking directly through a Hyatt channel and not through their GDS,” he added. “This move makes comparative shopping harder for agent and consumer alike, and adds to an agent’s workload by disrupting the standard booking process.”

BCD Travel uses a shopping system that can access hotel content from outside the GDS, but the company prefers that rates be in the GDS to support client needs. “We worked closely with Hilton and Marriott on that,” said senior director for supplier relations Kim Kearns. “And we hope to have those conversations with Hyatt as well.”

The move exacerbates existing channel conflict on hotel rates, boosts rate-checking tools like TripBam and Yapta and could further undermine negotiated rate programs. It counters gains by GDSs in accessing hotel content. It could also increase the demand for itinerary capture and “open booking” programs like Concur’s TripLink.

Additional info: Hickory Global Partners manager of hotel partners Annette Bonavito helped The Company Dime check GDS availability of new loyalty program member-only rates offered by Hilton, Marriott and Hyatt. The Hyatt rates were, indeed, missing. The Hilton rates were there, using the company’s rate code. The Marriott rates were more difficult to find, but in there.

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Big Three Airlines Add Corporate Travel Self-Service

[UPDATE, March 15, 2017: United announced that a new self-service portal is available to corporate and agency customers. The airline said it empowers users to solve problems, access info and request special services without phone calls to support desks. Called Jetstream, the portal offers customizable travel activity and spending reports (including “future-predictive performance”), weather waivers and product and policy updates. United plans to further expand the reporting dashboard, add ancillary spending data and enable custom notifications.]

American, Delta and United are rolling out online tools to give corporate accounts and travel agencies more and faster control over disruption recovery, itinerary adjustments, upgrades and other service requests. These are the next steps in automating waivers and favors.

In addition to reaccommodation during irregular operations, airlines offer some customers waivers on inventory and ticketing rules — advance purchasing, name changing and so forth. They may be a component of the soft-dollar funds negotiated and accrued as part of preferred-carrier contracts. The Big Three U.S. airlines are working to give accounts more power to choose and use those value-added items, which often are elite loyalty program status nominations, club passes and free tickets.

Enjoying a sustained period of profitability, the airlines each have committed to investing in customer service. The new online self-service capabilities show how they’re trying to make the experience better for lucrative corporate travelers.

online-self-service

Image: Thinkstock

American last June claimed it was the first to offer 24/7 online management of “waiver banks” through its Flex Funds program. The airline today planned to announce new services on its SalesLink travel agency platform. Agents now can rebook customers impacted by bad weather or other schedule changes without risking debit memos. They can more easily revalidate or reissue tickets as needed. “Compliance guidelines” are listed. An “un-check” function lets agents service records already in checked-in status. That’s helpful during flight disruptions or for last-minute changes requested by the traveler.

Delta is activating some of the same services. Last quarter, it added an online waiver management tool for TMCs via its Delta Professional portal. Through it, agents can apply waivers and manage what Delta calls “travel exceptions.” Some of that relates to redeeming “beyond contract value” points. Director of sales technology Sarah Reid said blanket waiver functionality is coming in the next phase. Blanket waivers often apply during severe weather.

United’s forthcoming set of self-services for corporate and agency accounts is “probably the single highest priority for my team this year,” said managing director of sales resources Karen Catlin. The vision is a do-it-yourself portal with customizable reporting and tools for PNR support and managing waivers.

Another component will let accounts manage the amenities United wraps into preferred deals. Today, Catlin explained, those lock in when contracts are signed. Cashing them in is a manual process. The plan is to not only allow accounts (or their TMCs) to redeem those amenities online but also swap in more relevant ones as needed. For example, the travel manager may want to reallocate funding earmarked for elite statuses because a group of transcon travelers would benefit from upgrades.

Reporting would encompass contract performance, ancillary spending and forecasting (i.e., looking at advance bookings). It also will show various aspects of United’s operational performance.

“Today I might have a meeting with my CFO and I want to show them some cost savings and information on ancillary spend but tomorrow I am meeting with my human resources leadership and they may be more interested in how often our travelers were upgraded or delayed,” Catlin explained. “These will be customized reports, on demand, based on the need of the day.”

Hastening Perks

In its forthcoming announcement, American indicated it would be “opening up new seat inventory” so corporate travelers can grab preferred seats “earlier than ever before.” Officials were not immediately available to provide details.

Preferred seats generally are aisles, windows or exit rows. Delta last quarter introduced a preferred seats application so corporate travelers can reserve them more quickly after booking tickets. “In the past you had to go through the TMC” to reserve those seats, Reid said. “Now it’s empowered in any channel where you can get at Delta seats.” That includes delta.com and the carrier’s mobile app.

Delta already provides Zone 1 boarding for travelers from corporate accounts. It also affords them priority service recovery during irregular operations and protection from involuntary denied boarding “at all costs,” Reid said.

Onboard recognition of an account’s travelers is another piece — if the travelers want that. “It’s acknowledgement and appreciation, some additional services onboard and service recovery if coming off a delayed flight,” said Kristen Shovlin, Delta vice president of sales operations and development.

Reid said Delta “in a few weeks” will add corporates into algorithms determining upgrades. The same is coming later in the year for the standby processes.

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Deem To Get $34 Million In Funding; Grady Out

[UPDATE, April 19, 2017: Deem redesigned and rebranded its software suite as ‘Work Fource.’]

[UPDATE, April 15, 2016: A Deem official indicated the company does not agree with the CrunchBase figure for total investment in Deem; the official did not provide a different figure.]

With founder Patrick Grady out and new funding in, Deem anticipates layoffs and a narrowed product focus in an effort to become profitable by early 2018. That’s the gist of what Deem’s incoming CEO and COO told The Company Dime in an exclusive interview Thursday.

The company will iron out specifics on products and personnel in the coming weeks. After 15 years of pivots, name changes and bombast, it looks like this middling provider of corporate booking, expense management and ground transport technology will be different.

“Deem has been struggling with a desire to do too many things and I find that when you try to do too many things, you don’t do anything well,” said John Rizzo, who will be COO and president — and day-to-day head of the company — should shareholders approve the plan in the coming weeks. “Our plan is to listen to customers and the market, and over-deliver.”

Incoming Deem president and COO John Rizzo

Incoming Deem president and COO John Rizzo

Rizzo is associated with PointGuard Ventures, whose managing director, Krish Panu, will become Deem’s CEO. PointGuard and Hony Capital are adding $34 million to their existing investments in the company. Rizzo said employees “have a large stake in the business with respect to stock options,” and Panu said there’s a “nice group” of other investors. He declined to name them, pending their approval.

American Express, Fidelity and Oak Investment Partners are listed on Deem’s website as investors. The site also indicated that Grady has been chairman as well as CEO; but Panu and Rizzo said Panu has been chairman since 2014, after PointGuard first invested in Deem. “You should probably assume [the website] is dated,” said Rizzo.

Panu and Rizzo repeatedly emphasized their desire for improved transparency with customers, partners and the market in general.

They said they have told large customers the company will be well-funded and customer-centric.

As for products, the company is going through a process of identifying which are important in relationship to the “core” travel, expense and car service technology.

“Many customers use ancillary products that support the core, so for example a customer might use travel but also one of our shipping products or spend analytics,” Rizzo said. The idea is to determine which of those ancillary products Deem should support without diluting the core offerings. “To the extent we can put resources into the core and execute successfully on those businesses, some of the employees on the peripheral [products] may choose not to participate going forward,” Rizzo added. “I don’t know what that number might be; we should know in the next week or so.”

Other non-core products include a shopping tool for supplies and solutions for sourcing and contract management.

A handful of customers and partners contacted this morning were just absorbing the news and had no comment.

According to one former client, “They should have dropped the peripheral stuff years ago.”

The new leaders have their work cut out for them in proving it’s not too late. One industry observer was skeptical, joking: “If I had a nickel for every $1 million someone pumped into Deem, I could retire already.”

Before the latest deal, Deem enjoyed eight rounds of financing from 15 investors totaling $492 million, according to CrunchBase. Deem disputes the figure, but did not provide its own.

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New Risk Management Firms Aim To Mainstream Real-time Tracking

The most common and largely practical way to locate travelers in a crisis is to look at who intended to travel to the area and ping them. Credit card swipe data is another way follow an employee’s path. Potentially even more effective, GPS-based tracking is challenged by privacy concerns and battery drain. However, a relatively new crop of providers is trying to change that. They obscure the location data until it’s needed, streamline messaging and assume that when people want to be tracked, the law allows it.

Does this mean travel itinerary data loses its value? No. Any and all accurate information in a crisis is good information. Having more than one procedure is good, too. One heartbreaking story of the recent Brussels attacks was of the man who sent an “I’m okay” text message to family after the airport bombings. He died about an hour later in the subway bombing. The text- or app-based “check-in” is a commonly used tool by corporations looking to ensure duty of care. But it’s just one of many that could be in the kit.

Would another procedure have saved him? Not necessarily. The point is, it’s hard to put a limit on how much one should do. Better and faster communications could help not only locate employees, but also guide them to safety. Insiders call this situational awareness.

GPS-tracking

Image: Thinkstock

Real-time tracking has been available for a pretty penny with satellite phones for many years. VIPs and top executives traveling in high-risk areas are the typical corporate users. New providers are looking to bring this type of down-to-the-meter detail to the corporate-travel masses.

They also represent a new appreciation for travel risk management among investors. Venture-funded startups may bring more competition in travel risk management. Competition is rarely bad for customers.

An exception to that startup dynamic is GPS tracking company Vismo, which partners with 30-year-old TRM firm International SOS. Vismo is a division of Cellhire USA and started mobile phone tracking in 2010.

“Prior to the Paris and Brussels attacks, the interest [in GPS tracking] was very much tied to riskier destinations and therefore a subset of clients and a small percentage of their travelers,” according to International SOS EVP Tim Daniel. “Now clients with more mainstream travel are showing an interest. While there hasn’t been a lot of adoption, we do see a trend that suggests clients are expanding the target population to include travelers who are going to lower-risk countries but may be a ‘VIP’ or in some cases the hardcore road warriors. In other words, a sensible expansion that doesn’t attempt an enterprise-wide adoption with all the inherent challenges.”

Track Me, Please And Thank You

Two of the newish providers focus on real-time tracking and charge a license fee for their apps based on volume. Former U.S. military officers and corporate security personnel in 2013 separately created Aliso Viejo, Calif.-based GridMeNow and Seattle-based Stabilitas. GridMeNow’s enterprise app and web-based management portal now claim U.S. federal agency, local municipality, university and corporate clients. Asked about other aspects of travel risk management beyond tracking, CEO Adam Tolk said, “We don’t try to be all things to all people.”

Stabilitas co-founder Greg Adams emphasized artificial intelligence in describing his company’s apps. “We’re trying to connect everyone traveling while maintaining the privacy of company info and the individual travelers, and anticipating what they need next using AI,” he said. Check-ins, messaging and geofencing features also are part of the product.

Adams likened the app to Google’s Waze traffic app, which crowdsources congestion and incident information to warn drivers. This would be supplemented by information from about 4,700 news sources, helping flag problems. Stabilitas was part of the 2015 Techstars funding program. Pilot clients included Accenture, Batelle, CH2M, FINCA International and Harvard University.

The impact of real-time tracking on batter power is always a concern. When TRM stalwart iJet International released GPS tracking apps in December 2014 on Google’s Android and January 2015 on Apple’s iOS, it included a message on the download pages that’s still there: “Continued use of GPS running in the background can dramatically decrease battery life.”

“We have optimized for the mobile battery,” said Stabilitas’ Adams. “There’s more we can do.” He said a lot of the difficulty stems from moving between different telecom and Wi-Fi networks. “If you run the app as a navigation service, you’ll kill the battery,” said Adams. “We’re working to strike global deals to get city-level info and the ability to keep the app going or do background pings to the phone in a low-cost way — in terms of battery life.”

Tolk said GridMeNow minimizes drain by “using some unique coding” to limit power use to transmission or reception.

According to Vismo, using Wi-Fi hotspots and improved GPS chips have reduced battery drain. “Algorithms use a combination of metrics from the phone such as speed, GPS, network information and cell tower locations to determine optimal accuracy for locations from the device, without incurring the large battery drain usually typical of GPS tracking applications,” according to the company’s blog.

A fourth and even newer company, Montrose, Colo.-based Travel Recon, is releasing its free and premium apps in beta this month. Offering a number of the same services, it claims to address the full gamut of risk management needs. Go Recon is a free crowdsourcing safety app. The premium version, Travel Recon, features intelligence, push notifications, multiple data sources and “high-end social analytics,” said founder and CEO Toby Houchens.

Houchens also has a military background. His company last year received funding from Telluride Venture Accelerator.

The Travel Recon suite will include a dashboard for corporate program managers. The tracking service includes pinging and specific location obfuscation.

“It’s great that startups are challenging the status quo,” said Houchens. However, tracking and communications are merely aspects of a full travel risk management program, he said. Houchens has a lot of support for that notion among analysts and other TRM providers.

“It’s about decision-making and intel,” he said, “and there’s a difference between aggregating media and actionable intelligence. That’s what we focus on — a hyper-granular intelligence capability. For $1,200 our competitors will give you a country study that hits the wave tops of the general topics. It’s better than nothing. We get into the weeds — you could be in Rio and you’ll see in real time how the threat landscape is changing neighborhood by neighborhood. An annual report isn’t good enough.”

Travelers and locals reporting issues and incidents will earn points for providing reliable information. Travel Recon charges on a subscription basis, either by destination or for unlimited locations and either monthly or annually. Bulk licenses are available.

A Word About Privacy

Tolk said GridMeNow doesn’t necessarily identify the specific location. Wi-Fi and cell tower transmissions create a geofencing approach. The app may send users within the fence a digital muster, prompting them to check in. Tolk said that he doesn’t see this replacing the use of travel data, especially for large organizations. However, “you no longer need to know they booked travel,” he claimed. “When they cross into that geofence, the platform alerts the device there are four documents they need to review. From a quality assurance perspective, you have a digital timestamp on when those individuals reviewed the documents. And now you can show that from a duty of care perspective.”

Meanwhile, users can opt for continual tracking or use a breadcrumb concept with check-ins every 15, 30 or 60 minutes. That activity displays on the map back at headquarters. “It’s not the end-all, be-all, but it’s another layer,” said Tolk.

With Stabilitas, a “ghosting” feature means a user’s exact location is masked. The general vicinity is transmitted. This is the default setting. However, in an emergency the user can turn on direct tracking or a security manager can “break the ‘privacy glass,’ ” said Adams. “It’s our belief that if you’re trying to protect employees and privacy at the same time, then it makes sense to track them. We’re not necessarily sharing exact location unless the company requests it during an emergency. We don’t necessarily even need to show the people on the map.”

Matthew Judge, managing director of the nearly 30-year-old TRM firm Anvil Group, said he advises clients to first adopt travel itinerary tracking. One reason is that it doesn’t raise the same privacy concerns that real-time tracking does. “Unfortunately, due to the exponential growth of technology and new suppliers entering the market promoting standalone ‘active’ tracking solutions, this fundamental piece of the travel risk management strategy is being forgotten, resulting in corporations becoming confused and losing sight of how to build up an appropriate solution utilizing the correct tools,” said Judge. GPS tracking is appropriate “for travelers who have been assessed to be higher risk, because of who they are, where they are traveling to and so on.”

TRM commentator and author Charles Brossman has critiqued the new military and security industry providers. On the question of whether to employ real-time tracking, he said, it depends.

“For many oil and gas industry companies or mining companies, constant tracking of movement via apps or programs using satellite phones may be a condition of employment and widely appreciated by travelers who travel far from commercial airports while on the job in potentially dangerous areas,” Brossman noted. “Alternatively, a company might have implemented a TRM program’s check-in feature, with the explicit understanding (conveyed via policy and training) that it is only used in the event of a crisis. Again, there are different ways to implement and address concerns around GPS or satellite tracking, and as these methods are adopted over time, if companies are regularly conducting assessments of their TRM programs that include benchmarking their use against their peers, it will be easier to establish industry standards in the event that a legal defense is required.”

International SOS’ Daniel made similar remarks: “Our clients consistently tell us that success with these services is always less about the technology and more about the practicalities of implementation and adoption. For example, if an organization has a bring-your-own-device approach for smartphones there are limits to what they can enforce in the way of apps, international data roaming, etc. There are also still significant privacy concerns. Solutions that are developed with a hostile environment or military mindset don’t necessarily translate well to the corporate business travel world.”

Additional info: The latest version of International SOS’ main tracking solution, TravelTracker, improves on data capture capabilities by taking in emailed itineraries and parsing them using WorldMate. This supplements travel agency booking data and other sources.

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Donald Swartz’s Principles Of TMC RFPs

Miami — Managing travel should generate at least 8 percent to 20 percent in reduced spending. The offsetting cost to achieve that should be 4 percent to 7 percent. Sourcing a travel management company to support all that should take seven to 21 months. Sadly, implementation fails seven out of 10 times.

These are some rules of thumb for travel management company contracting presented here last month by Corporate Travel Buyer Resources managing director Donald Swartz at the Institute for Supply Management’s T&E 2016 conference.

Why such ranges? The level of complexity in travel management services varies greatly depending on travel patterns, existing consolidation and geographic scope. The variances illustrate the pain that going out to bid for TMC services can generate. So for Swartz, the first question any client should ask themselves is “Why?”

Image: Thinkstock

Image: Thinkstock

Unless there are clear service issues, an executive is unhappy or the company has a legal or compliance reason, whether or not to go out to bid isn’t always obvious, Swartz advised. A business case for doing so should demonstrate that the existing program is underperforming on travel cost avoidance. That missed opportunity should be greater than the cost of the solicitation itself. Swartz estimates that the cost of a TMC request for proposals process is between 25 percent and 150 percent of the amount the client pays its TMC each year (again, the variance is due to the complexity of the program). Estimating that amount can be difficult as it must incorporate fuzzy factors like part-time labor, average savings and lost savings — so expect a margin of error of as much as 20 percent.

As general rules, he said you should consider going out to bid if you have multiple providers in a single country; if you have low compliance (that is, 10 percent or more of transactions are not going through the TMC for reasons other than weak corporate policies or enforcement); if you have a declining relationship or a lot of service complaints, potentially hurting savings to the tune of two or three percentage points; or if you’re looking at a change in configuration (on-site to offsite), needs (like more support for air or hotel sourcing), policies (for example, a new pre-trip approval process), or global footprint.

When Swartz’s firm challenges new clients on why they want to go out to bid, he said, about 30 percent instead decide to renegotiate with incumbents.

Those that go ahead with the process are advised that if they do it right, it will take less time (seven to 21 months) than average (12 to 39 months). This means putting in a significant amount of work up front and resisting the urge to award the business too quickly.

After that, companies and providers need to be vigilant about timelines.

“The contracting process has become insane,” said Swartz, referring to the third stage which follows planning and sourcing. “It’s partly the complexity. Some of it is not covering enough up front. There’s blame on both sides. Companies may not be organized enough — for example, maybe they don’t have a single entity who can sign for the whole company because they never did a global deal. The TMC may not have enough legal counsel. So there’s backlog and no time to customize agreements.”

After that, he said, “most people think the finish line is the award of the bid. That’s the first finish line. The second is implementation, and that’s another huge problem.”

Implementation can fail for many reasons, Swartz said. It might blow up completely; it might work in only a few of the intended markets; there may be service or data issues. “In my research, it’s usually one of several things,” he said. “On the TMC side, there’s a shortage of good quality project implementation managers. They’re also extremely expensive, so a TMC can’t just have 10 of them in the bullpen. The other thing is the TMC’s project plan tends to be an operations checklist, not a real implementation plan.

“For the buyer, most of the time they don’t think [ahead] to the implementation stage,” he added. “If we do it on the front end, if the incumbent wins, this or that happens. If the incumbent doesn’t win, what’s the approval process? (It has to be different). And what’s the implementation plan? Some of that is resources, organization and preparation.”

He said travel and category managers also often don’t budget for the time required to implement. They think they can do it on top of their day jobs. This can lead to failure.

“Add up the months and hours,” said Swartz. “If you spent all that to get to this implementation and it fails, there’s no return. You have lost so much time, credibility and traction.”

For a good result, then, buyers need a valid business case, lots of advance planning, a customized sourcing process (“RFIs do not apply”) and buyer-centric agreements.

It makes sense to include a team of stakeholders in scoring bids, but make an effort to weight the decision-makers — some obviously know more about the subject than others.

In contracts, service-level agreements should be based on aspects that are defendable — in other words, not based on traveler surveys that the TMC runs or the delivery of standard reports. Early termination clauses might be more effective in keeping the provider honest. Penalties should be small and only included if they’re balanced by incentives.

Deliverables should be defined in great detail. Domestically, TMCs typically offer somewhere between about 30 and 50 discrete services. Globally it’s another 10 to 30 per country, Swartz said.

Also worthy of great detail are termination and transition requirements. You will still need your data weeks after your TMC has processed the last transaction, he noted.

Last And Not Most, Pricing

“In most RFP processes, you solicit pricing right away,” Swartz said. “With TMCs pricing should be the last thing. We down-select and try to not have pricing be a factor in that first round. At the end there won’t be much difference in pricing.”

CTBR builds the pricing model by adding together all transaction and non-transaction services. The former are typically per-booking fees, which in Canada and the United States “most TMCs price to break-even.” In other regions, TMCs tend to seek a profit on those charges and may even charge everyone the same amount. Non-transaction services — which could be bundled into a transaction fee — might include personnel allocations (such as VIP agents or account managers), meetings services, sourcing support or proprietary risk management or technology services. “Those they price at the highest profit margins,” he said. “If a client buys a lot of these, the TMC can be more aggressive on transaction services.”

Third-party revenue streams may represent between 10 percent and 100 percent of the TMC’s profit. TMCs generate revenue from airline overrides, international commissions, GDS incentives and hotel commissions.

If any of that goes away, Swartz noted, these TMC pricing models will change.

Disclosure: The Company Dime strives for impartiality in all its work. The reader should know that as it relates to industry associations, The Company Dime in 2016 had a brief partnership with Institute for Supply Management.

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Updates: Air Merger; NYC Room Rates; Hotel Safety

Sometimes the things we write about peter out. Sometimes more developments happen, but they don’t warrant an entirely new article. In other cases, something unexpected or counterintuitive is noteworthy in its continuance. Hence, the Updates post.

Click these links to jump to updates on airline consolidation, New York lodging rates, hotel safety, GBTA’s risk management tool, Uber-like air services, upstarts hiring travel management vets, Apple Pay, DoD’s hotel program and Microsoft’s expense app.

Assessing The Impact Of A Mid-Major Merger

We’ve covered contracting complications from airline industry consolidation, Alaska Airlines’ growing partnership with American Airlines and Virgin America’s pursuit of tech-sector business. This week’s news that Alaska agreed to buy Virgin for $4 billion impacts them all.

Alaska’s inclusion in corporate programs generally has been confined to companies based in or traveling extensively to the Pacific Northwest. Virgin America’s corporate inroads mostly have come in the Bay Area and a few other tech hotspots.

Image: Thinkstock

Image: Thinkstock

According to J.P.Morgan analysts, Virgin has an “attractive” transcon operation and a “disruptive” presence on the West Coast. The combined network would likely “prove more appealing to consumers and small businesses,” they wrote, “while posing little, if any, threat to the Big Three that align with larger corporations.”

Not necessarily, according to Advito senior practice leader Olivier Benoit. Though he wrote that combining “two smaller niche carriers on the surface seems like a minor story” for corporate programs, the merger “may create conflict/overlap with the larger joint venture carriers,” especially on transcon routes.

That will mostly affect United, the top carrier in San Francisco, where Alaska would claim 16 percent market share, according to Cowen analysts. For Newark-San Francisco and Newark-Los Angeles, Benoit pointed out that Virgin America “is the only competitor to United’s dominant position.” The consultancy laid out some market share figures here. On routes between New York JFK and both LAX and SFO, United no longer is a player but the markets have been competitive. According to Advito, AA, Delta, JetBlue and Virgin each have between 20 percent and 30 percent share in both.

Overall, the larger Alaska would claim a 22 percent seat share on the West Coast and rank as the fifth-largest U.S. carrier with $7 billion in annual revenues. It would acquire Virgin’s eight gates at SFO, six at LAX and two at Dallas Love Field. Alaska also would grab 23 slots at JFK, 12 at New York LaGuardia and 10 at Washington National — all slot-controlled airports — and 15 at Newark.

Given its Alaska partnership, American stands to be a beneficiary, especially in the Bay Area. AA and Virgin America are the only carriers operating from SFO’s Terminal 2. AA has a lounge there that eventually could become accessible to some Virgin America customers via AA-Alaska cooperation.

Alaska plus Virgin America — with codeshare help from AA and potentially AA’s global partners — doesn’t quite match the network that United and its partners bring to Bay Area companies. But it’s nothing to sneeze at.

Alaska expects the merger to close before Jan. 1, 2017.

The New York Lull, Continued

A year ago we wrote about how New York City was bucking the trend of continued higher hotel rates. Since then, more of the same. The largest U.S. business travel market represents a great pocket of opportunity for anyone negotiating hotel rates on behalf of their companies. It’s also a great market for shopping and re-shopping with TripBam and Yapta.

New York hotel ratesAnalysts are still forecasting strong growth for hotels overall, but not in the Big Apple. “There’s a slowing in revenue per available room while occupancy is really strong,” STR Inc.’s Jan Freitag told us last month. “Given the high occupancy you’d expect some pricing power. It has [hotel] people worried.”

He said the underlying headwinds remain growing supply, the strong dollar and Airbnb.

According to STR data through February, the New York average daily rate has fallen year-over-year in 12 of the past 16 months. The four increases were small, while the highest drop was 8.7 percent in January 2015. The largest decline since then was 7.4 percent in February 2016, the most recent month for which data are available.

According to Hogg Robinson Group’s 2016 hotel survey, released last week, New York was one of just three major North America markets to see a drop last year in average room rate — to $373 from $375 in 2014. “Travel to NYC has increased, but there have been new hotel openings and the impact of disruptor technologies, both of which provide more options for travelers,” HRG wrote.

Hotel Property Safety Rating Certification Expands

Safehotels Alliance, the Sweden-based assessor of hotel safety and security procedures, added participating properties in more than 40 new cities last year. It certified 80 Carlson hotels in Europe as part of a previously announced agreement. The company expects to include as many as a couple hundred more in 2016, Safehotels president and CEO Hans Kanold said last month. Safehotels also announced a partnership with distributor Kuoni GTA.

CCTV_FixedThe certification program takes hotel properties through about 280 questions related to safety and security procedures. “We add questions constantly,” said Kanold. “We learn from every incident.”

Attacked in November, Carlson’s Radisson Blu property in Mali was not certified. It’s not as if certification could have prevented anything, of course. But “in general terms, if you have certain routines and trained staff and the document is in place, you can prove that you work with security,” Kanold said. “That’s important. It’s so obvious that hotels which work with security are better prepared. It’s a lot about being able to reduce the damage, lock in guests, communicate with special forces, etc. Some travel managers have compared it with driving a Volvo.” You won’t necessarily avoid danger, but you may mitigate it.

GBTA Updates Travel Risk Management Self-Assessment

In January, we covered plans by International SOS to develop a new duty of care code of practice. At that time, the Global Business Travel Association told us of a forthcoming update to the well-known Travel Risk Management Maturity Model benchmarking tool. The GBTA Foundation delivered this week, announcing a new version of TRM3. It’s described as “a major update” that includes more detailed assessments and specific recommendations. GBTA members can access the latest version here.

‘Ubers For Air’ Blocked

LearjetLast April we highlighted several services that were looking to compete in the business-jet market using an “on-demand” model. It seemed at the time as though improving utilization and distribution were great goals, but actually sharing aircraft was raising regulatory eyebrows.

Since then the Federal Aviation Administration succeeded in shutting down the likes of Airpooler and Flytenow. JetMe’s and Ubair’s websites are no longer operating.

However, BlackJet, JetSmarter and Victor — more like traditional brokers than true sharing economy companies — appear to be expanding in their missions to bring private jet travel to more of the masses.

Driving The Future Of Travel Management

In January 2015 we covered an apparent trend in which upstart companies were turning to veteran travel managers to build and/or run their travel programs. There are a number of such examples, and it puts the travel expert — often older than the employee population — in the challenging position of advocating for corporate policy to freewheeling cultures.

Sean Parham of Riot Games is a great example; see our case study on his virtual card program here and his comments in our LinkedIn group about the challenges of trying to use TripLink.

Steve Sitto

Tesla global travel manager Steve Sitto

In our original article, we detailed the job opening at car maker Tesla. Last month, Steve Sitto (formerly of GE and Roche) joined the company as “head of global travel leading strategy and launch of Tesla’s new global program,” according to his LinkedIn profile.

Among other companies we mentioned last year, Uber said goodbye to Margaret Brady, who did a stint at Grant Thornton and now has something else up her sleeve. Karoline Mayr replaced Brady at Uber after six months at Workday, which in November hired former PwC and Goldman Sachs travel manager Kim McGlinn as head of global travel. Dropbox parted ways with Judy Emma, having put Ireland-based former Facebook corporate card implementation manager Patrick Dunne in charge of global travel and expense, according to his profile.

Apple Pay On Corporate Cards … For Real This Time

Last summer we determined that the first banks identified by Apple as supporting Apple Pay for corporate cards in fact weren’t. At that time, no users of true corporate cards had access to Apple Pay. That’s changed. American Express a month later announced that it was the first to enable Apple Pay on corporate cards. MasterCard followed in October, saying its corporate cards can handle Apple Pay, as well Samsung Pay and Android Pay. There have been more developments, though Apple Pay’s application in corporate travel thus far has been limited.

Left, Right, Left — DoD Lodging Program Marches Along

Last year we reported on a pilot of the U.S. Defense Department’s first centralized lodging program. In March it expanded to include Public-Private Venture lodging properties as bookable options in the Defense Travel System. PPV properties are on or near military installations. They previously were owned and operated by the U.S. government but now are owned by commercial lodging companies.

The U.S. Army’s Privatized Army Lodging program is one of DoD’s largest such programs. It will be the first one added to DTS. Government travelers going to sites included in the pilot can book these properties when government lodging is not available. If neither government lodging nor PPV properties are available, travelers can choose approved traditional commercial lodging options.

Microsoft Kills Expense App

In an experimental project, Microsoft last year revealed it was developing a mobile app to help users “say goodbye to expense report hell.”

Well, say goodbye to that. They dropped it.

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Dynamic Currency Conversion Presents Hidden Cost, Simple Fix

Long known to frequent travelers, a questionable practice called dynamic currency conversion is catching more attention from bank card issuers and their clients. While the practice borders on insidious, travel professionals can protect their organizations with a little education.

Bank sources said the activity — in which merchants ask foreign travelers whether they’d like charges in their home currency, only to levy unnecessary extra conversion fees — has slowly grown since emerging a few years ago. It’s now commonplace even at big brand hotels, they said.

The solution is simply to remind travelers that they should only accept charges in local currency. This may make it tougher to understand offhand how much something costs, but it takes advantage of the currency conversion fees many businesses negotiate with their banks. Some issuers even waive such fees in countries where they have no local currency card.

dynamic currency conversion

Image: Thinkstock

Otherwise, hotels and restaurants, and their partners, share in a cut of as much as 6 percent or more thanks to excess conversion fees. It sounds like a service but really it’s a silly thing to pay for.

Corporate travel buyers demonstrate mixed levels of awareness.

“We last looked into it about a year ago,” said one bank source who wished to remain unidentified due to a lack of authority to speak publicly on behalf of the company. “We were definitely seeing a fairly steady increase in dynamic currency conversion. For all the information out there, I don’t think customers really understand it. It’s hard for them to see — they’d have to dive into the data because it’s embedded with the exchange rate and the merchant adds it as a surcharge.”

“It seems that it’s not being addressed in most policies,” said GoldSpring Consulting partner Colleen Black.

Some banks are advising program managers and clients of the practice.

According to another bank source, the practice “seems to be accelerating. We always caution clients.”

Although MasterCard and Visa have rules requiring merchants to ask clients whether they would like to use DCC, “Some hotel properties are not asking — they’re just assuming,” said the source.

A third bank source said, “They’re becoming more brazen: ‘I presume you want to pay in dollars.’ The exchange spread is going to 4 percent or 5 percent. For a corporation it would be a fraction of that. We’ve been hearing it’s more of an issue over the past two years. People get used to living with it until you shine a light on it.”

Bottom line: Ask to pay in local currency.

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Concur Adds Delta, Lufthansa Branded Fares, Favors GDS Connectivity

[UPDATE, June 22, 2017: British Airways began offering branded fares to global distribution systems via the Airline Tariff Publishing Co. Using what BA called “an industry standard distribution method,” the functionality took effect for Travelport and Amadeus in early May and for Sabre on June 1. The airline told travel agencies that its aim is to help them “differentiate between the full range of products and the value they represent.” BA initially is making its branded fares available in this way for long-haul flights originating in the United Kingdom. They’ll be available for more flights via ATPCo “at a later stage.” Concur already offers limited British Airways branded fare content from GDSs but declined to comment on when it would access the new, broader set.]

[UPDATE: Nov. 28, 2016: Concur this month said several more airlines’ branded fares now are available in its booking tool for Sabre-connected users. They include Airberlin, Air Canada, Air New Zealand, Avianca, BMI Regional, Brussels Airlines, Etihad, Scandinavian Airlines and TAP Portugal.]

[UPDATE: Oct. 17, 2016: Concur increased by nearly half the number of airlines for which it intends to support branded fares. More here.]

Concur last month began providing Delta’s and Lufthansa’s branded fares for booking tool customers using Sabre as their global distribution system. Concur aims to furnish such fares from as many airlines as possible, including more to be added this year. According to Concur’s March user updates, airlines should use the Airline Tariff Publishing Company’s branding standards and the latest GDS fare-search technology.

Difficulty comparing and booking various airfare flavors has been a travel management challenge for years. Multiple price and product combos (and paid seat upgrades) provide more choice, but only if they’re accessible. So far, smaller booking systems and agent points of sale have made the most progress.

Standards can help. For branded fares in GDSs, Concur favors ATPCo’s specifications as “one universal method.” This allows intermediaries to “communicate and consume” fare details “in a structured format,” Concur explained. The company encouraged customers and travel agencies to push airlines to adopt the ATPCo approach. Doing so would ensure the Concur booking tool supports that airline content “as soon as possible.”

branded-fares

Image: Thinkstock

Concur also intends to support any airline that makes its branded fares available through the newest GDS shopping methods. It mentioned Sabre’s Bargain Finder Max and Amadeus’ Airline Fare Families. As GDSs “constantly” work with airlines on branded fares, the list of carriers supported within Concur Travel “will change frequently,” according to Concur documentation.

That documentation said the booking tool currently also supports branded fares from Lufthansa in Amadeus; American Airlines in Apollo, Sabre and Worldspan; and British Airways in Sabre.

Concur expects more booking tool clients using Sabre to start accessing Delta’s and Lufthansa’s branded fares this month. On March 23, it began “a controlled activation of this feature.” Now, according to user updates, it’s assessing performance to determine when more corporate users will get access. The March documentation indicated that Concur expects “all Sabre customers using Bargain Finder Max to see this feature before the April release.”

Delta’s branded fares include Comfort Plus. The premium-economy product in November became a distinct fare type (W class) for domestic U.S. travel from May 16 — rather than an ancillary upgrade. “Concur will make it available, and it’s up to travel managers to decide what will be made available to users,” according to Doug Anderson, Concur’s senior vice president of travel product strategy. One travel manager noted that company travelers already want to book the option now.

The May release of Concur Travel will include an updated “View More Air Fares” view. It is designed to match the “Branded Fare look and feel” Concur released last year. That feature allows travelers and arrangers to see various airfare choices.

There are limitations. “Generally speaking, branded fares are not available on codeshare flights,” according to Concur. Also, users can’t book branded fares for portions of any multi-carrier itineraries.

Concur also noted that its system adds a branded fare remark to GDS passenger name records. Travel agencies providing fulfillment then can see any “non-traditional restrictions or benefits” associated with the fare type. Concur already places these remarks within Amadeus and Sabre PNRs. They are “coming soon” in Apollo and Worldspan.

Branded fare support in other corporate self-booking tools is a mixed bag. No one claims to have them all.

A Sabre official said GetThere displays and can book branded fares provided by about 70 airlines, including Southwest, easyJet, Gol and Qantas. ATPCo standards will allow GetThere later this year to add branded fare capabilities from “several additional carriers,” according to the representative.

NuTravel currently displays such fares from Air Canada, American, Southwest and WestJet. EVP Rich Miller said the company expects to add several more this year. AmTrav said its homegrown booking tool displays branded fares from American, Delta and JetBlue. It expects to include United’s “as soon as they release theirs,” according to CEO Jeff Klee. Deem users also can book JetBlue bundles. Egencia users can book Air Canada branded fares from Canada points of sale.

Additional info: Concur Travel on Jan. 31 ended support for Sabre’s legacy JR low-fare search feature. Booking branded fare content in Sabre now requires the Bargain Finder Max shopping feature.

Concur said the May release of Concur Travel would update the “look and feel” of search results brought in via direct connects with Air Canada, Southwest and Travelfusion. Air Canada and Southwest “already offer Branded Fares,” according to Concur. “We are simply updating our user interface to match the enhancements we made for the GDSs.”

The March release fixed “performance issues” affecting multi-segment searches via the Air Canada direct connect. Those issues prompted Concur in January to temporarily switch off that function. Some travel managers have reported other problems with Concur’s Air Canada direct connect.

Meanwhile, Concur said purchases of lounge access and checked baggage in the booking tool are part of “a future roadmap item.”

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