Fernão Loureiro On Speaking To Corporate Travelers

From The FieldThis is a sample letter from a travel and events manager. Written by Brazil-based Fernão Loureiro, Philips Latin America regional business travel manager, it is a didactic way to generally illustrate to travelers and travel arrangers the difficulties of the travel management profession.


Dear colleague,

I am responsible for the travel area of ​​our company. You question me a lot by e-mail, in the cafeteria, at the bus stop or through your boss. Most of your grievances are common across our organization and others because most of our challenges come from the outside environment. For example:

• You claim to “regularly” find lower fares by going directly to suppliers, outside the official channels that I am responsible for managing, but these cases account for no more than 1 percent of our total volume.
• You wonder why the official agency is often limited in its service and not proactive (and you also wonder why your friend’s agency is much better than the one our company uses).
• You ask why the hotels we deal with don’t provide better rates and service.
• You perceive our designated online booking tool as less user-friendly than consumer sites such as Booking.com and Expedia.
• You want to know why you need so many approvals to travel or claim expenses.

Let me try to explain a few facts to help you understand why these things happen, which does not exonerate us from our responsibility to try to improve on them.

1. There has been a proliferation of new solutions and distribution channels. Latin American markets have a huge range of hotels and most of them are independent. They have little ability to finance the distribution of their rates through the traditional global distributors. Those distributors have a near-oligopoly, which is an obstacle for the new solutions that seek to distribute hotel rates at a lower cost. This takes a lot of time and involves many commercial and operational interests.

For example, a rate that came from an online travel agency may be cheaper than rates available through our travel management company or online booking tool. That’s because online travel agencies often have huge volumes and therefore bargaining power. Their rates, though, may be nonrefundable, may not include breakfast and may come with other restrictions. Moreover, when using rates found outside our designated channels, hotel employees may not know which company you are from.

Fernão Loureiro, Philips
Fernão Loureiro, Philips Latin America regional business travel manager

Our big challenge is to provide you a comprehensive set of choices in the OBT and via our travel agency. I have to give you access to the cheapest hotels, but also those that are most comfortable and safe.

Assuming we negotiate rates with 200 hotels, and recognizing there are many more properties we use without negotiated rates, you can imagine the difficulty in making this model work.

That’s just here in Brazil. We have the same problems in Argentina, Chile, Paraguay, Peru and other less mature markets filled with hotels that do not care about our volume. They sell independently or simply have no commercial appetite.

2. Business trips represent a sizable chunk of airline volume, but carriers still think a lot about the travelers who purchase directly via their websites. Fare rules and distribution strategies reflect that. Some international airlines seem to not give a damn about us. They change baggage and seat booking rules without thinking about how they impact corporate travel. They sell seats in bulk to the same online agencies I mentioned earlier, but not to the corporate agencies that serve us. They sell unique airfares on their websites that are not available to you via our travel agency or the internal company system.

As with hotel rates, these website-only airfares often are nonrefundable and have other restrictions.

3. Complaints about our travel agencies — lack of proactivity, slow response and high prices — emerge from every country in the world. This is true especially with the biggest corporate service providers. But being big means they have the financial and operational structure to support clients in different countries.

Do we pay them fairly? Buyers always want to pay less and get more, but in some cases clients insist on unsustainable prices. It is important to realize that the Latin American travel market generally is less mature than those of other regions. As a result, travel consultants are devalued and wages are low.

We customers share the guilt when we are not clear about our needs. Transparent and constructive feedback from you, the traveler, helps the service provider improve and know us better. We should not forget to offer praise when receiving good service.

Also note that contracts with a travel agency often spell out agreed levels of service, along with bonuses and financial penalties.

4. Approvals are necessary in our region until we learn to spend the company’s money as if it was our own. We must stop breaking rules on the expectation that no one is watching. (We usually do sample audits.) As long as employees use corporate cards for personal dinners or visits to the hairdresser, and choose luxury car rentals over economy ones or stay in five-star hotels, we need an approvals process. Using the corporate card, by the way, means agencies, rental car companies and hotels need not work with old-fashioned invoicing.

5. Companies often do not see value in strategically managing corporate travel. Many times travel buyers must manage several other categories — fleet, restaurants, facilities, employee benefits, and so on. Also note that in other categories, a buyer may manage 10 or 20 suppliers. In travel, it can be upwards of 100 (considering hotel chains, independent properties, airlines, travel agencies, event venues, car rental firms, travel insurance companies, reservations tool providers, other distributors and more.)

Buyers also don’t always get permission to attend travel industry events, inhibiting education and the sharing of best practices. Or the travel buyer simply does not have time to go.

It can be embarrassing to leave the office when colleagues are, for example, disrupted by severe weather events and other issues. Of course, as soon as a buyer finds a day when he or she can attend an event, 10 people call with problems.

Despite these difficulties, the fact is that buying everything centrally is still the best strategy. I need visibility to negotiate better with suppliers and to know where you are if a terrorist attack, a flood or a hurricane occurs. I am responsible for supporting you in these cases. I am responsible for decreasing travel costs or at least keeping them under control.

But I don’t look only at trip costs. A less tiring and logistically smarter journey makes you, your co-workers and our executive leaders more productive during travel, which helps everyone accomplish their missions.

That is it, my dear traveler. Now you know a little bit more about what I face during my day and why the travel department and our suppliers can’t always meet or exceed your expectations. The good part is that the people in this industry are very passionate about what they do. They strive to overcome the difficulties and make the services you use efficient and valuable.

Sincerely,
Your travel and events manager

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Fernão Loureiro

Author: Fernão Loureiro

Fernão Loureiro is the outsourced regional travel and events manager at Philips LATAM, based in São Paulo, Brazil. Before that he worked for the U.S. Embassy in Brazil and as regional sourcing manager for Agrega Intelligent Procurement and Ambev Procurement. Fernão is a member of HSMAI Brasil's board and coordinator of its Corporate Travel Committee. He also is a professor at SENAC São Paulo. In the past Fernão has served as president of GBTA Brazil and an instructor for GBTA Academy. He is a mentor, career coach, writer and speaker, and in 2017 he was elected one of the 75 Most Influential Tourism Professionals in Brazil by Panrotas. Connect with him on LinkedIn.

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Stacy
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Stacy

Great letter.

Chris Dane
Subscriber
Chris Dane

Fernao is right on the money and speaks to the daunting task that every travel manager and TMC faces.

Paul Hoffmann
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Paul Hoffmann

Well said Mr. Loureiro .. Nailed it and hopefully you received positive and supportive feedback from both your travelers and management.

Suzanne Neufang
Advisor
Suzanne Neufang

Hi Fernao –
What a great, well-structured letter which outlines not just the “me-me-me” oriented traveler situations every buyer faces, but also an approach to educating them on what the company expects of you (and of the travelers) on behalf of your company’s objectives. Thanks for putting pen to paper on this topic!

Rob Ness
Subscriber
Rob Ness

Fernao exposes several challenges that the travel management profession experiences, and casts heart-felt light on the difficulties we face. Travel managers and their chosen travel management companies (TMCs) are vested “agents” of their travelers and travel arrangers. Often, their value more than offsets any procurement costs of corporate travel — something the online world has rarely any interest in committing to. When business trips go sideways, a responsible TMC will step-in, leverage its coveted supplier partnerships, and represent travelers the best that it can, usually 24/7. Those low-cost “distributors” will unlikely have the bandwidth to accommodate the transient traveler the… Read more »