By Stacy Collett
On any given weekday, about 10,000 of PricewaterhouseCoopers' 50,000 employees worldwide are somewhere on the road, traveling to a client destination, according to Jim Lennon, global travel leader. Those trips come with a staggering price tag. PwC spent $580 million last year on airline tickets alone. Don't even get Lennon started on the additional hotel, housing, and car rental costs. The final bill represents PwC's third largest controllable expense, behind salaries and IT costs.
Even though the firm charges the majority of travel expenses back to its clients, pressure is mounting to cut project costs even further. So, this month PwC is rolling out its latest weapon in cost reduction — a corporate in-house travel booking solution that lets employees book their own travel plans using PwC's pre-negotiated rates on-line. "You can save upward of 50 percent off the cost of the transaction" with these systems, Lennon explains.
In-house travel booking systems have caught the eye of corporate America and many consulting firms as a way to negotiate better rates and use them consistently companywide, save on travel agency service fees, and pass the savings on to customers. Most companies are keeping relationships with travel agencies for international or complex travel for now, but they're pressing employees to use in-house systems for U.S. travel.
By 2005, corporate in-house travel booking solutions will drive $33 billion in on-line bookings, representing 31 percent of all corporate bookings, according to Jupiter Research in New York. That's an eightfold increase from 2000, when managed business travelers purchased $4.4 billion in air, car, and hotel bookings, representing just 5.8 percent of all corporate bookings.
But there are drawbacks. Corporate travel managers can only keep prices low in an in-house system through widespread use and volume discounts. But they're finding that employee adoption rates are surprisingly low, with many companies averaging between 20 percent and 25 percent in the first year. What's more, employees often complain about lack of airline and hotel choices, as companies narrow choices to two or three preferred providers.
The challenge for consulting firms, observers say, will be to keep road warriors happy with choices and a feeling of control, while steering them toward the airlines and hotels that will save the firm and its clients money.
The Players
Today there are more than a dozen on-line booking solutions competing for the biggest corporate accounts. According to Travel Weekly and Jupiter analysis, some 92 percent of the top 50 U.S. agencies offer an on-line solution, and 38 percent offer more than one.
But the largest player by far is the combined Sabre Holdings Corp. and GetThere.com, which was acquired by Sabre in November 2000. Together, they account for more than half of the on-line business travel market. They've also forged relationships with two of the largest travel agencies, American Express and Carlson Worldwide, to expand into larger corporate accounts, according to Jupiter. Oracle e-Travel, which resulted from Oracle's acquisition of the on-line travel site over a year ago, is a relatively new player in the market but has chalked up 7 percent of all corporate on-line booking business.
In the consulting industry, GetThere.com is taking on many high-profile customers. PricewaterhouseCoopers is about to roll out the GetThere system to its U.S. consultants after piloting the product earlier this year with a few thousand employees. Lennon says that so far the reviews have been mixed. "A lot of people really like it because they see everything right there. You don't rely on interpreting what an agent tells you. The downside is that at times, when everyone uses the Internet [at once], it's slow or you get logged off of it. It's frustrating. But once you know your way around it, you're trusting of it."
In February, Computer Sciences Corp. announced it would implement GetThere's corporate system on its intranet. CSC also piloted the system with several hundred employees earlier this year and will have done a full rollout to its 68,000 employees this spring. Michael Kabo, director of CSC's global travel program, expects to achieve 30 percent adoption within the first year.
Steve Woods, a principle in CSC's global Oracle practice, hasn't used the new system yet, but says he'll gladly use it to book his weekly trips between Chicago and San Diego, where he's working on a 12-month Oracle implementation. "I tend to make all my reservations for the coming month all at one time. I just try to minimize the time I have to spend [booking travel]," Woods explains. Woods currently makes travel arrangements by phone with CSC's agency of record, but he became familiar with the GetThere booking system during a short stint at another consulting firm. "I found that it was as easy to use as any other [on-line travel site] available."
American Management Systems, Inc., and Cap Gemini Ernst & Young have also implemented the GetThere system.
Oracle's e-Travel.com in Waltham, MA, scored a contract with Keane, Inc., in the third quarter of 2000. "We had a lot of people asking for an alternative to calling, because they work odd hours and they want to be able to book in the middle of the night," explains Marianne Goodman, global travel services manager. Keane, which spends some $25 million annually on travel, is piloting the e-Travel system at three of its 45 offices. Keane will use the system in addition to eight on-site travel agents from Carlson Wagonlit Travel in Keane's Boston and San Francisco offices.
It's All About Control
Getting consultants to kick their old ways of booking travel can be a challenge. Large corporations have the highest rate of corporate on-line booking solutions deployed, but have a low rate of usage, with only 22 percent of corporate reservations, according to an American Express survey of corporate travel managers. For most travelers, the issue is control.
"They have their favorite agent on the phone, or they don't travel frequently, so in their mind it's just as simple to call up," explains Cheryl Hutchinson, corporate travel manager at American Management Systems, Inc., which has been using the GetThere system since November 1999. "With on-line booking, if you're doing a lot of changing, people are hesitant. Also, if you're booking at the last minute. Those are factors that influence people to stick with their old habits. But we have captured a few of them."
Hutchinson added that younger employees with long-term assignments used the system readily, while the holdouts tended to be senior execs and partners.
According to a Jupiter Consumer Survey, price and choice are the two biggest reasons why employees book travel on their own. Other inhibitors include the clunkiness of the initial technology behind corporate booking solutions, lack of knowledge about the new system, and the sense of empowerment and entitlement that "rogue purchasing" gives the traveler.
Fearing holdouts, many newcomers have set their sites low. At Boston-based Keane, Goodman calls her 25 percent adoption goal for 2001 "aggressive."
"If you talk to the vendor, they'll say that 25–50 percent [adoption] is very easy to achieve. But I listen to the numbers that are out there, and I haven't heard anything higher than 20 percent. I don't know if it's just that we're a techie company, so people like to book on-line," Goodman says.
Sabre's GetThere.com acknowledged the adoption problem in February and announced new adoption consulting services to help bring its customers up to the 50 percent to 80 percent adoptions rates reached by some of its more successful clients. GetThere offers designated consultants that customers can retain to drive aggressive programs tailored to the corporation's culture and adoption goals. GetThere will also partner with a major travel agency, if the customer desires, to provide even more booking options.
Some consulting firms have taken adoption matters into their own hands by offering employees incentives for using the system, such as personal frequent flier miles for every four or five bookings on the system. Others take a harder hand by refusing to reimburse expenses for travel that isn't booked on the system.
But some industry watchers say consulting firms will probably have higher adoption rates than other industries because of their consultants' techie nature and do-it-yourself mentality.
American Management Systems is one early adopter that has seen great success in on-line bookings. The Fairfax, VA, company achieved 65 percent adoption at the end of 2000. As a result, AMS expects to save $1 million in travel costs this year.
Hutchinson attributes AMS's success to the nature of their business. "We're tech-savvy, open-minded people who use the Internet for business. It wasn't a hard sell," she says.
When the system was rolled out in November 1999, Hutchinson was hoping for 20 percent adoption, but she was pleasantly surprised when that number quickly rose to 25 percent in the first two months. Her team also scheduled brown-bag lunches and training sessions to promote the new system, but no one attended.
Fewer Choices
Even after a successful initial rollout, firms can face a backlash from consultants if they start limiting choices for airlines, hotels, and car rental agencies — an often-necessary move to get greater discounts.
Like many other booking solutions, Accenture's in-house system, VIA, can hide travel options that aren't part of the firm's pre-negotiated prices, which leaves some wondering whether they're really getting the best deals. "It would be helpful to view all offerings, not just those we have specific discounts with. You won't see Southwest airlines pop up on any of our options," says Brad McConnell, a manager based in Chicago who travels weekly to a client in Connecticut.
"You don't want to turn somebody off," acknowledges PwC's Lennon. "You'll lose credibility if they say, 'I know that Continental flies there. Why aren't I seeing it here?'"
PwC doesn't plan to limit travel choices for now, but Lennon says that it "will obviously try to impose a policy" of preferred travel providers down the road.
While AMS has negotiated rates with a few airlines and a handful of hotels, employees aren't limited in their on-line choices. "We don't hide any properties or any airlines" on the system, except for car rental bookings, Hutchinson says. If an employee chooses a more expensive airline ticket, for example, they must enter a code explaining why the selection was made. If a pattern develops, "then you have a conversation" with that employee, she adds.
Travel Agents Still Fly
On-line solutions are shaking up the traditional roles of agencies, suppliers, global distribution systems, and companies. But live agents still represent a valuable resource.
Lennon says that PwC's on-line solution is "very intuitive, but it's not for everything. You don't want to do a six-leg, international trip with it. But the simple round-trips around the states are duck soup." That's why PwC will still rely on American Express travel agents for its more complicated travel arrangements.
Agencies also are better suited for last-minute travel, which is typical for many firm partners and directors. Gary Robert, a director at Deloitte & Touche in St. Louis, travels one to two days a week, but in many cases his schedule doesn't firm up until the day before a meeting. Deloitte signed on with travel management firm WorldTravel BTI in Atlanta about a year ago to handle all of the firm's travel — with a few exceptions. If Robert is traveling regionally, to Chicago or Kansas City for example, he can go to an airline or consumer travel Web site and book it himself.
"Our policy basically is, if the airfare is under $200, you're better off doing it yourself," Robert says.
"Human travel agents possess the cachet of customer service — a feature that will not easily be displaced by a technology solution," says Heidi Kim, a Jupiter Research analyst. Business travelers will always have a need for specific information and itinerary revisions 24 hours a day, seven days a week, she adds. They're also valued for their expertise, and their ability to handle travel conflicts and provide destination advice.
What's more, since international travel represents a small portion of on-line bookings because of complex fare methodologies, restrictions, and software issues, the bulk of international travel plans will still be made off-line in the short term, Kim says. Travel agencies will also play an important role in recommending on-line solutions, integrating systems, and recommending cost-saving initiatives.
Sidebar: Power Points
• Consulting firms are now one of the largest target markets for in-house travel booking solutions that permit consultants to book their own travel plans using pre-negotiated rates on-line.
• While a large portion of a firm's travel expenses are charged back to their clients, pressure is mounting to cut project costs, and travel management solutions promise to help keep consulting's pricing competititve.
• Fearing holdouts among their consultants, consulting firms have initially set their sights low, and expect only 20 to 30 percent of their people to become early adopters.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.