Corporate-card data is a powerful tool when negotiating with travel suppliers
By Susan Avery -- Purchasing, 6/12/2008 2:00:00 AM
Travel buyers agree: Mandating that employees use a corporate card to pay for air travel, hotel rooms and rental cars is a best practice. Not only does the use of a corporate card make payment easier for employees, it also provides more detailed spend data so purchasing can manage compliance to travel policy and leverage in negotiations with airlines, hotels and other travel services suppliers.
The practice is, in fact, identified in The 2006 Corporate Travel Card Benchmark Survey Results report by Richard Palmer and Mahendra Gupta. "Data," says Palmer, "is the real value of the card."
Card companies American Express, Visa and MasterCard and issuing banks recognize that value and are enhancing their product offerings to meet increased demands from travel buyers. They're working to improve quality and quantity of spend information they provide and also introducing cards to pay for meeting expenses. They're also adding features and capabilities specifically for travel buyers at midmarket companies while also tailoring programs for multinational companies. Plus, they're adding perks for road warriors.
Purchasing influence. As senior business leader for U.S. large market commercial solutions at Visa in San Francisco, Janet Zablock sees more purchasing operations take on responsibility for travel. In their roles, the buyers work to encourage employees to comply with travel policy and use preferred suppliers. Meeting commitments of agreements with the suppliers helps ensure their companies receive negotiated discounts.
Many companies' travel policies mandate travelers use the preferred credit card. Most, in fact, have formal card programs. One driver: Sarbanes-Oxley requirements for which spend visibility is an imperative. Another: More companies are using automated expense reporting tools. Spend data generated by the cards pre-populates the tools, helping streamline processes and improve efficiency.
As a result, Zablock says buyers are asking card companies for more and better, or enhanced, data on air, hotel, car rental and other spending. While airlines have supplied such data for some time, more hotels are starting to provide detailed information on traveler stays that include a break out of spending by category such as rooms, meals, Internet access, etc.
"Providing clients with a single source of data gives visibility into the travel and entertainment spend," says Zablock, adding that more suppliers such as cab companies now accept cards; the data helps provide an even more complete spend picture.
New for many companies is purchasing involvement in the meetings spend. Again, in the quest for data, travel buyers are looking to card companies for products that help manage these expenses. Are especially popular payment tool for meetings is the purchasing card or a corporate card with a spending limit, says Zablock, adding that Visa has plans to launch a meetings card.
For travel buyers who work at companies with annual sales that place them in the middle market, Visa has published a guide on controls and compliance. The company's customers in this sector typically use its one-card product, which has both corporate and p-card functionality.
Dashboard. Working with global distribution services (GDS) companies (providers of reservation systems such as Sabre and Amadeus), MasterCard has capability to provide level-three data (line item detail) on air travel to its corporate-card customers. It typically sends the data directly to their ERP (enterprise resource planning) or expense management systems.
The card program also is able to match traveler spend data from more than 11,000 hotels with payment records, providing customers detailed information on a traveler's stay by category. Buyers use the data in negotiations with hotels, and to prepopulate expense reports or reports that run off the expense reports. The benefit: process efficiency.
"Companies don't want executives on the road spending time doing expense reports when they could be meeting with customers," says Marcie Verdin, senior vice president, large market segment commercial products at MasterCard Worldwide in Purchase, N.Y.
MasterCard has developed a dashboard that displays all this spend data in an easy-to-read format. It launched the new product at the Association of Corporate Travel Executives (ACTE) annual meeting last year and plans to formally introduce it this spring.
One feature of the dashboard buyers especially like, Verdin says, is the information it provides on percentage of business, or market share, their company does with a supplier. "It's really powerful," she says. "The dashboard puts data in the hands of buyers to take into negotiations and better manage travel policy and compliance."
At the same time, travel managers are asking for data on their companies' meeting spending. Now, they are mainly using purchasing cards to pay for meetings because p-cards have more spend controls than corporate cards. (P-cards have features that can block spending with certain suppliers.) Also popular is a declining-balance card that gives meeting planners a pre-approved spend limit and prepaid cards for employees who travel infrequently but do attend occasional off-site meetings.
Research by MasterCard shows one third of U.S.- and European-based multinational companies have adopted multinational corporate-card programs. Of those that have not, more than 21% are planning to or considering doing the same. While buyers are working to export best practices, the move has its challenges. Among them: In some European cultures, it's insulting to be issued a credit card with individual liability. Employees don't want their companies to have visibility into their finances. Another: Many companies in Europe tend to have centrally billed air programs.
Looking for much of the same data on travel spending for many of the same reasons as travel buyers at large companies, midmarket companies are using the MasterCard multicard product and its SmartData reporting product.
Meetings and midmarket. "Companies continue to leverage corporate cards in order to get data and information on their spending to better negotiate savings with suppliers," says Eduardo Vergara, senior vice president, global commercial card and services at American Express in New York.
To that end, American Express is helping its clients to gather data on the meeting management spend through its work with StarCite in Philadelphia. The card company has integrated its payment and reconciliation and reporting capabilities into the meetings management company's meeting planning process. The two companies introduced the new tool in the U.S. late in 2007, and expect eventually to expand the offering to other regions.
For the midmarket, American Express offers co-branded corporate cards, such as the Business ExtrAA card which provides rebates and other savings on air travel. Another program, Savings at Work, provides rebates and savings from other suppliers such as hotels and car rental companies.
"Smaller companies look for many of the same things in a card program as larger companies," says Vergara. "That is, spend data for negotiations with suppliers. The co-branded card program provides a discount with a supplier that they probably could not negotiate for themselves, given their size. It's pre-negotiated savings."
Likewise, card issuer JPMorgan's new corporate platinum and gold card programs feature such benefits as VIP airport lounge access, VIP luggage delivery, concierge services, travel accident and lost luggage insurance coverage and emergency medical and dental coverage.
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