Travel procurement has role in corporate strategy as companies expand globally
By Susan Avery -- Purchasing, 8/14/2008 2:00:00 AM
In may, commerce Secretary Carlos Gutierrez named new members to the U.S. Travel and Tourism Advisory Board. Among them was Sam Gilliland, chairman and CEO of Sabre Holdings in Southlake, Texas. The 15-member Board advises the Secretary on government policies and programs that affect the U.S. travel and tourism industry.
Sabre Holdings is the parent company of Travelocity, Sabre Travel Network and Sabre Airline Solutions. Gilliland has been with Sabre for 20 years and was named president and CEO in 2003.
In a recent interview with Purchasing, Gilliland spoke of topics of interest to corporate travel buyers that may come before the board, the critical role travel procurement plays in a company's strategic plans and ways emerging technology can help improve efficiencies related to the buying process as well as the traveler experience.
PURCHASING: What are your thoughts on travel and procurement converging and what do you see as benefits of the move to a company?
SAM GILLILAND: It is a logical move simply because travel can be such a large part of a company's annual spend. Depending on the company, travel can be one of its top three controllable expenses. It just makes sense.
Having procurement be responsible for the spend gives travel more visibility within a company as well as the discipline's inherent rigor. Travel deserves that. More companies are expanding their operations globally, which adds complexity to the travel spend and the behavior of employees who travel.
If the company has a presence in China or India, it's important that travel procurement be supportive of that. One way travel managers can do that is through preferred supplier programs they put in place.
PURCHASING: Does the trend have an impact on the travel industry?
GILLILAND: Yes. Consider the airlines as an example. In the past, the airlines had a lot of data available to them as they went into negotiations with corporations. What's different now is that corporations also have data available around their travel patterns and buying volumes that can be really helpful as they negotiate agreements with the airlines or the hotels.
PURCHASING: Procurement professionals tend to focus on costs and how to best manage costs. What are some ways that travel buyers can better manage costs now and in 2009?
GILLILAND: We see travel managers benchmarking costs at their companies with those of other companies, and they are looking to adopt best practices in use of technology tools and service levels. They do some of this with suppliers through the RFP (request for proposal) process. This isn't new to the procurement discipline, but, in some cases, it is for travel.
Travel managers are looking at individual elements of the business process or value chain and are identifying inefficiencies. They're working to get at the root cause which may mean they need to redefine travel policy and better manage compliance or deploy new technology tools to better manage costs. For instance, a lot of companies are gaining efficiencies and reducing costs through touchless transactions or using a self-booking tool.
PURCHASING: In the current economic environment, how can travel buyers best prepare for negotiations with suppliers for 2009?
GILLILAND: Capturing and tracking data is huge for travel managers particularly now as we see travel get more and more expensive. That's an obvious point, given oil prices. So, it's important as travel managers prepare for negotiations to know their programs and be able to demonstrate that they can move market share to preferred suppliers.
Travel managers also need to be sure they have accurately priced content or inventory for their programs. Take hotels for instance. Obviously, travel managers want travelers to stay in a hotel that's safe and comfortable, but it's also important that the company pays the price they negotiated. A lot of times, companies will put emphasis on choosing the right hotels for employees and then there's breakage on the back end of the process, meaning negotiated hotel rates are not loaded into the system.
PURCHASING: It's summer, a time of frequent delays for travelers at the airport. What advice do you have for travel managers to help alleviate the stress they and their internal customers may experience? What sources can they turn to for help?
GILLILAND: Let's start with a longer term objective then come back to the short term. Certainly airlines in particular get a lot of negative press around their service offerings. As travel is elevated in a corporation, it is important for procurement, travel managers, to voice their opinions on air travel in the U.S. And it is a much higher level issue than at first glance. Some of the problems are outside the control of the airlines. For instance, our air traffic control program is outdated and in some ways both the airlines and travelers are victims. And airports are congested. That's less of an airline and more of an infrastructure issue.
There are opportunities for corporations to voice their opinions and that corporate voice is huge. After all, business travel is the meat and potatoes of the airline industry. Travel managers need to keep the airlines aware of trouble spots. If they have large volumes of people traveling between two cities and it's not working for them, they need to let their account manager know. Corporations large and small with particularly concentrated volumes between origin and destination cities can have a very strong voice with the airlines. They will listen.
Short-term, how a travel manager handles delays is related to service levels they negotiate and define with suppliers, both the travel management company (TMC) and the airline. It is important to set up front service expectations with suppliers if there is disruption in an employee's travel, and to determine at which point the TMC will contract the traveler or arranger about delays. There are mobile technology tools that work nicely here.
PURCHASING: What role does technology play in the corporate travel buy?
GILLILAND: Technology plays several roles. The first is to ensure that travelers have appropriate choices when making travel plans. Online booking tools fill this role, and can also help to reduce costs (i.e., alerting travelers that they have unused airline tickets). The second is to improve efficiency, as in automating the RFP process or auditing hotel room rates.
PURCHASING: How is this going to change in the next year? The next five years?
GILLILAND: Technology plays a third role. It can help travel managers improve service for travelers. There are emerging technologies, social networking applications, that make sense in the travel marketplace. The applications are based on the idea of peer to peer communication across a company. Say an employee is traveling to the company's Tampa office. The travel manager may have selected eight hotels in the Tampa area, but employees quickly learn to recognize the best place to stay and they gravitate towards it. It may be because the hotel is close to the office or near some good restaurants. If we can offer a tool for employees who have been to the Tampa office to communicate with those who plan to go it can make the travel experience even better and improve productivity for the traveler. It can help with locating a safe place to run in a city in India or finding something to do during a layover in Frankfurt.
PURCHASING: You were recently named to the U.S. Travel and Tourism Advisory Board. What are some of the issues addressed by the board that may be of interest to corporate travel buyers?
GILLILAND: The advisory board's charter is broadly travel and tourism. It's not just specific to business travel, but obviously when there's an improvement in leisure travel, there's an improvement in business travel and vice versa. Some early things we are looking at is improving the passport and visa process for people coming from other countries to the U.S. and modernizing our country's air traffic control system. We also may get into energy and transportation policies. At the top of my list, and it should be on everyone's, is the high price of sending someone to Europe or Asia. With the price of oil what it is, perhaps there needs to be energy or transportation policy that can be supportive of the industry. I am new to the board, but it is interesting to see how involved Secretary Gutierrez is in these issues and how he views the importance of travel to the U.S. economy.
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