Business Travel News - July 28, 2008 - (Page 6)

NEWS BCD Survey: Clients See Spending To Rise BY SETH HARRIS PROFILES IN TRAVEL MANAGEMENT Retailer Finds The Best Buy For Hotels,Meetings Consumer electronics retailer Best Buy last meetings management program that included year saved more than $7 million by revamping insourcing meeting planners. That effort helped its hotel program sourcing processes, develop- identify group travel that was booked as traning a strategic meetings management program sient and roll 60 percent to 70 percent of the and using its combined $22 milgroup volume into its transient lion to $25 million annual North air contracts. American air volume to negoIn-house planning and tiate with Air Canada for pointbooking gives business units of-sale discounts. visibility into meetings spendRichfield, Minn.-based Best ing, she said. It has halved transBuy aimed to offset hotel rate action costs, and in spite of rishikes by increasing the percenting airfares and an increase in age of midprice properties in its group trips, group air travel has program and concentrating its come in under budget. negotiating efforts on high-volCompliance with Best Buy ume markets, said Traci Tobias, policy language encouraging professional services category 14 days of advance air booking lead for Accenture at Best Buy. is at 90 percent for group travAccenture handles indirect proel versus transient’s 50 percent, curement services, including and average ticket price savTRACI TOBIAS travel, for Best Buy. ings is at 8 percent to 10 perCategory lead for Accenture In the request-for-proposals cent for group air travel, comat Best Buy process, Tobias developed a pared with more than 5 percent new baseline for hotel selection for individual travel. that saved the company $800,000. “We are able to leverage those group conHistorically, Best Buy used a comparison of its tracts that previously weren’t in place because negotiated rate to Business Travel News’ annual we didn’t have the visibility that these were group Corporate Travel Index of U.S. and international transactions,” Tobias said. “We are able to drive per diems as the basis for selecting properties. advance purchase and lowest logical fare through This time around, Tobias combined the potential that process.” savings from negotiated rates—compared to varTwo years ago, Best Buy consolidated its North American business by integrating with its Canadian travel program, which accounts for 25 perCOMPANY: BEST BUY cent of the company’s North American air volHEADQUARTERS: RICHFIELD, MINN. ume. After driving Canadian online booking 2007 N.A.BOOKED AIR VOLUME: $22-$25 MILLION adoption to 60 percent of eligible transactions within a year in a program that previously had ious industry averages—with hotel commissions no self-booking tool, further adoption growth and negotiated free amenities, mainly Internet was a struggle because of Best Buy’s participaand breakfast. Best Buy receives full hotel com- tion in the Air Canada Corporate Pass prepaid missions for its bookings through its travel man- flight segment program, in which corporations purchase segments in bulk offline or through Air agement company, Carlson Wagonlit Travel. “We took a market average from a number of Canada’s Web site to receive negotiated discounts different sources and determined the year-over- (BTNonline, Oct. 23, 2006). year change in each market, and adjusted the At the end of last year, Tobias negotiated with current preferred rate for the projected increase the carrier for discounts at the point of sale, infor 2008,” said Tobias. “We were focusing our atten- cluding through Best Buy’s online booking tool. tion more on those key markets with the major- The discount strategy yielded another additionity of our volume and calculated our savings al 8 or 9 percentage points in the net effective based on our commissions and amenities.” savings rate in Canada. Tobias also led the development of a strategic —Seth Harris More than half of 333 travel buyer respondents to BCD Travel’s eighth annual client travel program survey expect overall travel to increase next year, despite a 2009 projected airfare increase of 8 percent to 10 percent over final 2008 fares. In examining effects of rising prices, capacity cuts, travel pattern changes and policy compliance struggles, BCD recorded in its Insight on Corporate Travel study a massive shift in procurement’s influence over travel, with 74 percent of respondents reporting via procurement, a 30 percentage-point increase from last year’s 219-respondent survey. Less than half said demand will increase in North America and Europe and 70 percent forecasted increases in Asia. “We see fewer U.S. domestic trips, but more trips in the emerging markets, Asia and some parts of Europe,” said BCD Travel executive vice president of global business solutions, sales and marketing Louise Miller. While reducing the overall trip cost is a key objective, many will be hard-pressed to do so with strong price increases expected and 60 percent of respondents having no influence over demand. Meanwhile, BCD Access the 2008 Business Travel and its AdviTravel Buyer’s Handbook to consulting unit see btnonline.com/handbook forecast smaller increases for 2009 U.S. hotel rates. They see domestic room rates increasing up to 3 percent, international room rates to rise 4 percent to 8 percent and car sector costs to increase 2 percent to 6 percent, mainly from fuel and fleet replacement costs. “We have seen softening in rates,” said Advito general manager Mary Ellen George. “Still, hoteliers have been good at pulling contracts if you can’t deliver on your room nights. We haven’t seen it yet in the major cities, but it isn’t going to be the same negotiating climate as last year.” The survey also showed 23 percent of buyers citing as their top air challenge obtaining effective discount levels, and 57 percent claiming air compliance of more than 70 percent, an 8 percentage-point decline from last year. Another 14 percent said their top air challenge was negotiating fee waivers with preferred suppliers. “The days of negotiating a few contracts and checking on them a couple times of year are long over,” George said. “It is a tough climate right now, but if you can prove that you have appropriate measures to drive usage and manage your contracts, you’ll be successful at the negotiating table.” ■ sharris@btnonline.com ■ 6 Monday, July 28, 2008 www.BTNonline.com Business Travel News http://btnonline.com/handbook http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - July 28, 2008

Business Travel News - July 28, 2008
Contents
Inside Track
Profile
Newsmaker
BTN Research
Forum
Aviation
Lodging
Ground Transportation
Meetings Today
Travel Management
Expense/Payment
Destinations
Executive Dashboard
Washington Wire

Business Travel News - July 28, 2008