Convergence. A review from Ultramar's 7th annual Business Travel Forum

The corporate travel industry is addressing the parallel push towards going global and going green with innovative solutions that employ the latest technologies, according to the seventh-annual Ultramar business travel forum. The half-day conference, held in New York City, brought together national leaders in business travel strategy and management who shared their perspectives on the evolution of these significant issues.

“We’re seeing an unprecedented interest in going global, with companies looking to leverage their worldwide spend with best practices in global travel management,” said Peter Klebanow, chairman and CEO of Ultramar Travel Management and worldwide chairman of Globalstar. “At the same time we’re seeing a strong interest in going green – the push for environmentally-sound solutions is coming at us fast. The best ideas understand the need for global solutions to corporate travel management; recognize the demand for those solutions to incorporate environmentally-responsible tools; and utilize the latest technology to do so. I’m excited by the ideas shared at our forum and look forward to putting them into action for our clients.”
 
Drivers of Globalization
Susan Steinbrink, senior research and corporate market analyst with PhoCusWright, an authority on travel industry research and market intelligence, began by describing the drivers towards the globalization of travel – from increasing business intelligence (that enables companies to leverage suppliers) to improving company processes (thereby improving efficiency).

“There are no absolutes in global travel management,” said Steinbrink, “But every company can apply best practices to balance local and global needs. As demand for U.S. goods increases, companies have to go global to compete. We’re only going to see a greater need for U.S. companies to adopt a thoughtful global travel strategy to best manage their resources.”

Additional drivers of globalized travel are far reaching, and range from the growing middle class in India and China, to increased sensitivity on green travel and awareness of the carbon footprint, to technological advancements like online booking and using mobile, to regulatory changes and relaxation of some visa requirements.

Steinbrink also described the barriers to global travel, from corporate dynamics and the focus on procurement to cultural nuances. She shared that as companies become better equipped to manage their global travel spend, and recognize that travel is a determining factor for value and profit margins, they will become more global and more strategic in their approach.

Global travel programs cannot be one size fits all, because not every market is equally ready for globalization opportunities. Steinbrink shared PhoCusWright’s data on the readiness of the world’s markets, revealing that the United Kingdom, Australia and Scandinavian countries have the greatest readiness on factors including online services, comfort with online credit card usage, a corporate culture that supports online booking tools, and sophistication of travel management. The countries that offer the least market readiness are Japan, China, Italy and Spain, with India making great strides towards readiness.
Steinbrink shared that the average savings from a global travel program can range from 15 to 25 percent. She broke out specific opportunities for cost management, including:

•    standardizing policy and buying processes, which can yield 10-20% in savings
•    centralized access to content through online point of service technology, which can yield up to 15% in savings
•    leveraging spend volume though consolidated sourcing with suppliers, which can yield 5-10% in savings.

She described other means of cost savings, including effective data consolidation for performance monitoring, traveler tracking, and safety and emergency risk management.

Steinbrink also discussed the critical steps towards putting a consolidated global travel plan into action, including:

•    gaining corporate support and buy-in,
•    rolling out in stages,
•    standardizing operating procedures (but still allowing for cultural flexibility and regional best practices), and
•    incorporating a “follow-the-sun” approach.

The Demand for Green
Michael Gresty, president of Kinetix Business Ecology, a sustainability expert, shared his perspective on the inevitable march of global warming and its impact on global travel needs. Gresty shared the philosophy that societies must be successful for companies to succeed, and that the latest global data indicates that consumers want to patronize companies that respect and understand global issues. With the global costs of managing climate-induced catastrophes bound to rise, even with better management of climate issues, shareholders and stakeholders are pushing companies to address climate change.

Gresty also described the concept of “peak oil” – the point at which any source of oil reaches its peak of production, and then declines. U.S. oil reserves reached their peak in 1972; global oil production is expected to peak in 2015 and then begin to decline. And the demand for energy and resources is significant – at current rates, the U.S. lifestyle would require three earths to survive. With this in mind, Gresty shared that energy efficiency and global corporate responsibility is critical for any company looking to manage its brand and manage costs in the future.

“We’re already starting to see travel-related service companies taking steps – from in-flight recycling to LEED-certified hotels and hybrid car rentals,” said Gresty. “In the future, companies will do everything they can to cut emissions, from video conferencing to fleet management.”

Gresty described how customer demand for such steps will only increase, and customers will look beyond green awards and labels to ask tough questions. The companies that succeed will create a strategy for building brand equity by demonstrating leadership on corporate social responsibility and environmental impact. He also shared a checklist for evaluating sustainable travel – which by definition, requires offering alternatives to unnecessary travel and reduces the impact of needed travel. The checklist includes establishing a cross-functional working group, measuring impact, educating employees, setting goals, creating initiatives with a working budget, ensuring accountability, and reviewing and communicating progress.

A Green Ground Transportation Solution
Next, Neil Zeller, CEO of New York City-based LimoGreen, a new company offering environmentally-friendly executive travel, described how his company works with industry operators to convert a portion of their fleets to new, alternative fuel vehicles and replace miles driven in polluting, gasoline vehicles with miles driven in cleaner, lower-emission vehicles that promote energy independence.

Zeller described how in New York City, with the world’s best and most highly used public transportation system, there are also a high number of service vehicles on its streets, with black cars and limousines producing 1.5 million tons of carbon dioxide. Developing environmentally-sound solutions to address this impact is now a core operating consideration – and the failure to do so will have a real cost.

“Companies now have the option to choose green vendors, measure impact and demonstrate tangible proof of their efforts,” said Zeller. “We’re seeing that RFPs now require such a commitment to the environment, and we can be part of that solution.”

Zeller provided an overview of the latest relevant energy technologies. The most talked about technology for reducing vehicle impact on the environment is the hybrid, which combines electricity and gas. However the hybrid has some limitations – battery disposal is an unresolved issue, and hybrids still require gasoline, particularly for highway driving. Biofuels are also in development, however while they are renewable, the cost per mile is high, refueling options are limited, and there is some question as to whether there is really a net benefit given the impact on the environment.

Finally, Zeller discussed the benefits of natural gas, which is more popular outside the U.S. Natural gas has low carbon emissions and is delivered by pipeline rather than the higher impact travel and freight required for traditional fuels. While natural gas requires fill stations, thus limiting its current application for the average consumer, this is not an issue for a fleet, which can have its own stations. LimoGreen relies on natural gas, replacing miles in “dirty” vehicles with miles in “clean” vehicles. 

In discussing the criteria by which a company might evaluate a greener ground transportation solution, Zeller shared that while the California’s standards and the federal Environmental Protection Agency offer guidelines, there is no specific standard. He said that significant work is being done now to establish criteria, which he hopes are broad, and underscored the importance of having such standards so that claims of environmental responsibility can be credible and valid.

Global Meeting Management
Lenora Valvo, CEO of Global Executive, took the conversation back to addressing the challenges of global travel, managing global meetings, and what technologies and tools can help companies to improve their oversight and cost-savings.

Valvo gave an overview of the US meeting market, describing an environment where $127 billion will be spent on meetings and events in the US in 2008, attended by 114 million people. She added that the global meeting market is probably twice the U.S. market.

Sharing data for the first time from a study of 300 large firms by IACCM, a global association comprising senior executives in procurement and sourcing from around the world, Valvo described how only 12 percent of companies have centralized their meeting spend, either because it’s not a priority, or because they don’t have the technology to do so. She shared that the top reasons why companies centralize their management of meeting spend are reducing costs and increasing their ability to leverage travel-related costs. As the role and involvement of procurement in meeting planning increases, the push towards more efficient planning and management of global meetings will also increase. Valvo also discussed how meeting planning needs to be a balance between the cost of putting the meeting on with the reason for having the meeting in the first place.

“With new software and technology tools, you can address and balance the needs of revenue growth versus managing your spend,” said Valvo. “The opportunity for savings around event management far exceeds what you might think.”

She shared how procurement will be increasingly involved in overseeing and managing meetings and events spend, ensuring costs are minimized. Technology will empower meeting planners and owners to take responsibility for their own spend, and ensure the success of the outcome.

Industry Evolution
Chris Kroeger, senior vice president for North America of Sabre Travel Network, shared how his company has evolved with the changing needs of the travel industry, developing new technologies to address its demands. Sabre and its networks now handle 19,000 transactions per second – a great snapshot of the state of the industry and the volume managed daily.

Kroeger shared his view of the industry overall, seeing a greater focus in the near future on mobile offerings and greater efficiencies for procurement officers. He also described how some customers want a turnkey, complete solution, where others want to take pieces of what Sabre offers and incorporate them into their own, customized model.

“We provide a range of functionality, but some agencies want to employ specific components to enable other technologies,” said Kroeger.  “Clearly Ultramar is one of the agencies that has the greater technology capability and sophistication to take our offering and fully leverage it for its clients.”

Kroeger also spoke about the convergence of corporate travel with leisure travel, a perspective shared by several of the day’s speakers. He reiterated the movement towards green travel and the convergence of new technologies with sustainable solutions. He also mentioned that the Sabre headquarters in Texas is housed in one of the state’s only LEED-certified buildings.

“We’re looking to collaborate across the industry, and want to find ways to participate in the solution,” added Kroger. “We’re enabling customers to reduce their impact with offsets and credits, by reducing emissions and with GetThere Green’s offerings.”

Empowering the Corporate Traveler
Bev Heinritz, general manager of GetThere, a brand of Sabre holdings, followed Kroeger and shared her company’s 18-24 month product development vision to an external audience for the first time. She presented GetThere’s latest online tools, created to empower the primary users of global travel management, many of which offer advances that are bound to have significant impact when ultimately rolled out.

Heinritz explained how GetThere is creating a new interface and experience that that addresses the unique priorities and needs of the traveler, the travel arranger and the travel/procurement manager.  Heinritz described the key trends impacting corporate travel, including interest in a more personalized, on-demand experience, the need for global travel, the influence of procurement and the increasing focus on environmentally-responsible solutions.

For the traveler, the interface offers a reliable and feature-rich experience that also reflects the influence of procurement – helping travelers to make the right decision about whether to take a trip. She also described how as the offering evolves it will offer the traveler the ability to calculate their carbon footprint and impact of their trip.

For the travel arranger, new tools enable better management of unused tickets, global tracking of travelers en route, and better booking and tracking for groups of travelers. And for the travel/procurement manager, with an increased focus on oversight, GetThere’s interface will enable better cost management, more detailed breakouts of spend by department and region, and the option of pre-trip approval.

“The good news is travelers have thousands of options, the bad news is they need to choose!” said Heinritz.  “But there are ways to narrow their options. We can show the company’s travel policy alongside comparisons of flights versus trains, for example – enabling a decision based on cost as well as environmental impact.”

She added that GetThere would soon enable users to see how altering and extending a trip can also save money for their employer. This offering also creates an opportunity for the convergence of corporate and leisure travel. Heinritz also described the markets where she anticipates the greatest expansion of global travel resources: Brazil, the Middle East, South Africa, India and Central Asia.

The Converging Demand for Global and Green
The forum closed with a panel discussion involving several conference participants about the challenges and best practices in taking a company’s global travel management towards “greener” behavior, led by Jay Campbell, a veteran travel industry journalist and chief content officer of Procurement.Travel magazine. The panel discussed how some companies are already putting green solutions to work, kicking off with a description of best practices by Rosanne Russo, CMP firmwide travel manager for Reed Smith LLP.

Russo described how as she was creating a global travel program the issue of carbon offsets had become front and center – with clients asking what their policy was on the issue. Working with Globalstar and Ultramar to develop a solution, Russo tracks and prepares monthly reports on carbon offsets to her company’s “green committee,” which then evaluates the offsets and determines to what organization the company should make a donation.

Russo added that the interest for a carbon offset initiative is much stronger globally than in the U.S., and that since environmental responsibility is a global issue, it further underscores the drive towards globalizing travel.

PhoCusWright’s Steinbrink added that there’s a “push and a pull” for green behavior. “It’s not just corporations setting policy, but individual travelers having a say and a sense of responsibility that is moving this forward,” she said.

In discussing the potential for future tax breaks for companies that promote going green, LimoGreen’s Zeller recommended that companies look instead to the regulatory climate, finding opportunity in behavior that will reduce taxes rather than achieve credits. “Some green initiatives are cost-saving, some are neutral and some have a real cost,” added Zeller. “But environmentally-responsible behavior can reduce real costs, particularly if in the future companies that don’t take such steps face additional taxes.”

GetThere’s Heinritz added that the movement towards green is just getting started, and that most U.S. efforts are preliminary. She said that companies are looking for measurement tools, and ways to evaluate vendors and feel confident that the actions they take are legitimate and have a real impact.

“I’m impressed by how our industry is committed to such forward thinking,” added Klebanow at the close of the forum. “I doubt there’s another industry that’s undergone such a rapid evolution, and is driving towards further change with such creative and thoughtful solutions. I look forward to continuing this dialogue with our travel industry partners to share best practices and keep moving forward.”

All of the presentations provided by the conference participants can be found here [provide link].

About Ultramar Travel Management
Ultramar is a virtual travel companion for every client, offering highly-responsive, hands-on service from experienced agents, and intuitive technology solutions that enhance communication and support while on the road. We deliver this experience with the help of an exceptional group of dedicated, experienced, and well-trained agents, and our Chairman’s Club which provides concierge-level service to C-suite executives. We also employ sophisticated technology tools that enable us to support our clients in coping with the many stresses of travel, including what we call "active service moments" – offering vital information on flight schedules, or a helping hand with an itinerary when the traveler needs it most. Ultramar has developed strong industry relationships with major airlines, hotels and other suppliers. Peter Klebanow, chairman and CEO of Ultramar, serves as the current chairman of GlobalStar, the leading network of independent travel management firms in which we are a partner, offering our clients local travel expertise around the world. For more information please visit www.ultramartravel.com.