Stages of Travel Management Excellence

1. TRAVEL ANALYTICS INC Stages of Travel Management Excellence Strategies for Advancing Your Travel Programme Presented by Scott Gillespie, CEO

2. Today’s Agenda • Credentials • The Stages of Excellence Framework • Application and Limitations • Elements and Criteria • Discussion

3. Scott Gillespie’s Background • Founded Travel Analytics in 1999 • Developed TANGO™ and BRAVO™ for airline sourcing projects • Analyzed in excess of $10 Billion of annual air spend • Recipient of ACTE’s Industry Professionalism and Distinguished Fellow honors • Named by Business Travel News as one of the travel industry’s most influential executives • A.T. Kearney’s expert in strategic sourcing of travel suppliers from 1994 -1999 • MBA, University of Chicago

4. Past and Current Clients • Hewlett-Packard • Hoffman LaRoche • Invensys • International Monetary Fund • Lockheed Martin • Microsoft • Lucent Technologies • Proctor & Gamble • Nortel Networks • PricewaterhouseCoopers • Saint Gobain • AXA • Capital One • Coca-Cola • Chevron • Compaq • DaimlerChrysler • Dell Computer • John Deere • Ernst & Young • ExxonMobil • Ford

5. Stages of Excellence For Travel Management The Framework

6. 50%? 25%? 20%? 5%? Poor Fair Good Great How Many Good Travel Programmes Are Out There?

7. Stage 4 Stage 3 Stage 2 Stage 1 How Do Travel Programs Evolve? World class program; Great support, Excellent results By taking a series of prioritized and often difficult steps Advanced travel program; good support Basic travel program; limited support No real travel program; mostly fighting fires Right…What are those steps, exactly?

8. The Answers Are Not Clear…But The Method Is • The travel/procurement team must agree on a basic strategy and key goals • What is realistically achievable? • What does our company expect? • Requires a rigorous assessment of current program, practices, processes and stakeholders • Managers must prioritize costs and benefits of each potential improvement Managers need a useful framework

9. Illustrative Dimensions None or part-time None or ad hoc Vocal but uninvolved Respond to problems None or ad hoc Travel manager Travel policies Senior management Major goals Procurement strategy Criteria Stages of Excellence Framework Stage 4 Stage 2 Stage 3 Stage 1 Functional specialists Regular business case reviews Engaged and supportive Support the Business Strategic sourcing Full-time Written, low to moderate enforcement Occasional bursts of involvement Keep the noise down Keep making promises Category specialists Moderate to strong enforcement Predictable support Operational excellence Focus only on price Better

10. 14 Major Dimensions • Suppliers • Transient Management • Group Management • Data • Travelers • Demand Management • Travel Organization • Senior Management • Travel Strategy • Goals • Travel Policy • Feedback • Controls • Procurement

11. Organized Into Four Quadrants Roadmap Engine Procurement Suppliers Transient Management Groups Management Data Senior Management Travel Strategy Goals Steering Wheel Drivers Travelers Demand Management Travel Organization Travel Policy Feedback Controls Similar to a Balanced Scorecard

12. Dimensions Criteria Senior Management Travel Strategy Goals Goals are meaningful and aggressive Goals are hard to measure Goals are easy to measure No goals Elements Traveler Satisfaction Agency Operations 3 3 1 1 2 2 4 4 Better Stage 4 Stage 1 Three Levels of Analysis

13. Stage 1 Stage 4 Criteria Dimension Goals are meaningful and aggressive Goals are hard to measure Goals are easy to measure No goals Goals Elements Traveler Satisfaction Agency Operations 3 3 1 1 2 2 4 4 Each Element and Dimension Is Scored Can score 2.5 or 3.3 etc. Average Goal Score: 2.0

14. Stages of Excellence For Travel Management Application and Limitations

15. Stage 1 Stage 4 Goals are meaningful and aggressive Goals are hard to measure Goals are easy to measure No goals Goals Elements Traveler Satisfaction Agency Operations 3 3 1 1 2 2 4 4 Weak Points Can Be Addressed Is this a priority? Will it clearly help us? What goals should we use? How are we going to measure them?

16. Procurement Suppliers Transient Management Groups Management Data 2.5 Senior Management Travel Strategy Goals 2.0 1.8 1.6 3.4 1.2 1.0 2.7 Average: 2.3 Average: 1.6 Travelers Demand Management Travel Organization Travel Policy Feedback Controls 2.4 2.6 2.8 1.4 3.1 3.6 Average: 2.5 Average: 2.8 Scores Can Be Summarized Engine Roadmap Steering Wheel Drivers

17. Roadmap Engine Today Goal Today Goal Peers Peers Steering Wheel Drivers 4 4 4 4 3 3 3 3 2 2 2 2 1 1 1 1 Today Goal Peers Today Goal Peers Priorities Can Be Set Priority 2 Priority 1

18. Entire Programs Can Be Compared Stage 4 Stage 3 Stage 2 Stage 1 A B C D E F G Company Codes

19. And More Importantly – Improved! Goal Today Stage 4 Stage 3 Stage 2 Stage 1 A B C D E F G Company Codes

20. How Is This Different From Benchmarking? • Most benchmarking statistics are descriptive • “Our average ticket price is $375 vs. peer group’s $344” • “Our travel agency configuration is a single reservation center; 63% of our peers use on-site agencies” • Descriptive statistics are not often prescriptive • Should your average ticket price be lower? • Should you use on-site agencies? Stages of Excellence are designed to be prescriptive

21. Limitations to Stages Of Excellence • The Dimensions, Elements and Criteria were developed by Travel Analytics • There are many other possible views • Requires honest self-assessment • Scoring depends on assigned weights • The path to improvement is not always obvious • Must often ask “What do we need to do to improve this score?” Stages of Excellence is a rigorous and objective – but not perfect – diagnostic tool

22. Stages of Excellence for Travel Management Elements and Criteria

23. Roadmap Engine Procurement Suppliers Transient Management Groups Management Data Senior Management (4) Travel Strategy (6) Goals (8) Steering Wheel Drivers Travelers Demand Management Travel Organization Travel Policy Feedback Controls ( ) = Number of Elements

24. Significant use; very effective Solid understanding of most key issues; views Travel strategically Strong and consistent support and enforcement Ownership is very clear SM1. Understanding of Travel Management SM4. Utilization of a Travel Council SM3. Support and Enforcement SM2. Ownership of Travel Management No Travel Council Little or no support or enforcement Little or no understanding of the basic issues Nobody owns Travel Limited use; not very effective Ownership is not very clear Basic understanding, but struggles with making decisions Support and enforcement is fairly weak and inconsistent Consistent but moderate support and enforcement Basic understanding; makes good decisions Moderate use; fairly effective Ownership is fairly clear Senior Management Stage 1 Stage 2 Stage 3 Stage 4

25. Significantly Significantly Significantly TS1. Travel viewed as a factor for business success TS2. Travel viewed as a factor in employee retention and productivity TS3. Travel viewed as a controllable cost Not at all Not at all Not at all Slightly Slightly Slightly Moderately Moderately Moderately Travel Strategy, part 1 Stage 1 Stage 2 Stage 3 Stage 4

26. Excellent Excellent Excellent TS4. Success at budgeting travel costs TS5. Success at tracking and reporting travel cost savings TS6. Success at getting major travel management initiatives approved Little or none Little or none Little or none Somewhat limited Somewhat limited Somewhat limited Generally good Generally good Generally good Travel Strategy, part 2 Stage 1 Stage 2 Stage 3 Stage 4

27. Meaningful; aggressive but achievable Meaningful; aggressive but achievable Meaningful; aggressive but achievable Meaningful; aggressive but achievable G3. Policy compliance G4. Agency performance G1. Traveler satisfaction G2. Senior management satisfaction No goals No goals No goals No goals Exist, but hard to measure Exist, but hard to measure Exist, but hard to measure Exist, but hard to measure Fairly easy to measure Fairly easy to measure Fairly easy to measure Fairly easy to measure Goals, part 1 Stage 1 Stage 2 Stage 3 Stage 4

28. Meaningful; aggressive but achievable Meaningful; aggressive but achievable Meaningful; aggressive but achievable Meaningful; aggressive but achievable G8. Financial performance G7. Supplier performance G5. Self-booking adoption G6. Contract compliance No goals No goals No goals No goals Exist, but hard to measure Exist, but hard to measure Exist, but hard to measure Exist, but hard to measure Fairly easy to measure Fairly easy to measure Fairly easy to measure Fairly easy to measure Goals, part 2 Stage 1 Stage 2 Stage 3 Stage 4

29. Roadmap Engine Procurement Suppliers Transient Management Groups Management Data Senior Management (4) Travel Strategy (6) Goals (8) Steering Wheel Drivers Travelers Demand Management Travel Organization Travel Policy (3) Feedback (8) Controls (4) ( ) = Number of Elements

30. Strong consequences Very specific Very specific TP1. Quality of travel to be purchased TP2. Processes to be used for purchasing travel TP3. Typical consequences of not complying with a key travel policy Little or no guidelines Little or no consequences Little or no guidelines Minor consequences General guidelines General guidelines Fairly specific Fairly specific Moderate consequences Travel Policy Stage 1 Stage 2 Stage 3 Stage 4

31. Clearly drives future actions F1. Traveler satisfaction Little or none sought Obtained irregularly Obtained regularly Clearly drives future actions F2. Senior management satisfaction Little or none sought Obtained irregularly Obtained regularly Clearly drives future actions F3. Policy compliance Little or none sought Obtained irregularly Obtained regularly Clearly drives future actions F4. Agency performance Little or none sought Obtained irregularly Obtained regularly Feedback, part 1 Stage 1 Stage 2 Stage 3 Stage 4

32. Clearly drives future actions F5. Self-booking adoption Little or none sought Obtained irregularly Obtained regularly Clearly drives future actions F6. Contract compliance Little or none sought Obtained irregularly Obtained regularly Clearly drives future actions F7. Supplier performance Little or none sought Obtained irregularly Obtained regularly Clearly drives future actions F8. Financial performance Little or none sought Obtained irregularly Obtained regularly Feedback, part 2 Stage 1 Stage 2 Stage 3 Stage 4

33. Significant ability Preferred suppliers automatically prioritized based on contract needs Very hard to obtain; reported to senior management Significant ability C4. Ability to pass travel costs onto business units C1. Exceptions to travel policies C2. Supplier preferencing at point of sale C3. Ability to move business away from key suppliers Easy to obtain; not tracked or reported Little or none Little or no ability Little or no ability Agents are expected to sell preferred suppliers Fairly limited ability Fairly limited ability Fairly easy to obtain; tracked and reported Fairly hard to obtain; tracked and reported Preferred suppliers identified automatically at Point of Sale Moderate ability Moderate ability Controls Stage 1 Stage 2 Stage 3 Stage 4

34. Roadmap Engine Procurement (7) Suppliers (4) Transient Management (5) Groups Management (4) Data (5) Senior Management (4) Travel Strategy (6) Goals (8) Steering Wheel Drivers Travelers Demand Management Travel Organization Travel Policy (3) Feedback (8) Controls (4) ( ) = Number of Elements

35. Strategic sourcing process; directed by senior management Use sophisticated cost/pricing models Use of quality scoring models and traveler feedback P3. Analysis of quality P1. Tender or RFP process P2. Analysis of pricing No analysis Very informal Informal; back of the envelope Benchmarking of key rates, city pairs, etc. Limited analysis; mostly rely upon supplier’s reputation Require proposals; but have rolling contracts Fairly detailed analysis of RFP/tender responses Formal sourcing process Detailed comparisons of bids and current contracts Significant analysis; tied clearly to procurement decisions P4. Analysis of risk (implementation, contract cancellation, traveler dissatisfaction No real analysis Limited analysis; primarily based on judgment Fairly detailed analysis combined with judgment Procurement, part 1 Stage 1 Stage 2 Stage 3 Stage 4

36. Moderate to significant input; issues resolved quickly Decision rules established prior to receiving bids Significant integration P5. Travel’s integration with Procurement P6. Basis for awarding contracts P7. Legal department’s input No integration None Primarily based on relationships Minimal review of contracts and bids Minimal integration Primarily based on price Moderate integration Suppliers evaluated on total cost, quality and risk Moderate to significant input, but time-consuming Procurement, part 2 Stage 1 Stage 2 Stage 3 Stage 4

37. Delighted Delighted Delighted Delighted S4. Current pricing S3. Quality of people assigned to your account S1. Delivery of expected level of service S2. Resolution of traveler complaints and other operational issues Very or mostly dissatisfied Very or mostly dissatisfied Very or mostly dissatisfied Very or mostly dissatisfied Fairly satisfied Fairly satisfied Fairly satisfied Fairly satisfied Very satisfied Very satisfied Very satisfied Very satisfied Suppliers Stage 1 Stage 2 Stage 3 Stage 4

38. Significant and sustained improvements Trusted as an objective and proactive source of excellent advice Mostly consolidated at regional level Delighted Able to easily control preferred supplier market share TM2. Ability to control the point of sale TM5. Agency as a trusted advisor or consultant TM3. Agency service quality TM1. Agency consolidation TM4. Agency productivity Very little consolidation Poor or very inconsistent Not used in this capacity Little or none Not measured or getting worse Some consolidation; mostly in major countries Counselors trained to sell preferred suppliers, but are fairly passive Fairly satisfied Fairly stable Use is limited mostly to agency operational issues Some recent improvements Provides practical advice on a range of issues Mostly consolidated at country level Counselors actively sell preferred suppliers Very satisfied Transient Management Stage 1 Stage 2 Stage 3 Stage 4

39. Standardized processes for most all events; very effective Fairly easy for most large and medium events Very good for most events of all sizes GM planners have very strong communication network GM4. Processes for planning, sourcing and managing GM events GM3. Centralized visibility of GM events GM1. Ability to measure GM spend GM2. Communication between internal GM planners Little or none Unable; difficult for even major events No or few standardized processes Little or none Very basic ability for most large events Fairly fragmented; not well organized Standardized processes only for large events Limited to major events Fairly good for most large and medium events Fairly easy for most large events Standardized processes for most large and medium events Well organized network; effective communications Group Management (GM) Stage 1 Stage 2 Stage 3 Stage 4

40. Excellent reports and analyses Visibility of 90+% room nights by property Very easy and fast; good data quality Daily dashboard reports on all key metrics D2. Airline data D4. Agency data D1. Ability to consolidate enterprise-wide travel spending D3. Hotel data Mostly limited to agency bookings; 40+% missing Very difficult; poor data quality Very limited; long delays None or limited Basic monthly or quarterly reports Fairly difficult; data quality questionable Mostly limited to agency bookings; 20-40% missing Basic reports; moderate delays Informative reports available weekly Visibility of 80+% room nights by property Fairly easy; good data quality Good reports; fairly timely; useful Delighted D5. Other information needed for managing travel Very or fairly dissatisfied Fairly satisfied Very satisfied Data / Information Stage 1 Stage 2 Stage 3 Stage 4

41. Roadmap Engine Procurement (7) Suppliers (4) Transient Management (5) Groups Management (4) Data (5) Senior Management (4) Travel Strategy (6) Goals (8) Steering Wheel Drivers Travelers (4) Demand Management (4) Travel Organization (4) Travel Policy (3) Feedback (8) Controls (4) ( ) = Number of Elements

42. Fairly high opinion; clearly respected Strong awareness Moderate or significant input sought; clearly effective Strong; over 95% T4. Opinion of Travel department T3. Input on travel policies and suppliers T1. Awareness of travel policies and preferred suppliers T2. Compliance with key travel policies Generally not solicited Little or no awareness Low opinion Low; less than 65% Moderate awareness Moderate; between 65 and 80% No opinion, or somewhat mixed Limited input sought Moderate input sought Good awareness Generally favorable Good; between 80 and 95% Travelers Stage 1 Stage 2 Stage 3 Stage 4

43. Significant efforts or cooperation with other departments Very easy Pre-trip authorization and post-trip evaluation Specific criteria suited to job DM4. Promotion of non-travel alternatives DM3. System for evaluating a trip’s value DM1. Ability to eliminate unnecessary trips before they are taken DM2. Guidelines for evaluating the need for a trip None Very difficult None; not in scope None Somewhat difficult Basic, such as use good judgment Limited efforts Post-trip evaluation or report Pre-trip authorization Fairly easy Moderate efforts Fairly useful guidelines Demand Management Stage 1 Stage 2 Stage 3 Stage 4

44. Travel department viewed as a desirable career stepping stone Very easy Very easy to recruit highly effective people Staffed mostly by very effective people TO4. Career Advancement TO3. Recruiting TO1. Ability to execute major new policies, projects and initiatives TO2. Staffing Fairly difficult to recruit effective people Very difficult Travel department viewed as unattractive Staffed mostly by fairly ineffective people Somewhat difficult Staffed mostly by fairly effective people Limited advancement opportunities Fairly easy to recruit effective people Very easy to recruit effective people Fairly easy Regular advancement opportunities Staffed mostly by effective people Travel Organization Stage 1 Stage 2 Stage 3 Stage 4

45. Where Do We Go From Here? • Score your program • Should generate deep discussions and frank assessments • Many companies will not like their scores • Organize confidential comparisons • Travel management companies or consultants can lead these efforts • Develop specific goals and priorities for your program • Measure results year to year

46. We Can Go From Here… 50%? 25%? 20%? 5%? Poor Fair Good Great

47. …To Here! 50% 25% 20% 5% Stage1 Stage 2 Stage 3 Stage 4

48. Thank You! For a copy of this presentation and the accompanying scoring tool, please visit our Free Tools page at www.travelanalytics.com Or send an e-mail to: Scott.Gillespie@travelanalytics.com