OVATION TRAVEL – AN EXPERT IN INCREASING TRAVEL REVENUES
Background:
After seven years in frontline operations at several of New York’s top Travel Management Companies (TMCs), Lee Coltman landed at Ovation Travel, the prestigious agency handling the country’s top law firms, where he was asked by the COO to develop a program to increase revenue derived from airline overrides.
The compensation paid by airlines for support via superior market share compared to peers was becoming increasingly critical to the viability of TMCs. Support of the supplementary corporate contract between the TMC client and the airline for their own upfront fare discounts was also critical to compliance and maintaining the status quo.
Market share-based vendor agreements are generally centered on an ineffective “good faith” arrangement. If a new program was to be successful, a different approach was needed to persuade the airlines of the agency’s intent so they could provide the additional support necessary to assist in increasing market share.
Solution:
Existing contracts did not have to be rewritten. A greater emphasis on across-the-board cooperation was required, and all that was needed was for Ovation Travel to deliver on the agreed upon terms.
The program strategy was broken into five components.
- Provide instantaneous notification – With the CIO devise, build and implement companywide software (Marketmax) interfacing with the Global Distribution System (GDS) that would instantaneously notify the program administrator both visually and audibly of all non-preferred airline and hotel reservations made by the travel counselor. The program administrator would then reference the Passenger Name Record (PNR) checking User Definable Interface Data (UDID) fields for any number of coded entries documented by the travel counselor as to why a non-preferred carrier had been booked. Canned entries such as “scheduling conflict” or “fare descrepency” would be typical. A high priority was put on key “driving” markets as outlined in the vendor agreement. The program administrator would make an evaluation as to what options were available to the travel counselor to make practical changes for agreement compliance. If a change was to be made, speed was of the essence, and options for changes were either communicated verbally or via e-mail. An automated e-mail would always be sent to the travel counselor advising them a non-preferred reservation had been made and reminding them of the preferred vendor in that market.
- Identify preferred vendors and markets – For Travel Counselors implement a point-of-sale GDS highlighter to supplement Marketmax identifying preferred vendors in key markets. A convenient visual prompt was necessary.
- Offer incentives – Introduce a generous travel counselor incentive (temporary) to kick start the program and encourage the sale of preferred vendors.
- Provide education – Create a classroom-type education program for travel counselors to instruct on program goals and techniques to help the corporate travel buyer and traveler make the right decision on preferred vendors per the terms of all agency and corporate agreements. These sessions also would give the travel counselor a better understanding and appreciation of the industry financials.
- Show results – Demonstrate the potential of Marketmax to all current and prospective preferred vendors and the objective of the program overall.
For the program to be a success, an affirmation of support was required from the preferred vendors. Airline support is usually in the form of upgrades, waivers and favors and upgraded frequent flier status. Support from preferred hotels can be negotiated directly into the rate agreement in the form of room upgrades, Internet access, airport transportation, complimentary breakfast and other additional amenities. Support is generally misused by the agency community often used as a perk for their clients. The real purpose of these tools is to drive market share by moving passengers from one airline or hotel to another.
Results:
Within three months of program implementation, the agency’s override performance on their primary preferred carrier increased from 101% to 149% of peer and maximizing at 5% payout. At the same time, it similarly enhanced the common client vendor agreement and the relationship, now viewed more favorably, enabled more support and rewards in the form of greater agreement discounts. A new model was built showcasing the benefits of agency, client and vendor cooperation.
As an extension of this program, Lee Coltman took on the entire process of all agency and client vendor contract negotiations and the role of day-to-day maintenance. He also developed a preferred vendor awareness program – a far reaching, more beneficial version of the commonly known “familiarization trip” to train travel counselors on vendor product and practical destination knowledge. Several vendor-sponsored trips were organized for groups of up to 25. Comprehensive education programs were organized that included destinations in the United States and major European cities and involved contributing services from agency preferred vendors airline, ground transportation companies and hotels. The program was a blueprint for end-to-end events management, and served as a precursor to the development of the Strategic Meetings Management project at Henry Schein, Inc.
Ovation Corporate Travel is an independently owned, $900 million travel management company with experienced travel consultant teams in more than 90 locations throughout the United States. Ovation provides global travel management through affiliation with BCD Travel, the 3rd largest travel management firm in the world operating in 90 countries.