The ABCs of RFPs

April 21, 2015

Robyn Gilmartin is a Project Manager with Carlson Wagonlit’s Air Solutions Group, where she leads engagements assisting global clients with strategy development, vendor selection and air program optimization. Prior to joining the Air Solutions consulting team, she spent 20+ years in the airline industry leading multinational teams in airline/alliance negotiation strategy.

Robyn is a member of GBTA’s Aviation Committee and has served as former Vice President and Board Member of the GBTA Upstate NY Chapter. She completed GBTA’s Global Leadership Program in 2010 and holds an MBA from the University of Buffalo

Presenter Introduction

ROBYN GILMARTIN

Project Manager, Carlson Wagonlit’s Air Solutions Group

Agenda

• 2015 Industry Forecast

• Stakeholder Engagement

• Category Sourcing Dynamics

– Airlines

– Hotels

– Ground Transportation

• Best Practices

• “Special Situations”

• Q&A

2015 Global Travel Price Outlook

Suppliers strategies, sourcing and on-going management

• Spend Analysis

• Opportunity Analysis

• Market Conditions

• Savings Baseline

• Scenarios and right strategy

• Sourcing

• Optimization

Demand & Travelers’ behavior management

• Engagement

• Demand management

• Traveler management

• Business Units and Travelers’ Scorecards

• Tool Preferencing and Gamification

An efficient travel management strategy needs to tackle both suppliers’ and travelers’ perspectives

Dynamics of Airline Category Sourcing

Supplier management: a complex environment

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• Airlines

– Consolidation, JV & Alliances

– Oil prices

– Capacity Right Sizing

– Profitability

– LCCs & New World Carrier Emergence

– Ancillary & Other Fees

Navigating the airline supply base

Characteristics

Opportunities

Challenges

Strategies

Characteristics of the airline supply base

• Supplier consolidation

• Focused on reducing the cost of doing business • Continued development and expansion of alternate revenue streams • Traveler loyalty

Challenges in navigating the airline supply base

• Creating incremental value in

mature programs • Hard to reduce supplier base • Difficult to control ancillary fee and surcharge growth

Opportunities within the airline supply base

• Global consolidation/Supplier

reduction can generate incremental savings from 3-8% • Even with consolidation, suppliers will aggressively pursue share growth when customers can direct business • Manage new cost variables by setting appropriate policies and informing travelers on alternative cost control measures • Using rail as an alternative to air travel in EMEA and APAC

Strategies for navigating the airline supply base

• Supplier reduction can add value and

reduce costs through improved discounts, reduced or eliminated performance targets, and enhanced traveler experience • Pre-payment options and/or full share commitments can generate incremental savings above discounts • Continually manage supplier performance on KPI’s, percent of spend on preferred carriers, spend eligible for discount, emerging markets, markets with significant inflation, and average market costs

Dynamics of Hotel Category Sourcing

Supplier management: a complex environment

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• Hotels

– Fragmentation and Franchise models

– Rebranding

– Inconsistent technologies

– Lack of data

Navigating the hotel supply base

Characteristics

Opportunities

Challenges

Strategies

Characteristics of the hotel supply base

• Fragmented supply base • Program creation and management is arduous • High Growth • Strong brand preference

Challenges in navigating the hotel supply base

• Limited value offered by suppliers • Difficult to shift from incumbent suppliers • Challenging to reduce suppliers • Sellers’ market: competitive sourcing limited

Opportunities within the hotel supply base

• Consolidate and leverage spend and brand preference • Supply base provides multiple service lines (transient, groups, expenses) • Focus on total cost, instead of price (multi category, service, availability, added value for end-users, etc)

Strategies for navigating the hotel supply base

• Leverage concentrated volume to core set

of providers that meet all service requirements • Rethink supplier relationships, focus on strategic partners versus all suppliers • Fine-tune supplier requirements and rank suppliers on ability to meet full range (coverage, multi-category, expenses) and content (added value for travelers) • Leverage multi category supplier alliances • Reduce complexity, build corroborative process improvements to reduce cost of doing business (RFPs)

Dynamics of Ground Transportation Sourcing

Supplier management: a complex environment

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• Ground Transportation

– Rental Car

• Continued Consolidation

• Ancillary charges & fees

• Total Cost of Rental

– Chauffeured Service

• Safety & Security

• Consistent pricing

• Lack of consistent data

Navigating the ground transportation supply base

Characteristics

Opportunities

Challenges

Strategies

Characteristics of the ground transportation supply base

• Rental Car: consolidation, hyper competitive market, pressure to increase corporate rates • Chauffeured services: fragmented, lack of standards, spend visibility, and effective booking procedures • Rail: monopolistic market conditions, limited corporate discounting

Challenges in navigating the ground transportation supply base

• Visibility into total spend and cost • Compliance and monitoring for both travelers and suppliers • Distribution, sourcing and management of chauffeured services and rail • Discounting in rail

Opportunities within the ground transportation supply base

• Reduce leakage/improve overall category compliance • Tackle chauffeured service category • Balance rates with consideration for quality, service, safety/security, and reliability • Include total set of charges in the final price paid

Strategies for navigating the ground transportation supply base

• Capture data • Take advantage of rental car market conditions • Create chauffeured supplier program with safety/insurance requirements and booking procedures • Begin to put some structure around rail program

Best Practices

Optimization

Distribution

RFP & Negotiations

Requirements definition

Best Practices Solutions and Methodology

Understand Client travel policy and

objectives Incorporate

travelers’ needs and patterns Strategic

recommendations (sourcing, policy,

travelers’ behavior)

Create solicitation list Prepare and

launch RFP Support suppliers

management Analyze bids Compare bids,

define target rates and support

partially/fully negotiations Recommend

selection Measure savings and forecast spend

Create rate loading instructions Notify suppliers Audit conditions

in GDS Ensure GDS support and

technical assistance for loading

Communicate to travelers

On-going management Program stats KPIs monitoring Monitor suppliers’

performance Monitor travelers’

performance Provide actionable

recommendations

Spend Analysis

Consolidate all data sources and

fine tune understanding of

Client travel spend Analyze

opportunities Compare KPIs

versus the industry and peers

Identify the right supplier mix with incumbent and

challengers

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Best Practices in Spend Analysis

• Consolidate all data sources and fine tune understanding of Client travel spend • Analyze opportunities • Compare KPIs versus the industry and peers • Identify the right supplier mix with incumbent and challengers

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Best Practices in Requirements Definition

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• Understand Client travel policy, special needs and objectives • Incorporate travelers’ needs and patterns • Strategic recommendations (sourcing, policy, travelers’ behavior)

Best Practices in RFP Management

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• Create solicitation list • Prepare and launch RFP • Support suppliers management • Navigating Client internal processes • Scheduling supplier negotiation sessions

Best Practices in RFP Analytics

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• Analyze bids • Compare bids, define target rates and partially/fully support negotiations • Scenario modelling: share shift impacts • Recommend selection • Measure savings and forecast spend

Best Practices in Implementation

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• Create rate loading instructions • Notify suppliers • Audit conditions in GDS • Ensure GDS support and technical assistance for loading • Communicate to travelers

Best Practices in Optimization

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• On-going management • Program statistics • KPIs monitoring • Monitor suppliers’ performance • Monitor travelers’ performance • Provide actionable recommendations

Special Situations

• Mergers, Acquisitions & Divestitures – “Oh My”

– Impact on Strategy

– Support of TMC

THANK YOU FOR ATTENDING