1. Category Management Travel Category
Kathy Briski, C.P.M., GTP
October 18, 2018

2. Global Procurement Processes
Source: ;

3. Key Category Management Principles
Cross Functional Team Approach
Strong Supply Market Knowledge
Stakeholder Engagement
Transition to Success
Facts And Data
Corporate Governance
Source:

4. Travel Category Category Profile Drives the Strategy
Internal and external drivers are used to develop the subcategory strategies
Internal Profile
External Profile
Understand internal business drivers and budget forecasts
Survey internal stakeholders to help define category priorities.
Analyze total and sub-category spend
Define category characteristics
Analyze TCO drivers and levers
Evaluate external market capabilities and availability
Understand the predominant business models by subcategory
Match the supplier base to the required activities
Identify key industry trends which affect cost and service
Perform competitive Market Analysis
Category Strategy
Sourcing sub-categories with market intelligence and benchmarking for negotiations with incumbents or RFP via traditional bid process
Perform demand management analysis in key maverick spend areas determining a plan of action for behavioral movement, either through better booking choices or utilizing Grace’s preferred travel agency
Capitalize on the implementation of Global Expense Reporting Solution (GERS) for compliance which is an integral part of our ongoing category management system

5. Travel Category Profile
Internal Profile

6. Internal Profile - Spend
The scope of the project includes all global spend within Company. Total Spend: $XXXM
Observations
Total spend was obtained using a combination of travel agency data, commercial card data (corporate card, P-card, and PO System
Date range used was December 1, 2015 thru November 30, 2016,
The majority of spend for airline, hotel and car rental is in North America
Some meeting/events spend is reflected in the commercial card total, and possibly in the hotel spend, but not in airline and car rental spend.
Meeting/events spend is understated due to decentralized program
Divisional Breakdown (based upon Travel Agency data):
Division 1 - Airline 55%, Hotel 47%, and Car Rental 58%
Division 2 – Airline 31%, Hotel 33%, and Car Rental 27%
Corporate – Airline 14%, Hotel 19%, and Car Rental 15%

7. Internal Spend Profile - Airline
Spend by Business Unit (PNR Data)
Top Ten Airlines by Spend (PNR Data)
Advance Ticket Purchase(ATP) (PNR – Tickets)
Observations:
Approx. 70% of spend is with the top10 airlines with rest of spend spread across multiple airlines
Top carrier is Delta Airlines with United Airlines second
Alaska and Virgin America has recently announced plans to merge
Company currently has XX airline agreements and do not “favor” one airline over the other
ABC books 50% of the airline tickets and DEF books 25% of the airline tickets
In 2015, travelers were booking 35% of the time less than 14 days in advance. Furthermore, 30% of bookings were made 21 day+ out which could lead to changes by the travelers.
Opportunities exist in performing city pair analysis and further Advance Ticket Purchase (ATP) analysis.
Note: PNR = Passenger Name Record (Booking Data)
Updated Spend by BU (Booking Data)

8. Internal Spend Profile - Airline
Domestic Vs. International (PNR Spend)
Class of Service – Domestic (PNR – Tickets)
Class of Service – International (PNR – Tickets)
Observations:
Approx. 45% of spend is booked domestically while 55% of spend is international.
For Domestic bookings: 65% of tickets booked by travelers are in restricted economy (low fare coach), while 10% are booked in unrestricted coach (refundable). An additional 15% were booked in business but this is misleading since these tickets are connections internationally.
For International bookings: 90% of tickets are booked in business class, however some travelers are booking in economy or coach class.
Savings opportunities exist to reduce the fully refundable coach tickets to restricted coach and to review policy on international business class.
In addition, Boeing is working with airlines to provide reports on ancillary spend.
Note: PNR = Passenger Name Record (Booking Data)
Coach = Unrestricted
Economy = Restricted

9. Internal Spend Profile - Hotel
Spend by BU (Expense Data)
Top 10 Domestic Hotel Chains by Spend/Rooms (PNR Data)
Top 10 Int’l Hotel Chains by Spend/Rooms (PNR Data)
Observations:
Total Hotel spend is $64M, Domestic - $50M International - $14M
The majority of spend is with the top domestic and international Hotel Chains, such as Hilton, Marriott, Hyatt, Starwood and IHG
XXX Company has 800 hotel agreements worldwide
Currently have 2 global hotel chain agreements: Starwood and IHG
Opportunities may include incorporating other global hotel agreements to cover non-preferred spend (Hilton, Marriott and Hyatt) or incorporate a “rate cap”
Majority of hotel spend is on room rate. Additional amenities such as free breakfast, internet, parking are emphasized in the global RFP.
Note: PNR = Passenger Name Record (Booking Data)

10. Travel Category – Internal Spend Profile Lodging
Domestic vs. International (PNR –Room Nights)
Domestic: Preferred Hotels (PNR – Room Nights)
Int’l: Preferred Hotels (PNR – Room Nights)*
Observations:
Of the total nights booked 80% of total nights are booked domestically, while 20% are booked internationally. In terms of spend: domestic represents 79% of the dollars, while international spend represents 21%
Travelers are booking preferred hotels 85% of the time domestically and 50% of the time
Opportunity to perform a hotel “cluster” analysis on international hotels and work with travelers to educate them on the preferred hotels or determine if other preferred hotels are needed.
Note: PNR = Passenger Name Record (Booking Data)

11. Internal Spend Profile - Hotel
Top 10 Hotel Properties by Spend (PNR Data)
Top 10 Hotel Cities (PNR Data – Airport Codes)
Chain Scale Room Night Segmentation (PNR Data)
Observations:
Phoenix area is the top hotel stay for travelers, followed by Seattle and Los Angeles areas.
Travelers stay in Luxury hotels 5% of the time (500 room nights, average rate $250), Upper Upscale hotels 45% of the time (5,000 room nights, average rate $145), Upscale 30% of the time (4,000 room nights, average rate $125), Midscale 10% of the time (1,500 room nights, average rate $90) and Economy type rooms 10% of the time (250 rooms nights, average rate $75) .
Opportunities exist to lower TCO with hotel chain shift downwards (i.e.: Upper Upscale to Upscale and incorporate a per idem cap in the US.
A further opportunity is to review hotel booked data vs. paid hotel rate. The Concur booking and expense tool will enhance this effort.
Note: PNR = Passenger Name Record (Booking Data)

12. Hotel Chain Scales Chain Scale Brand Name
Luxury
Upper Upscale
Upscale
Midscale
Economy
Ex-Upscale
Ex-Midscale
Ex-Economy
For Domestic Hotel Bookings (2018) :
Total Tracked Spend: $XXM
45% of spend in Upper Upscale. Average Nightly Rate: $145
30% of spend in Upscale. Average Nightly Rate: $125
Business Travel News: Corporate Travel Index: $180

13. Internal Spend Profile - Car Rental
Spend by BU (Expense Data)
Top 3 Suppliers by Spend (Expense Data)
Car Rental Domestic Spend by Type (Supplier Data)
Observations:
Car rental expense reimbursements amounts to $15M
ABC travelers have the majority of spend in this area
Top preferred supplier: All 3 suppliers have approx. the same spend
Time & Mileage (daily rate for rental car) amount to the majority of cost when renting a car (excluding taxes) which will be the focus of negotiations for the upcoming car rental RFP.

14. Internal Spend Profile - Car Rental
Car Rental - % of Cars Returned Refueled (Supplier Data)
Car Rental – Charges by Booking Source (Supplier Data)
Car Rental – Method of Payment (Supplier Data)
Observations:
Travelers return rental cars refueled 75% of the time
The majority of bookings were done via GDS, on-line booking tool. Other booking occurred directly with the supplier “Walkups” and Web
In terms of payment method, 92% of the bookings were paid by corporate card.
Opportunities exist with utilizing the on-line booking tool and corporate card

15. Internal Spend Profile - Meals
Spend by BU (Expense Data)
Top State Spend (Expense Data)
Top Merchant Spend (Expense Data)
Observations:
The top states are Arizona, California and New York (no surprise).
2015 analysis indicated that that top merchant spend was Starbucks, Durant’s and Bobby Q’s.
Opportunity exists to look at cost over benchmark data and review actual vs. per diem in addition with further analysis and possibly approaching top merchants for Company discount. Moreover, work with Dinova Restaurant Program to ensure that top merchants are approached by Dinova to solicit acceptance into the Dinova Dining

16. Internal Spend Profile - Meetings/Events
Meeting/Event Spend (Expense Data)
Top Suppliers by Spend
SSPN Spend By BU (Expense Data)
Observations:
Limited spend information. Team doesn’t feel that the spend showing is reflecting the true spend for meetings/events.
Recommend to explore and do a “deep-dive” into meetings/events spend within Company. Determine current process and make recommendations to lower TCO and mitigate risk.

17. Travel Category Summary of Major Contracts
Supplier
Description
Contract Value
Term of Contract
Agreement End Date
Corporate Card
Corporate Travel / Procurement Card
Travel Agency
Travel management services
Airlines
Preferred Airlines
Hotels
Chain Agreements
Car Rental
Car Rental Services
Booking / Expense
Tool
On-line Software for booking and expensing travel
GDS
GDS system for booking travel
Airport Parking
Airport Parking for Travelers
Risk/Security
Location of Travelers /
Observations
All airline agreements contain no financial commitments.
All hotel sourcing is done yearly thru the hotel sourcing tool. Rates and amenities are accepted via the tool, hence no paper agreements exist and no financial commitments are contained.
Car Rental has not been competitively bid and is on the schedule to be competitively bid this year
All parking agreements contain no financial commitments and cover top cities of Company’s travel pattern

18. Travel Category Profile
External Profile

19. Airline Industry: Overview
2017 Global Airline Industry: Revenue estimated to reach $754 Billion. North America is the industry leader.
Key Points
2018 Global Airline Industry revenue estimated to reached $824 Billion.
Total airline industry net profit in 2018 will rise to $38.4 billion, an increase of around 11 percent on the projected figure for 2017.
The bulk of the profit generated next year will come from North America where, according to IATA, airlines in the region are forecast to record a combined net profit of $16.4 billion.
Top five airlines hold an estimated market share of 73%.
Source: airlines.org, Airline Financials.com, IATA, Wikipedia, Statista.com, MarketWatch.com

20. Airline Industry: PPI (Producer Price Index) – Scheduled Domestic Passenger Air Transportation The PPI (measures average change in prices over time) for passenger air transportation.
Source: (NAICS )

21. Airline Industry: Jet Fuel Costs
Fuel is one of the largest cost contributor to airlines’ operating costs.
Key Points
Global airlines reduced their fuel costs in 2017, these costs accounted for only 17.3% of their expenditures.
For 2018: it is estimated at 18.9% of their expenditures
Jet fuel consumption has not increased as much as air travel because airline fuel economy has continued to improve. Air travel fuel economy generally increases as carriers review their commercial fleets to modernize them through purchases or leases of new, more fuel-efficient planes.
Current jet fuel pricing is $98.77 per barrel. Impact on 2018 fuel bill amounts to $47 Billion
The Air Transport Association estimates that for every dollar increase in the price of jet fuel (a derivative product of crude oil), US airlines incur an additional $445.0 million in fuel expenses.
Sources: Airlines for America: ww.statista.com

22. Airline Industry: Air Travel Price Index & Ancillary Fees
Air Travel Price Index for JFK, LaGuarda, and White Plains, NY
Key Points
The cost of airfare flying out of the JFK has been consistently higher than the national average. White Plains has been higher as well since LaGuardia, on the other hand, has been consistently below the national average,
Airlines found several ways to grow revenue without raising fares – a la carte pricing: from charging for select coach seat assignments, boarding after elite status members and baggage fees.
2017 Airline ancillary revenue – ~$82 billion globally, a 22% increase from 2016
The air travel price index measures the percents change over time in prices paid by travelers.
Sources: Bureau of Transportation Statistis, Ibisworld.com, Airlines for America: Plane Stats.com, CarTrawler Yearbook of Ancillary Revenue (IdeaWorks Company)

23. Cost of Air Travel Compared to Other Goods and Services

24. GBTA and CWT 2019 Forecast: Airline Pricing

25. GBTA and CWT 2019 Forecast: Top Tips for Travel Buyers

26. Advito 2019 Forecast: North America Airline Pricing
Source: Advito 2018 Industry Forecast

27. Hotel Industry: Overview
The US Hotel Industry Revenue reached $166.5 Billion in 2015.
2017 Global Operating
Revenue and Net Income (in billions)
Key Points
The global hotel industry revenue is estimated to exceed $560 billion for 2018
The US Hotel Industry Revenue is estimated to exceed $200 billion in 2018
Over the five years to 2020, IBISWorld projects that the industry will continue expanding, with particularly strong growth in the extended-stay hotels, boutique hotels, spa and health retreats and resorts segments.
US revenue is projected to increase at an average annual rate of 3.0% to $167.0 billion over the three years to 2019.
Source: MarketWatch.com, Smith Travel Research

28. The PPI for hotel rooms have continued to climb since 2010
Hotel Industry: PPI – Hotels & Motels, Guestroom Rentals, Full Service
The PPI for hotel rooms have continued to climb since 2010
NAICS All indexes are subject to revision four months after original publication.
Source:

29. Hotel Industry: Overview
The US Hotel Industry Revenue reached $166.5 Billion in 2015.
Key Points
2017 Average Hotel Rates
The average daily rate in the US for 2017 was $126.43
Top chart represents the monthly average daily rate hotels from 2011 to 2017.
Bottom Chart: Airbnb: Does your Travel Program Allow It? Average daily hotel rate vs Average daily Airbnb rates in 2016(in U.S. dollars)
Hoteliers are looking for ways to sustain their growth as online private accommodations aggregators are flooding the market with new inventory. Marriott, Hyatt, and Wyndham are investing in home-sharing start-ups to combat Airbnb.
For 2019, US hotel prices are forecasted to rise between 1% - 3%
Business Travel News – Average hotel daily cost: $180.12
New York: Ranked 1
Upper Upscale: $322.87
Upscale: $335.91
Midscale: $288.50
Average Daily Rate: $330.47
Taxes: $62.48
Total: $392.95
White Plains: Ranked 13
Upper Upscale: $191.99
Upscale: $188.37
Midscale: N/A
Average Daily Rate: $198.15
Taxes: $26.50
Total: $224.65
Stamford, CT: Not Ranked in Top 100
GSA Rate: $127/night
Source: Smith Travel Research.com’, Statistic.com, busman.com

30. GBTA and CWT 2019 Forecast: Hotel Pricing

31. GBTA and CWT 2019 Forecast: Top Tips for Travel Buyers

32. Advito 2019 Forecast: Hotel Pricing
Source: Advito 2019 Industry Forecast

33. Car Rental Industry: Overview
SAMPLE
Global industry spend is $39.9 billion of which 26.3% is business travel.
Key Points
Global industry spend is $39.9 Billion of which 26.3 is business travel car rental % is on airport rental and 21.8% is off-airport.
Within US, spend is estimated at $28 Billion which was achieved on a smaller overall U.S. fleet size of million vehicles, some 126,000 fewer units than the industry fleet in 2016.
The industry is segmented by business travelers, leisure travelers, car leasing and car sharing
Leisure market has grown larger than corporate business market
IBISWorld expects industry revenue to expand at an annualized rate of 2.1% over the five years to 2021 to $47.9 billion.
Hertz and Avis continues to expand off-airport locations to compete with Enterprise
Investing in technology to compete with car sharing such as Uber and Lyft.
Source: Ibisoworld.com, Auto Rental News, Business Travel News

34. Rental Car Industry: PPI – Passenger Car Rental
The PPI for car rental has decreased in 2011 – 2017 but making a small increase in pricing for 2018
NAICS All indexes are subject to revision four months after original publication.
Source:

35. Car Rental Industry: Market Share
The U.S. car rental market is highly consolidated among a small number of major players and is getting smaller.
Key Points
Market share:
Enterprise – 35.5%
Avis/Budget – 15.2%
Hertzt – 15.1%
Suppliers offer different brands that focus on specialized markets.
Corporate Traveler – On-airport convenience – Hertz, Avis and National
Leisure Market – On/Off-airport Budget, Dollar Thrifty, and Enterprise
Additional Non-US regional players include:
Europcar (Europe and Asia Pacific)
Sixt (Germany and EMEA)
In high risk countries such as India, China, Thailand, Latin America, etc. the business model is to rent a car with driver. Cost is less than a chauffer / limo as a typical rental vehicle is used
Top 3 Car Rental Companies By Operating Revenue
Source: Business Travel News, 2017 Corporate Travel Index, MarketWatch.com

36. Car Rental Industry: Average Daily Rates
Key Points
Based upon Business Travel News Corporate Travel Index, the average car rental rate is $ (including tax, fees, etc) in the US for 2017.
Car rental companies have implemented a variety of new ancillary fees to help preserve some of the lost revenue in recent times, such as tacking on fees to extend a reservation, eliminating 60 minute grace period, or increasing the cost of a two-day rental
“Virtual rental technology” – enables customers to reserve, rent, access and return cars just about anywhere. ZipCar, WeCar, Connect.
Business Travel News – Average daily cost: $46.51 which makes up 15% of the total travel costs.
New York: Ranked 1
Compact: $51.46
Midsize: $54.93
Full size: $59.25
Average Daily Rate: $55.21
Taxes & Fees: 34.6%
Total: $74.31
White Plains: Ranked 8
Compact: $38.57
Mid size: $40.32
Full size: $43.67
Average Daily Rate: $40.85
Taxes & Fees: 30.2%
Total: $53.19
Stamford, CT: Not Ranked in Top 100
Source:, Business Travel News, 2012, 2013, 2014, 2015, 2016, 2017 Corporate Travel Index

37. Uber vs Taxi Expense Reports processed by Certify
Source: Travel Procurement May 2017

38. GBTA and CWT 2019 Forecast: Car Rental Pricing

39. GBTA and CWT 2019 Forecast: Top Tips for Travel Buyers

40. Advito 2019 Forecast: Car Rental Pricing
Source: Advito 2018 Industry Forecast

41. External Profile – Summary
Market Trends
Airline
Top four companies holding an estimated market share of 73%
Growing role of Premium Economy
Airline prices are forecasted to rise between 1% – 2% for the US in Globally 1 – 2.6%
Hotel
The global hotel industry revenue and US hotel industry revenue is estimated to exceed $560 billion and $200 billon for 2018
BTN: The average hotel daily cost: $180.12
Marriott, Hyatt, and Wyndham are investing in home-sharing start-ups to combat Airbnb.
For 2018, US hotel prices are forecasted to rise between 1% - 3%
Car Rental
Global industry spend is $39.9 Billion of which 26.3 is business travel car rental % is on airport rental and 21.8% is off-airport.
Within US, spend is estimated at $28.6 Billion
Car Rental prices predicted to increase 1% - 4% in 2019
Industry Challenges
New Distribution Capability (NDC)
New Technologies consistently entering the marketplace
Industry Supplier Consolidations (Marriott/Starwood)
Hotel Cancellation Policy
Meetings Commission Rate
AirBnB and Uber/Lyft models
Global Hotel Chains getting into the home rental market
Peer-to Peer Car Sharing / Autonomous Vehicles
Market Drivers
Jet Fuel is the largest cost driver for airlines.
Jet Fuel is up - Current 2018 price is $98.77 per barrel. Impact on 2018 fuel bill amounts to $47 Billion
Supply and Demand in the hotel industry
Car sharing has continued to emerge

42. Travel Category Strategy

43. Travel Category Strategy

44.             Travel Priorities Travel Category Strategy
Market driven competitive bidding
Policy Compliance
Utilization of Travel Agency /Online booking Tool
Optimize traveler experience / Duty of Care
Measures Of Success
Optimize travel spend by reducing TCO
Reduce TCO
Increased competition and volume leverage
Utilization of preferred suppliers
Leverage & build key supplier relationships
Influence smart /informed travel decisions thru a) appropriate booking tool content and b) compliance
Utilization of Travel Agency & On line Booking Tool
Improve key performance indicators
Utilization of appropriate procurement channels
Travelers booking thru Travel Agency & On line Booking Tool
Aligning process for meetings/events bookings with business needs
Traveler communication and training
Employee Feedback      
Category Strategies      

45. Travel Category Projects
Category Strategies
Projects
Quick Wins
Optimize travel spend by reducing TCO
Supplier Performance Assessment
Contract Analysis
Influence smart/informed travel decisions thru a) appropriate booking tool content and b) demand management
Sourcing Events
Utilization of appropriate procurement channels
Utilizing the Travel Agency or on line booking tool to book travel
Meetings/Events Analysis
Traveler communication & training
Corporate Social Responsibility / Social Media for the future traveler / Travel Apps

46. Travel Category Additional Opportunities Competitive Bids In/outsource
Opportunity
Airline
ATP modeling
Analysis on Non-Restricted Coach tickets
Airline City Pair and benchmarking
Class of Service Analysis
Understanding ancillary fees
Incentivize travelers to fly coach instead of Int’l business class
Hotel
Hotel RFP
Obtain additional global chainwide discounts
Explore shifting down hotel chain levels
Perform hotel cluster analysis of int’l cities
Review hotel booked data vs. paid hotel rate
Explore including a hotel “cap” (travelers would only be reimbursed to “cap” amount
Car Rental
Car Rental RFP
Educate Travelers when to rent a car vs other modes of transportation (ie Uber/Lyft)
Airport Parking
Review to determine if travelers are utilizing preferred airport parking suppliers
Explore additional parking opportunities in other cities
Rail
Review raid spend and explore possible preferred suppliers
Traveler
Risk & Security
Competitive Bid with appropriate suppliers. Include Travel, Security and HR Departments
Meals
Determine any opportunities to lower TCO – such as daily cap, etc
Work with Dinova to include additional frequented restaurants
Cash Receipts
Determine average daily spend for Meals
Explore lowering cash receipts to $25. Benchmark with other organizations
General
Review process to allow consulting/temp/contract labor/new hires/interviewees to book thru Travel (on-line booking tool) Develop policy for all to incorporate
Understand Company Corporate Social Responsibility(CSR), specially carbon footprint, and how it fits into the overall travel program. Explore what other large organizations are doing in this area
Understand Social Media and how the future travel program will incorporate such tools to cater to the traveler community of the future (younger travelers)
Meetings/Events
Identify meeting/events spend. Determine current process and make recommendations to lower TCO and mitigate risk
Technology
Travel Reporting Tools
Smart phone apps
Competitive Bids
In/outsource
Policy/compliance
Critical data (process)
Leverage spend (One Boeing)
Contract data…(working with Bouquet/chamberlain)
What’s happening …coming down the road?

47. Strategic Road Map (Next Steps)
2020 Q
Analyze Meeting/Events Program
Benchmark airline program
Airport Parking RFP
Traveler Risk & Security RFP
Q1 2019
Commence Competitive Bids for:
Car Rental
Travel Agency
Challenges & Issues:
Resources
Stakeholder buy-in
Q4 2018
Implement Quick Wins
Identify timeframe for sourcing events
Start Hotel Sourcing