Corporate Travel Update

Posted on July 1, 2003 by LCT Staff - Also by this author

The National Business Travel Association, the nation’s largest association of corporate travel managers, has posted documents on its Web site that NBTA members can use to seek and evaluate proposals from chauffeured transportation operators.

The documents consist of a detailed Request for Proposals that managers can customize and send to operators and a program that allows managers to readily compare the responses received from operators.

The documents were developed by members of NBTA’s Ground Transportation Task Force, which consists of corporate travel managers and senior officials from some of the national limousine companies.

The RFP seeks a considerable amount of information from operators and covers financial, insurance, fleet, chauffeur, technology, customer service, pricing, ownership, affiliates, li-censing and other issues.

The categories include:

• Operator financials and corporate structure: Operators are asked to submit a statement of “financial condition” and in-formation on any bankruptcy filings or audits. They are also asked to provide a detailed description of the company’s ownership structure, its corporate relationship with other companies and an organization chart.

• Insurance: Operators are asked to submit proof of insurance and the amounts of coverage they carry on vehicles, workers’ compensation, commercial liability and umbrella liability.

• Fleet: Not surprisingly, con-siderable information on an operator’s fleet is sought, including make/models, average age and turnover time of vehicles and whether the vehicles are company-owned, subcontracted, owner operated, franchised or affiliated. Information on maintenance procedures and schedules is also sought. Operators are further asked if cars are equipped with cell phones, what the per-minute charge is, and whether charges are billed to the trip or separately to a credit card.

• Services and procedures: This section of the RFP seeks a variety of information on such issues as whether operators provide 24-hour employee-operated dispatch as-sistance. It also asks operators to describe how they track flight delays, changes and cancellations. Further, operators are asked to describe their vehicle break-down/accident procedures and which, if any, daily newspapers they provide in the cars.

• Chauffeurs: Among other issues, the RFP queries operators on the percentage of drivers who are employees, whether operators perform a background check and what percentage of chauffeurs have been with the company two years or longer. Operators are asked to describe their chauffeur training and review programs, and whether the company provides any type of defensive driver training.

• Rates: Operators are asked to list their rates in the cities where the corporation is seeking service and asks that the rates include all fees. Operators are further asked to describe any discounts and pricing rebates they may offer based on volume. They also are asked to describe their policies and charges for cancellations, no shows, wait times, gratuities, credit cards, meet and greet and fuel surcharges.

• Reservations and billing: The RFP seeks information on whether travel agents or travelers can book through the travel industry’s computerized reservations systems and the Internet and for detailed information on credit card billings. The RFP also seeks detailed information on how an operator processes billing disputes and on what information is contained in passenger profiles.

• Customer care and references: Operators are asked to describe their quality control procedures and to provide a list of three current and three former corporate references.

RFPs Seen as Management Tool for Corporations

A Request for Proposals is a document that corporate officials send to suppliers or service providers – in this case chauffeured transportation companies. It typically offers information on how much the corporation currently is spending and how it is managing its purchasing processes.

Limousine operators looking to gain the corporation’s business are asked to provide many details about their limousine operations, their capabilities, their financial situation, how they would handle the business and what they would charge.

Corporate purchasing officials use RFPs to narrow the field of potential bidders. After reviewing the responses they receive to an RFP, corporate managers typically move forward with detailed negotiations with a handful of finalists.

The trend toward seeking RFPs from luxury transportation providers is strikingly similar to one experienced by travel agencies beginning in the mid-1980s. Several large corporations, notably led by IBM, started looking for ways to better manage their corporate travel purchasing. Up until that time, scores or even hundreds of travel agencies typically served large or mid-size corporations.

Corporate purchasing officials reasoned that they could better manage their travel expenses – along with cutting costs and gaining consistent and superior service – by consolidating their travel purchasing to one or a handful of agencies.

In addition, consolidating their purchasing with a few travel agencies made it much easier for corporate managers to determine how their travelers were spending the company’s money. This allowed them to better cut down on abuses and to steer their travelers toward money-saving options.

The move toward aggressive travel management practices caused considerable upheaval in the travel agency community: Several national and regional agencies aggressively expanded by buying or merging with other agencies to better serve large national and regional accounts.

In addition, many small and mid-size travel agencies were unable to compete with these rapidly expanding larger travel management firms.

A considerable number of agencies sold out to or merged with larger firms. Those that didn’t often found themselves restructuring their businesses to focus on vacation travel or small corporate accounts with modest travel needs.

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