Consortiums are "white hot" outside the travel industry, but they may soon be heating up among companies that purchase airline and hotel space, according to Kevin Mitchell, president of Business Travel Contractors Corp. (BTCC), a "strategic buying group" composed of U.S. corporations that annually purchase about $1 billion in business travel services.
There is growing evidence that groups like BTCC are spreading. Last spring two former hotel executives established the Resort Meetings Consortium of Cherry Hill, NJ to secure favorable rates for members at four- and five-diamond resort properties. Another new group, the Corporate Travel Alliance, representing companies with regional offices in Utah, is also considering consortium purchasing.
"Consortiums are the wave of the future because they are the only way for the buyer and the seller to jointly attack the cost of distribution," says BTCC's Mitchell.
Helping to trigger the formation of consortiums, he adds, are developments such as the recent American Airlines/British Airways alliance. "Once these alliances go through, companies will realize the day of the individual corporate deals are gone," he says.
Since its formation four years ago, BTCC has grown to 44 members. It made history last spring with a Southwest Airlines agreement providing BTCC members with "Business Contract Fares"- fares that exclude commissions and overrides-and a systemwide, mileage-based airfare structure. Mitchell says BTCC soon expects to receive proposals relating to Business Contract Fares from seven other airlines and will consider hotel and car rental programs "when we know we have turned the corner with our airline program."
The Resort Meetings Consortium is another industry first, according to Jerry Janove, its vice president of sales. Its membership consists solely of companies that use top-rated luxury resorts. "Our agreements mean resorts will not be looking at a one-shot deal with a particular company but at a client base that will continue to use them," says Janove. Janove says the group's members range from Wells Fargo to Harley-Davidson, although he would not disclose the number of members.
With a membership of 20 companies, the Corporate Travel Alliance is "a loose network" of corporate travel directors or supervisors, according to Jim Kimball, one of its leaders and director of corporate travel for Huntsman Chemical of Salt Lake City. Kimball says the group is discussing blocking hotel space in Salt Lake City. "Consortiums are like several hospitals having one purchasing department," says Kimball. "Volume determines price-and you get a better deal. It works."