The Beat Interviews Bob Chaiken, COO and CFO, Adelman Travel Group

INTERVIEW: TMC Exec Bob Chaiken

The Beat ~ a travel business newsletter

Danbury, Conn.

8/8/07 3:07 PM

Milwaukee's Adelman Travel Group began servicing clients in 1985 and now is among the larger travel management companies in the United States. The Sabre-connected Radius affiliate last year became one the first regional distributors of the Rearden Commerce technology platform, and this year joined Concur Technologies' TMC partner program and launched an enhanced global airfare search tool. Adelman COO and CFO Bob Chaiken last month spoke with The Beat's David Jonas about those and other developments.

Jonas: Does Adelman generally outsource its technology development needs or handle them internally?

Chaiken: It's a combination. For example, we developed the Adelman Private Fares product in conjunction with eGlobalfares. They were actually the developer, but we worked hand in hand to develop what the product needed to be. For our automated approval system, we went ahead and built that from scratch using a couple of different tools. Part of it is the [GDSX] Compleat quality control system, but a lot of it we developed internally. For online booking, we support third-party tools. We offer directly four tools and can support others. And there are other great third-party products coming out, including Sabre's Traveler Security and Data Suite, which is graphical and allows you to drill down to countries and cities to see where your travelers are and the hotels they are staying at. There is no point in us building a product like that when it is very complete.

Jonas: Can you further explain the Adelman Private Fares product, and whether it is for internal use only or if you have considered selling it to other agencies?

Chaiken: For us, it is internal. But it is really an eGlobalfares product, and they have been distributing recently to other agencies and building a customer base, though we were instrumental in helping them bring the product to market. It is a point of sale tool at the agent desktop so they can see global fare content. It is private fares to foreign destinations, as well as fares originating in other countries, both private and published, in an integrated screen. If an agent clicks on one, it goes over to that supplier for fulfillment. Or, if internal--a fare in our global distribution system or one of our private fares--it fulfills internally. It brings together a whole lot of fare sources and other currencies in one point of sale.

Jonas: What other supplier programs or technology enhancements have been most effective for your clients?

Chaiken: On the hotel front, we're digging a little deeper in terms of the negotiating process, so we are using RFP Solutions, which manages and streamlines that whole process online. In terms of content, we are developing more of our own negotiated hotel rates, and have the Radius hotel portfolio. As prices started going up a few years ago, we got out in front of it and said, "Look, we better retrain our staff to make sure they are selling those hotels, using negotiated rates and getting our customers negotiated rates." Generally for products and services, we have moved into more of a leadership role, where maybe 10 years ago we would follow. The [GDSX] Compleat quality control system now is used by everybody and we put it out there first. Or developing internal solutions for invoice archiving. Or automated approvals systems that are completely flexible. We are doing a lot more first, for a company of our size.

Jonas: How would you describe Adelman's customer base?

Chaiken: We have a very diverse customer base, in terms of manufacturing, service companies, not-for-profits, emergency recovery companies ... They probably range from $1 million to $25 million in T&E, typically. Most of them are global in some respects, meaning that they are foreign-owned, or have operations overseas.

Jonas: Within that $1 million to $25 million range, is there a proverbial "sweet spot?"

Chaiken: Our average sweet spot is between $5 million and $8 million. We have a lot of customers in the $15 million to $20 million range now, where six or seven years ago, we did not. So the average volume has been going up for us.

Jonas: Adelman operates both on-sites and regional call centers. Are you noticing a trend, one way or the other, as far as client preferences?

Chaiken: The shift has been away from the on-sites, as we have seen with most of our competitors. But interestingly, we add new on-sites every year, though not as many. It is the customers that really want the tight integration with company culture and policies, that want the person right there. We have been a large player in on-sites since day one, so for us, it makes a lot of sense.

Jonas: You mentioned how most clients have multinational travel patterns. How do you pursue that business? What role does your affiliation with Radius play in that respect?

Chaiken: We go after that business by trying to identify what their real needs are. When you talk about global, it can mean so many things. It might mean consolidated reporting, which, in some cases, means we take data from another agency they are using in a different country. For the ones that have a goal of bringing it all together--or bringing major regions together--we can use Radius as our global network. It is strong and we know most of those partners.

Jonas: There has been this idea that Radius partners would use common technology. Are there pieces that Adelman has been able to leverage, or do you generally blaze your own trail?

Chaiken: We mostly blaze our own trail. They have developed some good products. For example, the Radius Wheel is at the point of sale to make sure you are getting the hotel rates that Radius has negotiated, as well as individual offers from suppliers that may be better than what you have on your screen. As far as tying together with the other agencies, and shared technology, we have mostly gone our own route and brought that data back into our office, when needed for consolidating.

Jonas: Is the Adelman staff growing or shrinking?

Chaiken: The staff is growing because we are growing. But in relative terms, it is decreasing because online is picking up each year.

Jonas: What is the percentage of overall client bookings that are processed using online booking systems?

Chaiken: Our total bookings are approximately 23 percent right now, with individual customers ranging from 20 percent up to 90 percent. Many of our on-sites are doing some level of online booking--for some, a great level--but when they are really looking for that high-touch service, they may not be as inclined to book online.

Jonas: Adelman last October acquired Ft. Worth-based Pegasus Travel. Do you expect future growth to be strictly organic, or are additional acquisitions likely?

Chaiken: It will be both, as it has been in the past. We have done a series of planned acquisitions that have all had the same common thread: a local or regional agency with a good reputation, a strong customer base and a very knowledgeable staff. We certainly have plans for additional acquisitions. We have also built our sales force each year and I think it is paying off.

Jonas: Turning it around, why have you not sold?

Chaiken: We have not sold because we feel we have been in a strong position to deliver to our customers, grow as a company and hopefully be more profitable in the process. We are in a good position today. We ask, "How big do we have to be to still be a good competitor, given that there has been a lot of consolidation?" We have met those targets.

Jonas: Looking forward, what are your biggest challenges and advantages?

Chaiken: Finding staff has been an ongoing challenge over the past few years. There have been more agents leaving the industry. Fortunately, to counterbalance that, the online booking numbers have been going up, so that need has not been as great. But it will still be a challenge to service companies, so I put that up there at number one. In terms of opportunities, some of the online TMCs are starting to shake out; they are just not providing a complete service, or a high enough level of service, which the travelers are demanding. We are different. We have the size, structure, products and everything else the big guys offer. Yet we are relatively small in terms of providing the creativity, flexibility and access to senior management. That gives us a good position going forward.