Michael Buckman’s first day on the job as CEO of WorldTravel BTI was a little hectic.
It was Sept. 13, 2001, just two days after the terrorist attacks in New York, Washington D.C., and Pennsylvania, and Buckman had assumed the role two weeks ahead of schedule. It also happened to be a zero revenue day.
Not long after, airplanes returned to the skies. But all wasn’t fine in the corporate air travel business. The terrorist attacks hit just as people were realizing the economy had entered a recession. Corporate travel budgets were slashed, meetings were cancelled or sparsely attended, and the airlines faced some of the worst financial woes in their histories.
All of which made Buckman’s first few months on the job challenging, to say the least.
"My planned start date was Oct. 1," Buckman says. "But knowing the whole world was going to change and that we had to change with it, I thought it was time to get started right away."
But rather than react swiftly to the uncertain marketplace, Buckman held off, waiting until the situation became clearer.
"One of the decisions we made early on was to overcome the urge to act right away," he says. "Perhaps one of the biggest mistakes we could (have made) was making a quick reaction that, in hindsight, we would find to be very wrong."
Instead, Buckman chose to bear numerous hard costs that he believed the company would need to reduce later.
"We felt like that was going to be a more prudent decision than to immediately start cutting back, then finding it wasn’t really a necessary action to take," he says.
And, because the company’s Dutch owner, BCD Holdings, was financially sound and preferred viewing its business holdings with a more long-range perspective, Buckman was given the latitude to use a methodical approach to analyzing and dealing with the new industry landscape.
That, he says, was one of the keys to his success.
"We sat down the first week after 9/11 and said, ‘It’s going to take a little while to take inventory and really understand what the implications are.’"
That strategy benefited WorldTravel on several fronts. It allowed Buckman, who previously served as CEO of Worldspan and held senior positions at American Airlines and Homestore.com, to reassure customers that the company would work with them to handle ongoing travel needs and gave him the time he needed to deal internally with the effects of the sudden economic impact on his company’s operations.
"It helped us make better decisions," he says. "(And) it helped us have better credibility with our employees. We did have to go through a number of reductions and cutbacks, but we tried to do it in a prudent fashion. We were going to do it once; we weren’t going to have the water torture of six or seven different cuts."
Tough decision-maker
Because of the drop in revenue, Buckman was forced to cut his staff by 25 percent. At the same time, he looked to counter the loss in business by pursuing new revenue streams through other means.
"We immediately began looking at potential acquisitions so that we could maintain our level of activity and volume," he says. "We had some good people we knew we could apply to these things, so it was early in the following year that we acquired McCord Travel. That brought us back to the same level of activity or actually a little bigger than we were going into Sept. 11. It helped balance a lot of things out."
With the immediate issues of the company under control, Buckman turned his attention to its long-term needs, which had changed drastically.
"Our industry, post 9/11, is a lot different than it was before Sept. 11," Buckman says, adding that it wasn’t until the beginning of 2004 that corporate travel returned to its pre-9/11 levels. "It’s very competitive, and a business that’s gone through a lot of consolidation. It probably will go through a good bit more. In 2000, there were close to 33,000 travel agencies in the United States. Today, if we’re lucky, there are half that.
"A lot of people have left the business. A lot of people like us have continued to acquire and grow. You’ve got bigger, stronger competitors today. The online (competitors) have come into the business (by starting ) on the leisure side. Expedia, Orbitz, Travelocity, they’ve all set their sights on the corporate market."
And that means Buckman’s brave, new world includes several well-funded players that see WorldTravel as a market they’d like to take over. Each of them represents a threat.
"It’s a business that has very thin margins," Buckman says. "We know we’ve got to stay very close to the customers. We’ve got to try to anticipate the changes in the business and what tools and technology we’re going to need. It’s certainly one that we think is very competitive."
Staying competitive against the coming players means staying innovative and providing customers with new options. In Buckman’s case, he viewed the new threats as an opportunity. To keep its customers engaged, WorldTravel developed a software package that allows corporate customers to maintain and track their travelers.
"Prior to 9/11, most of the profiles and information we kept on travelers didn’t include cell phones," he says. "Now, it’s in just about all the records because you want to make sure that you have a way to get ahold of them. Prior to 9/11, when we would have our negotiations or bids on getting new business, corporate security was rarely a participant in those meetings. Today, it’s common to see the head of security be part of those meetings because they have a greater concern about how we are going to protect and make them aware of what is happening to their travelers."
Buckman has also expanded WorldTravel’s offerings in other areas.
"We felt like we needed to put more emphasis and resources behind them," he says. "The meetings business has been very successful; it’s the fifth-largest business (of its type) in the country. Technology has always been one of our company’s strengths, and I think it’s one of the differentiators.
"In the meeting area, we’ve got some very good software called Plan to Attend that helps customers who want to consolidate a lot of their meeting activity. We think we can bring them significant savings as a result of using these tools, usually in the 15 to 20 percent range."
Balance sheet manager
Spending money on technology and acquisition is one way to grow, but Buckman insists the company is also prudent at the other end of the balance sheet.
"Managing costs — we’re 25 percent smaller in terms of size of people (than we were pre-9/11), even though we’re a bigger business today," he says. "Looking for new revenues and new services, we’ve invested a lot more in the meetings incentive business. We’ve been able to grow that so it’s a good place where we can grow.
"We’ve been involved in building technology to provide our customers with hotel merchant inventory, not only to give them better prices on some of their hotel bookings but (also to) provide a new revenue stream for us. We’ve expanded our travel procurement solutions, our consulting business. We’re looking for other revenue streams to offset some of those declines from the traditional travel business."
Technology has always played a huge role in the industry, and Buckman expects another two to three years of turmoil and change, which will drive an increased reliance on technology.
"If you aren’t comfortable with change, you don’t want to be around this business," he says. "We’re going to continue to see a significant portion of our transaction activity go online. Three years from now, my feeling is that more than half of it will be online. We’re going to have to continue to find new and better ways to efficiently support and assist in that effort.
"The global thing is going to continue to be driven; we’re going to have to end up being more places, own more places and continue to invest in technology so we can provide that consistency throughout the network."
Buckman believes there will be fewer suppliers moving forward, which will make WorldTravel an even stronger player than it is today. And WorldTravel is already a force to be reckoned with.
"We’re one of the bigger players, depending on how you measure it," he says. "American Express is the largest. The next three (including WorldTravel) are all relatively about the same size. In today’s world, our revenues don’t come from commissions.
"To say what our sales volume is ‘in air’ or other things doesn’t really mean too much, but we will do in the U.S. about $3.8 billion in air travel sales (in 2004). Then you can add hotel and car and all the other things on top of that."
To keep growing, Buckman is tasked with ensuring the company stays focused on its goals.
"Acquisition is clearly one," he says. "You want to be able to grow, but if you can’t grow organically, we found ways to do it through acquiring others. You want both."
Another way to grow is to sell new business to WorldTravel’s existing customer base while pursuing new customers.
"We try very hard and set high goals for ourselves in terms of retaining the existing business," Buckman says. "I’m sure from the economic side it’s cheaper to retain new business than it is to sell new business. We want to grow, so we’ve got to be able to do both.
"Our retention rates have been in the high 90 percents year after year. It’s not that we don’t want new business, but we take a lot of pride in the companies we’ve served for a long time. Frankly, that’s our best judge. Our success is just the names of companies that we can list as our customers."
That list includes such Fortune 500 companies as Siemens, Turner Broadcasting Systems, The Gillette Co., EMI Music North America, Textron, Weyerhaeuser, the American Cancer Society and Harris Corp.
"It’s not rocket science," Buckman says. "We spend a lot of time asking them what’s important to them, what we can do better. We survey our customers every year. It’s not the only form of feedback we get, but it’s the benchmark.
"We’re pleased that we’ve seen those survey scores go up every year, year after year, even after 9/11. We then go back to each customer and build an improvement plan based on feedback so we can do a better job for each and every one."
And for that, Buckman gets to sit in first class.
HOW TO REACH: WorldTravel BTI, www.worldtravel.com or (800) 342-3234
