Latin American Business Travel Community Gathers in Brazil to Learn Latest Industry Developments

 
Against the backdrop of a recent government purchasing card scandal in Brazil, the Latin American corporate travel community gathered in São Paulo to discuss best practices, learn the latest industry developments, and network with peers at the third annual Latin American Corporate Travel and Technology Exchange (LACTTE), hosted by NBTA and the Brazilian Business Travel Association (ABGEV).

Brazilian government officials who had used corporate cards for personal purchases were grabbing national and international headlines, and the scandal was top-of-mind for many attendees. Yet, as Mateus Couto Passos, Commercial Manager of Tour House, Brazil, pointed out, the media was missing the point. The story was not that having the cards allowed misuse; it was that the cards enable the misuse to be detected and addressed.

In drawing that distinction, Couto underscored the need for card companies to educate the Brazilian and broader Latin American business community on the benefits corporate cards can offer. The theme carried throughout the event: Latin American travel management has significant opportunities to drive value through the development of more mature policies, purchasing systems, booking tools, standardized practices and strategic meetings management.

Travel Policies

Fernanda Lamas, Travel & Events Manager, Bayer, Brazil, said that 20 percent of Brazilian companies have travel policies. Daniel Feige, Business Consultant with Match Consultores, Argentina said the figure is smaller in Argentina, while in Mexico, more than 40 percent of companies have written travel policies. Both noted the benefits companies could drive simply by formalizing policies.

Payment Methods

In a session on payment methods, several speakers said that companies with travel policies could drive greater compliance by using corporate cards. Walter Teixeira, Director, TX Consultoria, Brazil, said that penetration of the corporate card in the Latin American market is “low, but growing.” He and Tour House’s Couto noted that the main use of corporate cards in the market is for air travel, and other sectors present opportunities for growing value. For that to be realized, Teixeira said, the card companies must invest in promoting their own products in Latin America.

There are significant challenges to be overcome if the use of corporate cards is to become more common for non-air T&E expenses. Veronica Crespo of the HP Global Travel Agency & Meeting Services Team, and member of the NBTA Mexico Board, said that when HP selected corporate cards as the method of payment, there was significant resistance in Brazil. There was a perception among some employees of the corporate card as a status symbol, which had to be overcome by setting up proper policies and systems to guard against out-of-policy usage.

Couto of Tour House said that the sheer number of hotels is also a challenge, as many do not currently accept credit cards. Additionally, Brazilian TMCs currently perform an audit function for their clients’ hotel folios, manually checking the details of each folio. Although that process is quite time-consuming and costly, it is the standard business process for many companies, and alternatives would have to be accepted to move away from the current practices.

HP’s Crespo offered that spot audits are the solution. With the clear support of top-level management as a prerequisite, the company sets up individual corporate cards (and possibly a centralized “ghost” card for air), and places responsibility on the individual to accurately report expenses. She said the company does not have to review every expense – “The role of the travel manager is not a policeman” -- but does has to review some expenses and must penalize anything out of policy.

The benefits of a successful corporate card roll-out can be significant. Marcia Ogawa, Partner, Deloitte Consulting, Brazil, said “Implementation of corporate cards is painful. It’s not an easy task, but the rewards are enormous.”

She said that travel managers and CFOs are generally under similar pressures to reduce costs, meet policies, optimize cash flow, improve and automate purchasing processes, and minimize risks. Corporate cards can help meet all of these goals, she said.

Crespo of HP listed several advantages of designating corporate cards as the method of payment, including:

• payments are in local currency
• cards are widely accepted
• some discounts are available through card products
• travel insurance is offered with some cards, eliminating the cost of separate insurance
• fraud controls are built in
• one payment method streamlines accounting processes

She also noted that there are some disadvantages, such as:

• The cost of financing
• The challenge of internal reconciliation, which HP has addressed by tasking it to the TMC
• Delays in payments
• Automated card processing is not always available in Latin America

The potential for the corporate card market in Brazil is huge, Ogawa added: as much as 20 billion Brazilian reais (approximately US$11.4 billion), taking into consideration T&E and other expansible items. During the conference, co-host ABGEV and several industry partners published research showing that Brazilian business travel receipts totaled 16.35 Brazilian reais reais (approximately US$9.3 billion). The market in Argentina is smaller, but also presents significant opportunities. According to Match Consultores’ Feige, Argentinean business travel expenses total US$3.5 billion per year.

Feige said that the categorization of cards is effective in creating demand, and that travel managers had to select carefully to meet their companies’ needs. “We’re seeing a whole rainbow of cards,” he said, and went on to give tips about questions to ask in choosing the right card product:

• Can transactions be imported into expense reports?
• Are temporary cards (e.g., meetings cards) offered?
• How are refunds completed and tracked?
• What fees are charged?
• Are any rebates/discounts offered?
• What savings will be generated?

More Insights from LACTTE 2008

Online Booking Tools - Bayer’s Fernanda Lamas said online booking has helped her company meet travel program goals by requiring travelers who book out of policy to say why they are doing so.

Martins and NBTA President Kevin Maguire