Kathy Briski, C.P.M., GTP
September 9, 2014

Day-to-Day Purchasing Process
Generate
Requisition
Approve/
Submit
Requisition
Process/
Submit
Order
Receive
Goods &
Services
Approve
Invoice
Process
Invoice &
Generate
Payment
Access
Opportunity
&
Establish
Team
Profile
Category
Internally
& Externally
Strategic Sourcing Process
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/ Approved
Suppliers
Negotiate
& Develop
Sourcing
Recommendaction
Implement
Agreements
Supplier Relationship Management Process
Define
Supplier
Evaluation
Criteria
Collect
Data
Conduct
Performance
Evaluation
Develop
Improvement
Strategy
Continuous
Improvement
Core Supporting Capabilities
Supplier
Scorecard
Savings
Management
Spend
Analysis
Page: 1
Knowledge
Management
Contract
Management
Catalog
Management

ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION
Assess
Opportunity
& Establish
Team
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendaction
Assess
Opportunity
Obtain
Sponsorship
& ID Team
Create
Project
Plan
Validate
Internal
Requirements
& Profile
Category
Develop
Sourcing
Objectives
Create
Supplier
Selection
Criteria
Fast Track for Quick Savings
Build TCO
Model
Conduct
Industry
Analysis
Develop
Sourcing
Strategies &
Tactics
Conduct
Supplier
Analysis
Complete
Traditional
RFP Process
- AND/OR -
Conduct eAuction(s)
- AND/OR -
Collaborate w/
Incumbent
Supplier(s)
Prepare Fact-
Based
Negotiation
Packages
Negotiate
Agreements
Implement
Agreements
Implement
Agreements and Monitor
KPIs
Evaluate
Performance and Develop
Suppliers
Project Plan
Analyze Current
Spend
Document
Requirements
Internal Category
Profile
TCO Model
Cost Reduction
Ideas
Industry Profile
Sourcing
Strategy Plan:
Competitive
Supplier
Selection or
Existing
Supplier
Development
Supplier
Selection
Decision Matrix
RFIs (optional)
“Short List” of
Suppliers
Page: 2
RFPs / RFQs
Fact-Based
Negotiation Packages eAuctions
Collaborative
Discussions
Supplier Negotiations
Presentation
Sourcing
Recommendation
Finalized
Agreements
Benefits
Realization
Continual
Supplier
Improvement

ANALYSIS STRATEGY SUPPLIER SELECTION
Assess
Opportunity
& Establish
Team
Assess
Opportunity
Obtain
Sponsorship
& ID Team
Create
Project
Plan
IMPLEMENTATION
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendaction
Implement
Agreements
Project Plan
Analyze Current
Spend
Document
Requirements
Page: 3

SAMPLE
Travel Workplan Review
April
Mobilization & Kick-Off
Category
May
Profile Internally &
Externally
Develop Strategy
Screen Suppliers &
Selection Factors
Conduct Competitive
Exercise
Negotiate & Develop
Sourcing
Recommendation
Implement Agreement
June July August September
4

SAMPLE
Confirmation of Sourceable Spend
Category Opportunity Baseline – Travel
Sourcing
Group
Category Sub-Category
Addressable
Spend
%
Addressable
Sourceable
Spend
Travel
Travel
Travel
Airline
Car Rental
Hotel
$6,000,000
$1,000,000
$4,500,000
100%
100%
100%
$5,500,000
$925,000
$4,400,000
Travel
Travel
Agency - Agency Fees
Demand Management
(Compliance)
$170,000
N/A
100% $0
Est. Mid
Saving %
3%
5%
5%
0%
N/A
Est. Mid
Savings $
$165,000
$46,250
$220,000
$0
$700,000
Key Travel Contracts and Expiration Dates Preliminary Opportunities to Drive Accelerated Benefit
• Hertz Car Rental Agreement – Expiration Date: July 31, 2010 • Mandated Travel & Entertainment Policy
• Northwest Airlines Agreement – Expiration Date: November 30, 2010 • Drive Demand Management (Compliance Behavior):
•
American Express Travel Agency Agreement
– Expiration Date:
September 30, 2009 – Currently Extended until September 30, 2010,
• Advance Ticket Purchase with an additional 1 year extension (2011).
• Non-Refundable Tickets
Page: 5
• Preferred Hotel usage
•
Preferred Car Rental usage
• Hotel Competitive Bid
• Negotiate American Airlines contract
• Car Rental Competitive Bid

ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION
Assess
Opportunity
& Establish
Team
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendation
Validate
Internal
Requirements
& Profile
Category
Build TCO
Model
Conduct
Industry
Analysis
Implement
Agreements
Internal Category
Profile
TCO Model
Cost Reduction
Ideas
Industry Profile
Page: 6

SAMPLE
Price for airfare, room rates and rental rates make up a portion of the TCO for Travel with cost drivers laying hidden in process.
Total Cost of
Ownership
Travel
Price
Process
Copyright © 2007 Accenture All Rights Reserved.
Airfare Cost
Hotel Cost
Rental Car Cost
Procurement
Agency Cost
Air Ticket Cost
Ancillary Fees
Nightly Room Rate
Misc. Charges
Daily Rate
Fuel
Misc. Charges
Labor Costs
Travel Policy
Management Fees
Support
• Air Ticket Cost
• Taxes
• Fuel Surcharges
• Security Fees
•
•
• Baggage Fees
• Change Fees
Room Rate
Taxes
•
• In Flight Internet
Status Level
• Upgrade Fees
• Energy Surcharge
• Internet
• Parking
• Fitness Center
• Daily Rate
• Taxes
•
• Meals
Phone
• Self fill
• Fuel and Service Charges
• Fuel Purchase Options
• Mileage Charge
• Vehicle Fees •
• Insurance
Airport Fees
• GPS • City Surcharge
• Concession Fee Recovery
• Time to register new online users on Cliqbook
• Time to train new online users
• Policy Enforcement
• Advance Booking
• Preferred Suppliers
• Online Booking
• Agent Assisted Booking
• Client Negotiated Airfare
Transaction Fee
• Emergency Travel Services
• Change Requests
7

SAMPLE
Objective
Provide a detailed understanding of the current corporate travel industry as well as the forces shaping future travel services. The results of this profile will shape Comerica’s travel Sourcing
Strategy.
Key Questions
How big is the industry?
Who are the major players?
How competitive is the market?
What are the key cost drivers?
Is the industry in a state of growth or decline?
What are the current pricing trends?
Page: 8

The travel industry encompasses a variety of different categories each grouped with an
NAICS (North American Industry Classification System) code.
SAMPLE
NAICS 481 – Transportation by Air
4811
– Scheduled Air Transportation
481111 – Scheduled Passenger Air Transportation
NAICS 721
– Accommodation
7211 – Traveler Accommodation
721110
– Hotels and Motels 721110.1 Guestroom Rental
NAICS 5321 – Automotive Equipment Rental
53211
– Passenger Car Rental and Leasing
532111 – Passenger Car Rental (for business travel)
NAICS 561 – Administrative and Support Services
5615 – Travel Arrangement and Reservation Services
561510 – Travel Agencies (including Meetings & Events)
Source: http://www.bls.gov
Page: 9
In Scope
Key Points
• Scheduled passenger air transportation, hotel, passenger car rentals and meeting/event planning services are in scope for travel sourcing.
• Because of the existing relationship with current travel agency and the subsequent process standardization, it does not make sense to fully source the travel agency component of travel at this time. However, there may be components of the contract to reevaluate.
• Meeting/Event Planning Services are categorized under the same NAICS code as Travel Agencies.

• In 2000, 10 airlines accounted for slightly more than 90% of available seat-mile capacity in the
United States. By early 2012, those 10 airlines, through mergers, were reduced to 5 airlines controlling about 85% of the domestic passenger market. Moreover, American and US Airways is currently merging —which would further reduce the number of airlines controlling the vast majority of passenger ridership to only four.
Source: Office of Inspector General, AVIATION INDUSTRY PERFORMANCE, A Review of the Aviation Industry, 2008
–2011, Number: CC-2012-029
, Date Issued: September 24, 2012
RITA, Bureau of Transportation Statistics
BOEING PROPRIETARY

2013 Global Airline Industry Revenue reached $711 Billion. North America is the industry's revenue leader, generating about 44% of industry revenue.
SAMPLE
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
$582
2008
Annual Airline Industry Revenue
$493
2009
$561
2010
$590
2011
$638
2012
$711
2013
$746
2014F
Source: Airlines for America: airlines.org, Airline Financials.com, IATA, Wikipedia,
CWT 2014 Travel Price Forecast
Page: 11
•
2013 Airline Industry revenue reached $711 Billion.
•
For 2014, Airline Industry revenue forecasts to reach
$746 Billion.
•
Over the five years to 2018, industry revenue is expected to increase at an annualized rate of 3.6% to
$848.2 billion
• US Airline Industry revenue is expected to continue flying upward over the five years to 2019, increasing at an annualized rate of 1.5% to $153.6 billion.
• Major operators such as American Airlines, Delta and
United Continental will reap synergies from their recent mergers, leading to higher profit margins.
However, profit margins will still depend on volatile fuel prices and the airlines’ ability to successfully hedge against any adverse movements. New fuelefficient aircraft will aid this cause and increase operator competitiveness in the global market.
• U.S. scheduled passenger airlines reported a net profit of $12.7 billion in 2013, up from a profit of $98 million in 2012
• Business travel represents 35% of airline’s revenue
• Federal taxes constitute $61 – or 20% – of the price of a typical $300 domestic one-stop round-trip ticket
•
In 2012, U.S. airlines carried 16% more passengers and cargo than in 2000, while using two billion fewer gallons of fuel
• From 2000-2013, U.S. airlines reduced the flight cancellation rate sharply from 3.30% to 1.51%

Airline Industry: PPI (Producer Price Index)
– Scheduled Passenger Air Transportation
The PPI (measures average change in prices over time) for passenger air transportation. For 2012 the average amounted to
285.0 which represents a gain of 9.5% from 2011, but for 2014 the average is trending slightly upward.
300
280
260
240
220
200
180
186,5
200,6
200,4
205,7
205,8
217,1
229,6
234,5
257,1
235,9
273,5
254,6
285,1
283,1
286,0
NAICS 481111 All indexes are subject to revision four months after original publication.
Source: http://www.bls.gov/ppi/

SAMPLE
Top 3 Drivers Account For 64.3% of Total Airline Costs.
Key Points
• The top three cost drivers for ninety five percent of the world’s airlines, are: fuel, personnel and the cost of aircraft, which together account for an average of 64.3% of an airline’s total cost structure.
• Dependence on oil production, labor agreements and a duopoly in aircraft manufacturing prevent airlines from having any substantive impact on these cost drivers.
• With revenues fixed by competitive ticket pricing and the majority of their costs out of their control, airlines are challenged to maintain earnings and gain competitive advantage by controlling less than 35% of their cost structure .
Source: www.rajcoaviation.com
Page: 13

Fuel is one of the largest cost contributor to airlines’ operating costs.
SAMPLE
$140
$120
$100
$80
$60
$40
$20
$36
$49
$83
$70
$88
$129
$80
$120
$91
$130
$125
$0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Key Points
• Historically jet fuel expenses have ranged between 10% and 15% of U.S passenger airline operating costs, but in 2008 the cost of fuel was between 30% – 40% of total operating expenses for most carriers
• The Air Transport Association estimates that for every dollar increase in the price of jet fuel (a derivative product of crude oil), US airlines incur an additional $445.0 million in fuel expenses
• From 2000 – 2010, US airlines carried 15% more traffic while using 2.1 Billion fewer gallons of fuel.
• For 2013 jet fuel prices averaging $124.60 per barrel. Current 2014 price is $120.60 per barrel or 8.4% from last year this time.
• Impact on 2013 fuel bill: $-4 Billion (global airline industry)
• From 1978-2012, U.S. airlines improved fuel efficiency approximately 120%
Sources: Airlines for America: www.airlines.org
, www.bts.gov
, www.iata.org
Page: 14

SAMPLE
The cost of air travel have been very volatile over the past several years. The cost of airfare flying out of Tampa, FL has been lower than the U.S. average.
$430
$380
$330
$280
$230
Air Travel Price Index for Tampa, FL
U.S.-Origin ATPI Tampa, Fl
$180
2001
Q1
2002
Q1
2003
Q1
2004
Q1
2005
Q1
2006
Q1
2007
Q1
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Q1
2014
Q1
Key Points
• The cost of airfare flying out of Tampa, FL has been lower than the U.S. average.
• Airfares will be nearly flat in Canada and the United States next year, driven by a highly consolidated and fiercely competitive landscape, stable projected oil prices, and potential reduction in demand from the U.S. government, driven by its sequestration efforts.
• Airlines found several ways to grow revenue without raising fares – a la carte pricing: from charging for select coach seat assignments, boarding after elite status members, baggage fees and fuel surcharges and possibly using restrooms!
• In 2011, US airlines posted the lowest annual rate of mishandled baggage ever recorded.
• 2013 ancillary revenue reached over $42 billion this year, up from $36.1 billion in 2013.
• Ancillaries will account for 6% of total airline revenue in 2013, up from 5.4% last year.
1 The air travel price index measures the percents change over time in prices paid by travelers.
Sources: Bureau of Transportation Statistics, AMEX 2013 Forecast, CWT 2014 Travel Price
Forecast, Airlines for America: www.airlines.org
Page: 15

SAMPLE
Ranking *
3
5
6
7
1
2
3
10
11
12
8
9
Airline
Delta
United
US Airways
American
Spirit
Southwest
Allegiant Air
Alaska
JetBlue
Hawaiian
Frontier
Virgin America
TOTAL
2007
96,546
52,002
27,738
124,538
20,799
2008
177,063
132,994
187,082
277,991
25,266
16,151
16,416
4,505
4,618
231
363,544
22,028
35,308
11,627
15,156
2,569
887,084
* Airlines ranked by 2013 baggage fee revenue, dollars in thousands (000)
2009
481,719
268,977
432,280
475,184
46,848
26,983
44,095
58,669
53,267
38,186
55,160
19,364
2,000,732
2010
952,250
313,207
513,623
580,663
81,503
29,787
55,325
108,997
57,019
54,008
62,115
36,075
2,844,572
2011
863,608
276,817
506,339
563,465
133,970
32,035
53,562
157,013
64,078
56,590
54,862
33,482
2,795,821
2012
865,879
705,547
516,206
557,385
168,229
144,475
89,556
151,475
70,788
67,829
70,173
57,410
3,464,952
2013
833,183
624,821
527,591
505,697
211,961
143,540
112,453
96,033
74,316
70,034
69,226
58,525
3,327,380
Source: www.bts.gov
Page: 16

SAMPLE
Ranking *
7
8
5
6
3
4
1
2
9
10
11
Airline
Delta
United
American
US Airways
JetBlue
Alaska
Spirit
Virgin America
Southwest
Hawaiian
Frontier
TOTAL
2007
16,331
331,193
74,472
54,700
943
21,801
33,081
532,521
2008
18,927
354,471
469,883
68,304
123,468
67,077
21,514
9,761
25,159
34,279
1,192,843
23,546
21,494
1,677,974
* Airlines ranked by 2013 reservation cancellation/change fee revenue, dollars in thousands (000)
2009
406,039
309,866
449,899
248,840
121,273
60,590
23,561
12,866
2010
698,611
321,539
471,369
253,077
113,997
50,357
23,120
18,151
18,192
16,685
1,985,098
17,356
16,562
2,072,555
2011
766,795
324,129
495,158
275,643
124,536
10,598
25,927
15,851
2012
778,398
660,943
517,708
297,693
133,771
23,210
27,763
30,644
32,470
18,285
14,217
2,535,102
2013
840,070
756,513
521,032
327,329
146,434
89,978
32,545
32,223
25,356
17,931
13,194
2,814,069
Source: www.bts.gov
Page: 17

SAMPLE
Shown in their original values, facilitating comparisons with other goods & services versus the price of air travel and with movements in the U.S. Consumer Price Index (CPI). CPI is defined as a measure that examines the weighted average of prices of a basket of consumer goods and services.
Price of Air Travel Versus Other Goods and Services
Product (Unit)
Walt Disney World (One Day Pass, Adult ) 0
College Education, Public, Undergraduate (Year) 1
College Education, Private, Undergraduate (Year) 1
National Football League (NFL) Game (Ticket) 9
Prescription Drugs (BLS Index) 2
Major League Baseball (MLB) Game (Ticket) 10
Gasoline (Gallon, Unleaded) 4
Vehicle (New) 11
Single Family Home (New) 5
Consumer Price Index (CPI-U) 2
Movie Ticket 6
Food & Beverage (BLS Index)
Postage Stamp (First-Class) 7
Whole Milk (Index) 2
Air Travel (R/T Domestic Fare + Ancillary) 8
Air Travel (R/T Domestic Fare Only) 8
Apparel: Clothing/Footwear/Jewery (BLS Index) 2
Television (BLS Index) 2
2000 2013
$46
$3,508
$16,072
$48.97
285.4
$16.22
$95
$8,893
$30,094
$81.54
442.6
$27.48
$1.51
$24,923
$3.53
$31,762
$169,000 $265,900
172.2
232.957
$5.39
168.35
$0.33
156.9
$316.96
$314.46
$8.13
237
$0.46
214.68
$385
$363
129.6
49.9
127.41
4.6
2013 vs 2000
107%
154%
87%
67%
55%
69%
134%
27%
57%
35%
51%
41%
39%
37%
22%
15%
-2%
-91%
0 AllEars.net - based on June of each yer
1 The College Board - based on beginning of academic year
2 U.S. Bureau of Labor Statistics - including hedonic "quality-change' adjustments
3 National Automobile Dealers Association - average retail selling price
4 U.S. Department of Energy - Monthly Energy Review, Table 9.4
5 U.S. Census Bureau - median sales price of new homes sold in the United States, including the land
6 National Association of Theatre Owners
7 U.S. Postal Service - Publication 100
8 A4A via U.S. Bureau of Transportation Statistics - shown on a round-trip basis
9 Team Marketing Report Fan Cost Index, average nonpremium ticket
10 Team Marketing Report Fan Cost Index, average nonpremium ticket
11 NADA DATA 2014
Sources: Airlines for America: www.airlines.org
Page: 18

SAMPLE
Source: www.ibisworld.com
Page: 19
Key Points
• Level Concentration in this industry is
Medium
• The Domestic Airlines industry has a moderate level of concentration. The top four industry players are estimated to hold a combined market share of more than 66.4% in 2014.
• Level & Trend Competition in this industry is
High and the trend is Increasing
• The Domestic Airlines industry is highly competitive.
Airlines compete for customers on price, frequency and capacity, route offerings, loyalty programs, promotions, rewards and service quality.
• Barriers to Entry in this industry are High and Steady
• Costs to purchase aircraft and specialist machinery, hangar and other airfield space, as well as costs to attract skilled labor and to comply with stringent safety requirements are high and a significant barrier to industry entry.
• Level & Trend Globalization in this industry is
Low and the trend is Increasing
• The Domestic Airlines industry has a low level of globalization, with access to domestic routes strictly controlled for US-based airlines; foreign ownership is discouraged. Foreign operators may provide services to the domestic market, but are generally restricted to limited routes and destinations.

$14,00
$12,00
$10,00
$8,00
$6,00
$4,00
$2,00
$0,00
SAMPLE
2013 Global Hotel Industry Revenue reached $592 Billion. The US Hotel Industry Revenue reached $144.4 Billion in 2013.
• 2013 Global Hotel Industry Revenue reached $592 Billion.
The US Hotel Industry Revenue reached $144.4 billion in
2013
• In 2014 global hotel revenues are estimated to grow 2 % to $604.5 billion. Over the five years to 2018, IBISWorld forecasts industry revenue will increase at an average annual rate of 2.2% to $661.5 billion.. This will result from growth in business and pleasure travel, and rising room rates.
• Over the five years to 2014, IBISWorld expects industry revenue to grow at an average annual rate of 2.5%. In
2014, industry revenue is expected to jump 2.3%, as consumer confidence and spending spike, raising revenue to $144.4 billion.
• US revenue is projected to increase at an average annual rate of 3.0% to $167.0 billion over the five years to 2019.
• Smith Travel Research is projecting increases in all three key performance metrics during 2014: Occupancy is expected to rise 1.3% to 62.7%, Average Daily Rate
(ADR) will increase 4.6% to $116.43 and Revenue Per
Available Room (RevPAR) is expected to grow 6.0% to
$72.97.
Page: 20
Source: www.IBISWorld.com
, Smith Travel Research

SAMPLE
The majority of the global branded properties and revenue are mostly located in North America,
Chain Portfolio by Hotels & Rooms
Total Network
(Rooms/Hotels)
647,161 R
4,437 H
612,735 R
7,207 H
605,141 R
3,474 H
~ 600,000 R
~ 3,600 H
507,306 R
4,229 H
495,145 R
6,142 H
301,700 R
1,027 H
Main
Footprin t
Americas: 68%
Americas: 83%
Americas: 85%
Americas: 86%
EMEA: 56%
Americas: 87%
Americas: 61%
Brands &
Segment
7 brands from midscale to luxury
12 brands from budget to upscale
15 brands from midscale to luxury
10 brands from economy to luxury
10 brands from budget to luxury
11 brands from budget to luxury
9 brands from midscale to luxury
Brands by Service Level
• The majority of the global branded properties and revenue are mostly located in North American
• Major revenue for global chains (such as
Marriott, Hilton, etc) is from franchise and management fees.
• Business travelers, including executives, are shifting from luxury hotels to more moderate mid-priced hotels
• Hotel taxes, usually a combination of sales and occupancy taxes along with the occasional flat fee, range from 10% to more than 18%.
• Hotel costs represent the single largest component of non-air expenses, about
43% of the travel dollar
Source: PWC Hospitality Directions, Smith Travel Research, CWT Hotel
Solutions, Business Travel News, IBISWorld
Page: 21

Chain Scale
Luxury
Upper Upscale
Upscale
Midscale
Economy
Ex-Upscale
Ex-Midscale
Ex-Economy
Brand Name
For Domestic Hotel
Bookings (2012) :
 Total Tracked
Spend: $XXM

46% of spend in
Upper Upscale.
Average Nightly
Rate: $XXX

21% of spend in
Upscale. Average
Nightly Rate:
$XXX

Business Travel
News: 2014
Corporate Travel
Index: $158

The PPI for hotel rooms have fluctuated during 2012 due to pressures from both buyers and sellers. The 2014 average is 136.2, indicating rates are continuing to rise.
140,0
135,0
130,0
125,0
120,0
115,0
110,0
105,0
100,0
100,0
104,5
111,7
124,3
129,7
125,1
124,1
126,8
131,4
134,0
136,2
116,4
NAICS 721110.1 All indexes are subject to revision four months after original publication.
Source: http://www.bls.gov/ppi/

SAMPLE
Over 80% of costs in the hotel industry is distributed among four categories: (1) administrative overhead, (2) labor, (3) repairs and maintenance, and (4) food and beverage.
Operating Cost Drivers
Source: www.IBISWorld.com
Page: 24

CWT 2014 Travel Price Forecast
Page: 25

Page: 26

Source : www.ibisworld.com
,
Page: 27
Key Findings
• Level Concentration in this industry is Medium
• In 2014, the four largest operators in the industry (Hilton
Worldwide, Marriott International, InterContinental Hotels
Group and Starwood Hotels and Resorts) account for an estimated 41.0% of industry revenue
• It is increasing as hotel buyouts and mergers become more frequent and operators join franchise and chain operators.
• Level & Trend Competition in this industry is
High and the trend is Increasing
• At most price points, hotels look to attract travelers by offering competitive prices with a range and quality of service to maximize client satisfaction, while minimizing room vacancy rates. Room discounting increases during difficult economic periods, with fewer discounts offered in boom times.
• Barriers to Entry in this industry are Medium and Steady
• The start-up costs and market share concentration vary between industry segments, particularly for the international standard five-star properties compared with three-star motels.
• Globalization in this industry is
Medium and the trend is Increasing
• Most operators in this industry are US-owned and earn most of their sales from domestic activity.

Global industry spend is $36.4 billion of which 30% is business travel at airports
Source: IBISWORLD, Auto Rental News, Business Travel News
SAMPLE
Page: 28
Key Points
• Global industry spend is $36.4 Billion of which 30% is business travel at airports and 35% off-airport.
• The industry is segmented by business travelers, leisure travelers, car leasing and car sharing
• Leisure market has grown larger than corporate business market
• Industry revenue is forecast to grow at an annualized rate of 3.0% over the five years to 2019 to $42.2 billion
• High fuel cost is impacting industry as customers, especially leisure travelers, are finding other alternatives (public transportation)
• Hertz and Avis expanding off-airport locations to compete with Enterprise
• Car rental industry adjusted to global recession better than other travel industry categories. They can “right” size fleet to meet demand by disposing vehicles quickly and reduce costs.

The PPI for passenger car rentals had been decreasing since 2013, but for 2014 prices are starting to finally rise again.
125,0
120,0
116,8
115,0
110,0
105,0
100,0
102,6
106,0
105,4
104,8
104,6
108,8
111,5
117,8
119,3
118,1
109,6
104,2
111,5
NAICS 532111 All indexes are subject to revision four months after original publication.
Source: http://www.bls.gov/ppi/

SAMPLE
The U.S. car rental market is highly consolidated among a small number of major players and is getting smaller.
$13,00
$11,00
$9,00
$7,00
$5,00
$3,00
$1,00
Top 3 Car Rental Companies By Revenue
$11,90
Enterprise
$6,30
Hertz
Global Market Share
$5,20
Avis Budget
Source: www.autorentalnews.com
; www.ibisworld.com
, Business Travel News, 2014
Corporate Travel Index
Page: 30
Key Points
• After Hertz’s purchase of Dollar Thrifty, the top three rental car companies will make up 95% of the total on-airport US car rental industry revenues
• Suppliers offer different brands that focus on specialized markets:
• Corporate Traveler – On-airport convenience – Hertz, Avis and
National
• Leisure Market – On/Off-airport Budget, Dollar Thrifty, and
Enterprise
• Additional Non-US regional players include:
• Europcar (Europe and Asia Pacific)
• Sixt (Germany and EMEA)
• In high risk countries such as India, China, Thailand, Latin
America, etc. the business model is to rent a car with driver.
Cost is less than a chauffer / limo as a typical rental vehicle is used
• Car rental companies have implemented a variety of new ancillary fees to help preserve some of the lost revenue in recent times, such as tacking on fees to extend a reservation, eliminating 60 minute grace period, or increasing the cost of a two-day rental
• “Virtual rental technology” – enables customers to reserve, rent, access and return cars just about anywhere. ZipCar, WeCar,
Connect.
• It is forecasted that that base rates will increase on average between 0% to 2% for business travel rental cars in the U.S. for
2014. This is big news since US suppliers haven’t been able to increase rates, even slightly. This is due to increasing fleet costs for car rental providers, as their used vehicles sell for less than in recent years as consumers shift toward buying more new and fewer used vehicles. Even so, the highly consolidated market will retain strong competition among suppliers in 2014.
• Business Travel News 2014 Corporate Travel Index: $47

Over 78% of costs in the car rental industry is distributed among four categories: (1)
Purchases, (2) Other, (3) Depreciation, and (4) Wages.
SAMPLE
Operating Cost Drivers
Key Findings
• The industry have slowly recovered as the demand for air travel, which is the industry’s primary revenue source, started to increase as of 2010.
• The industry’s solid recovery is expected to continue over the next five years. Demand is expected to increase as domestic travel rates continue to grow, bolstered by the US economy’s recovery.
• Industry revenue is forecast to grow at an annualized rate of 3.0% over the five years to 2019 to $42.2 billion.
• Corporate profit is currently at an all-time high, growing an impressive 9.2% per year on average over the five years to 2014
• Over the past five years, many industry operators have continued to expand into off-airport markets, providing additional avenues for growth. Car rental operators have learned from the recession and have sought to diversify their revenue streams, so as to mitigate exposure to any one segment of the economy.
• Car sharing has continued to emerge over the past five years as both traditional car rental companies and new players seek to gain market share in this new segment of the industry. Each of the major car rental companies now has a car sharing division.
Source : www.ibisworld.com
, Auto Rental News
Page: 31

Source : www.ibisworld.com
,
Key Findings
Page: 32
• This industry is Mature
• New technologies, such as online reservations, provide advantages like reduced customer acquisition costs. But these advantages flow on to existing companies and do not produce new entrants or new markets. Some companies are expanding into local markets with programs like car sharing.
• Basis for Competition: High and the trend is increasing
• All companies in this industry compete primarily on price and customer service.
• Companies also compete through branding and market segmentation.
• Strategic alliances with airlines and hotels can produce a competitive edge.
• External competition stems from other modes of travel including taxis, limousines and public transport.
• Barriers to Entry in this industry are Medium and Steady
• Rental fleet investment is a significant monetary outlay.
• Potential new entrants would have difficulty establishing a brand identity because the current brands are heavily entrenched.
• Globalization in this industry is Low and the trend is Steady
• All major car rental companies in the United States are domestically owned; however, US car rental companies operate globally either through direct ownership or through license and franchise agreements.

Over the next 5 years IBISWorld expects industry revenue will increase an annualized
10.1% to $264.4 billion.
2013 Top 6 Travel Management Co’s By
Revenues
$40
$35
$30
$25
$20
$15
$10
$5
$0
$39 $39
$30
$27
$22
$16
•
•
•
•
•
•
•
•
•
• Key Points
The top 50 travel management companies represent over $185 billion in sales revenue in
2013.
Five companies registered more than $20 billion in sales, the same number as in 2013, although three had more than $30 billion, up from one last year
There were 16 listees with sales of more than $1 billion, same as the last 2 years
Smaller firms continued to grow impressively, with and without acquisitions. Ovation Travel moved from $828 million to $910 million, and Direct Travel soared from $575 million to $767 million as it continued an aggressive acquisition strategy.
Over the five years to 2019 IBISWorld expects industry revenue will increase an annualized 10.1% to $265.4 billion.
Expedia, and now Priceline maintains top spots over AMEX.
Technology dominated the replies when it came to recent developments and projections. A number of companies said they were developing proprietary technology solutions
The industry is highly fragmented, with the top four industry players accounting for less than 30.0% of the industry's market share.
Travel Agency profit margins are low, reflecting a high level of competition in the industry.
Source: www.travelweekly.com
Travel Weekly Power List 2014, www.bts.gov

Global industry spend is $36.4 billion of which 30% is business travel at airports
SAMPLE
Key Points
• Leisure travel is the largest market for the industry. This market is made up of travelers taking both domestic and international trips. The total number of international tourism departures is expected to have exceeded 1 billion in 2014. The top three countries for departures are Germany, the United
States and China. Many travelers going overseas still use travel agency services for part or all of their trip components, such as accommodations and airline bookings. However, in mature markets such as the United States travelers are increasingly likely to use online services to book their domestic trip, or make arrangements directly with hotels and airlines.
Source: IBISWORLD,
Page: 34

The PPI for travel agencies has gone down 13% since its high in 2001 (due to 9/11 and the commencement of the on-line booking tool), but has risen since and has exceeded its 2007 high and continues to climb.
125,0
120,0
121,8
123,3
115,0
110,0
117,0
114,0
112,5
108,6
107,4
111,5
113,2
111,7
111,5
112,4
113,0
113,4
114,0
105,0
NAICS 561510 All indexes are subject to revision four months after original publication.
Source: http://www.bls.gov/ppi/

Over 60% of costs in the travel agency industry is distributed among four categories: (1)
Wages, (2) Purchases, (3) Rent & Utilities, and (4) Marketing.
SAMPLE
Operating Cost Drivers
Source : www.ibisworld.com
Page: 36

Business Travel News – 2014 Corporate
Travel Index: Food $88 per day
Page: 37

• Advito Consulting 2014 Forecast
• Airlines for America, www.airlines.org
• AirlineFinancials.com
• AMEX Business Travel 2013 Forecast and Trends
• ATWOnline, www.atwonline.com
• Auto Rental News
• Bureau of Labor Statistics, www.bls.gov
• Bureau of Transportation Statistics, www.bts.gov
• Business Travel News
• CWT Hotel Solutions
• CWT 2014 Travel Price Forecast
• Egencia 2013 Forecast
• Forbes, www.forbes.com
• Hoovers Online, www.hoovers.com
• IATA (International Air Transport Association) & World Air Transport Statistics (WATS 2006)
• www.ibisworld.com
• Global Business Travel Association, www.gbta.org
• OneSource Inc., www.onesource.com
• Power List 2014, www.travelweekly.com
• Pwc Hospitality Directions
• Rajcoaviation.com
• Smith Travel Research Data
• The Transnational.travel
• Travel Daily News, www.traveldailynews.com
• Travel Procurement
• Travel Weekly, www.travelweekly.com
• Wikipedia
• Wikiinvest
Page: 38
SAMPLE

ANALYSIS STRATEGY SUPPLIER SELECTION
Assess
Opportunity
& Establish
Team
IMPLEMENTATION
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendation
Develop
Sourcing
Objectives
Implement
Agreements
Develop
Sourcing
Strategies &
Tactics
Sourcing
Strategy Plan:
Competitive
Supplier
Selection or
Existing
Supplier
Development Page: 39

Several sourcing strategies can be pursued, either separately or together.
— Possible Sourcing Strategies —
STRATEGIC
RELATIONSHIP
 Establish integrated or close relationships with suppliers where both buyer and supplier work together to share information, collaborate, and further each partner’s goals
Strategic
Relationship
Best Price
Analysis
Process
Improvement
Commodity
Sourcing
Strategy Demand
Management
BEST PRICE
ANALYSIS
 Evaluate and model all costs and use negotiation tactics that increase transparency and maximize competition
Volume
Leveraging
PROCESS
IMPROVEMENT
 Identify opportunities to standardize and streamline business processes that will result in improved quality, reduced cycle times, and lower total cost of ownership
VOLUME CONCENTRATION
 Aggregate like goods and/or services across organizational units in order to increase negotiation leverage and negotiate better pricing, and terms and conditions
DEMAND
MANAGEMENT
 Address factors such as standards, requirements, and policies to reduce costs related to internal demand
Page: 40

Current State
• Travel policies located in Accounts Payable
Expenditure Manual – No enforcement
• All departments using one travel agency, however suspect that some Southwest bookings are going directly to Southwest.com
• Travel compliance is not be monitored
• Recently moved corporate headquarters from
Detroit, MI to Dallas, TX
• Top 3 airline spend: Northwest, American and
Southwest
• Current contract with Northwest only (no discount in Tier 3 and high market share commitment)
• 70% of air spend in Tier 3
• Some international air spend – about 15%
Results
• Separate travel policy resulting in improved compliance
• Discount in Tier 3 level pricing
• Capture all Southwest spend
Sourcing Recommendation
• Create separate travel policy with management enforcement
• Enter into negotiations with Northwest (current contracted supplier) and American Airlines. In addition, pursue possible corporate deal with
Southwest Airlines.
• Stimulate competition between Northwest and American Airlines in multi-hub city pairs
• Stimulate competition between Northwest and American Airlines for international air spend
• Negotiate with Southwest and determine if market share can support a formal corporate agreement
• Market dynamics suggest a 2 year contract
Page: 41

SAMPLE
Perform pricing exercise to include primary and primary/secondary considerations, include van/truck rental spend and negotiate additional concessions such as better rebate terms, lower city surcharges and flat rate refueling charge.
Savings
Opportunity
Volume
Concentration
Primary and
Secondary
Considerations
Service
Consolidations
Additional
Concessions
Proposed Strategy Expected Outcome


Consolidate all Division car rental spend.
Pricing exercise to include using one primary vendor only or having one primary and one secondary vendor for car rentals.
 Increase total spend to include cargo van/truck rental business to leverage buying power with Enterprise and
Budget.
 Leveraging buying power across all Divisions to maximize savings.
 Award business to one primary only, or one primary and one secondary vendor, whichever is more advantageous.
 Enterprise to acknowledge additional spend with cargo van/truck business which could help achieve additional savings. Show Budget total spend across their business units to obtain best pricing.
 Ask for additional concessions, including higher rebate, lower city surcharges, lower refueling charges, lower one-way and weekly rentals, and lower GPS rental fee.
 Better rebate terms, possible lower city surcharges, and flat rate refueling charge which amounts to additional savings.
 Develop a global travel policy for all Division’s to follow.
 Consistency across all Division’s leads to demand management savings.
Demand
Management –
Global Policy
Demand
Management –
Enforcement
Mechanism
Demand
Management –
Class of Service
Standardization
 Empower Global Travel Department to enforce global travel policy with key Division team members.
 Standardize car rental class of service to “intermediate” size car only.
 Demand management savings in all areas, airline, hotel and car rental.
 Average daily car rental rate to decrease, providing incremental cost savings to the program.
Page: 42

ANALYSIS STRATEGY SUPPLIER SELECTION
Assess
Opportunity
& Establish
Team
IMPLEMENTATION
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendation
Create
Supplier
Selection
Criteria
Implement
Agreements
Conduct
Supplier
Analysis
Supplier
Selection
Decision Matrix
RFIs (optional)
“Short List” of
Suppliers
Page: 43

SAMPLE
Weight
9%
1%
12%
7%
63%
10%
33%
20%
37%
0%
2%
7%
Maximum
Points
Evaluation Criteria
572 I.
Non-Pricing Components
0 A.
Company Information
35 B.
Rental Locations
100 D.
Safety & Fleet
131 E.
Services & Amenities
21 F.
Billing
185 G.
Top 15 Cities - Rental Locations
100 H.
Top 15 Cities - Trans Method from Airport
954 II.
Pricing Components
154 C.
Additional Pricing Questions
500 National Daily Rental Rate
300 City Surcharge Rate
92
437
136
21
185
100
666
Person A
Score
549
0
35
78
130
100% 1526 1215
93
437
136
21
185
76
667
Person B
Score
526
0
35
88
121
1193
97
437
136
21
185
100
671
Person C
Score
538
0
35
76
121
1209
Total Score
124
21
185
92
668
94
437
136
538
0
35
81
1206
Page: 44

ANALYSIS STRATEGY SUPPLIER SELECTION
Assess
Opportunity
& Establish
Team
IMPLEMENTATION
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendation
Complete
Traditional
RFP Process
- AND/OR -
Conduct eAuction(s)
- AND/OR -
Collaborate w/
Incumbent
Supplier(s)
Implement
Agreements
RFPs / RFQs eAuctions
Collaborative
Discussions
Page: 45

There are many ways to initially exchange information. While RFPs are often appropriate, they are one of many means of engaging suppliers.
Direct Negotiations with an Incumbent
Supplier
Direct Negotiations with a Target
Supplier
Pre-Negotiation
Information
Exchange
Brainstorm with a
Group of Trusted
Suppliers
RFPs / RFQs On-Line Auctions
Should choose the method(s) that best meets both the
Strategic Sourcing objective and the team resource capacity
Page: 46

ANALYSIS STRATEGY SUPPLIER SELECTION
Assess
Opportunity
& Establish
Team
IMPLEMENTATION
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendation
Prepare Fact-
Based
Negotiation
Packages
Implement
Agreements
Negotiate
Agreements
Fact-Based
Negotiation Packages
Supplier Negotiations
Presentation
Sourcing
Recommendation
Page: 47

SAMPLE
Based on a review of Company’s current program, contract terms, and stakeholder requirements, the following improvement areas have been identified to maximize the annual incentive rebate.
Negotiation Point
Pricing, Incentive Rebate
Structure
Pricing, Signing Bonus
Pricing, Performance
Bonus
Description
• Size down the gap between rebate tiers to reduce the risk associated with dropping to a lower tier. Closing the gap between tiers will inset Company to drive more spend to Amex.
• Ensure incentive BPS earned at each tier are best in class for domestic and nondomestic spend.
• Reduce/eliminate minimum signing bonus *NACV thresholds (claw back clause) to avoid refunding any portion of the $1M signing bonus paid to Company in 2008.
• Take a position which suggest Company is doing Amex a favor by offering them other potential business. ABC should fight to keep this business considering transition cost will be minimal for them, thus their margin will not be adversely be effected.
• Establish a realistic performance target based on the post spin *NACV, the current
(pre spin) performance target is too aggressive.
• Maximize the annual performance bonus.
Supplier
• ABC
• ABC
• ABC
Pricing, Deductions • Minimize consulting assessment expenses (hourly rate) and Membership Reward
(MR) fees which are deducted directly from the incentive rebate.
• Negotiate an annual credit which can be applied to consulting and MR expenses.
Pricing, High ROC
Transactions
• Reduce the 50 BSP reduction on P-card transactions > $10K (Hi-ROC volume).
• Negotiate a buffer which can be applied to the Hi-ROC volume, i.e. request that the
BSP penalty apply only to Hi-ROC volume which exceeds a specified amount.
*NACV – Net Annual Charge Volume (i.e. annual spend with Amex)
• ABC
• ABC
Page: 48

SAMPLE
Below are the projected results should Company be successful in driving ABC to the negotiation points proposed. Total Savings is projected to be approximately $300-$600K.
Strategy
Expected Benefits
Type Savings ($) LAS / BATNA Key Enablers
Incentive Rebate Structure – fine tune the incentive BSP tiers to maximize the rebate received post spin-off.
Performance & Signing Bonus – adjust bonus targets to align with the post spin-off spend portfolio. The current targets are far to aggressive.
Deductions – reduce the expense subtracted from the *NACV and deductions from the base incentive rebate.
Total
Financial
Financial
Financial
$200-$400K • Focus on sizing down the gap between rebate tires.
• Put business out to bid
$100-$150K • Concede to a reduction in the performance bonus if the target is simultaneously reduced
• Mandate a reduction in minimum thresholds for signing bonus retention
$0-$50K • Focus on improving the rebate earned on High-
ROC volume
• Dedicate a resource to handle ad-hoc assessment activities
$300-$600K
• Stakeholder buy-in
• Executive sponsorship
• Procurement Support
• Stakeholder buy-in
• Executive sponsorship
• Procurement Support
• Stakeholder buy-in
• Executive sponsorship
• Procurement Support
*NACV – Net Annual Charge Volume (i.e. annual spend with Amex)
Page: 49

ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION
Assess
Opportunity
& Establish
Team
Assess
Opportunity
Obtain
Sponsorship
& ID Team
Create
Project
Plan
Profile
Category
Internally &
Externally
Strategic Sourcing Methodology
Develop
Sourcing
Strategy
Create
Selection
Factors &
Evaluate
Suppliers
Conduct
Competitive
Exercise w/
Approved
Suppliers
Negotiate &
Develop
Sourcing
Recommendation
Validate
Internal
Requirements
& Profile
Category
Develop
Sourcing
Objectives
Create
Supplier
Selection
Criteria
Fast Track for Quick Savings
Build TCO
Model
Conduct
Industry
Analysis
Develop
Sourcing
Strategies &
Tactics
Conduct
Supplier
Analysis
Complete
Traditional
RFP Process
- AND/OR -
Conduct eAuction(s)
- AND/OR -
Collaborate w/
Incumbent
Supplier(s)
Prepare Fact-
Based
Negotiation
Packages
Negotiate
Agreements
Implement
Agreements
Implement
Agreements and Monitor
KPIs
Evaluate
Performance and Develop
Suppliers
Project Plan
Analyze Current
Spend
Document
Requirements
Internal Category
Profile
TCO Model
Cost Reduction
Ideas
Industry Profile
Sourcing
Strategy Plan:
Competitive
Supplier
Selection or
Existing
Supplier
Development
Supplier
Selection
Decision Matrix
RFIs (optional)
“Short List” of
Suppliers
Page: 50
RFPs / RFQs
Fact-Based
Negotiation Packages eAuctions
Collaborative
Discussions
Supplier Negotiations
Presentation
Sourcing
Recommendation
Finalized
Agreements
Benefits
Realization
Continual
Supplier
Improvement

SAMPLE
An effective implementation plan consists of several key components necessary to ensure rapid and complete benefits realization from the new supply arrangement(s), and to follow through on agreed to parameters during contract negotiations.
– Overview of Implementation Plan Components –
Plan Component
Transition Plan
Communication
Plan
Compliance Plan
Benefits Tracking &
Reporting Plan
Performance
Management Plan
Description
 Shift from old supply agreements to new ones.
 May or may not involve switching suppliers.
 Inform the user community of the outcome of the strategic sourcing effort.
 Specify to users how they are impacted and what actions they are required to take as a result of the strategic sourcing effort.
 Highlight all benefits that users may derive from the new supply arrangements.
 Determine how compliance to new supply arrangements will be enforced (if possible).
 Closely linked to the “Communication Plan”.
 Measure benefits resulting from new supply arrangements relative to targets
 Report to senior management on both status and any necessary actions required to improve benefits realization.
 Ensure that suppliers are performing along key metrics as required by the contract.
 Put in place a regular communication vehicle with suppliers to drive improvements in supplier performance.
Page: 51