December 17, 2018
Achieving More Through Corporate Trade
An Interview with Elizabeth Topazio, President, Active Travel, Active International
Elizabeth A. Topazio is President of Active Travel. She has more than 25 years of experience helping clients booking and/or selling travel goods and/or services achieve additional value through corporate trading.
With 35 years of experience, Active International (activeinternational.com) is a global financial solutions company that drives performance and improves business outcomes for leading brands. A data-driven company, with media as a core competency, Active operates a full service omnichannel media agency. In addition to media, Active brings to bear a broad portfolio of competencies such as Asset Disposition/Merchandise Sales, Real Estate, Retail Marketing, Travel and Hospitality, Freight & Logistics, and Lighting. Through the application of its core business model, Active is able to create financial benefits to serve its clients. Active International is based in New York and has offices in 15 countries.
Who is Active Travel?
Active Travel is the travel and hospitality division of Active International, a global leader in commercial innovation. It is comprised of a team of experienced corporate traders, committed to delivering additional value to travel and hospitality clients through corporate trading. While not a travel agency, Active Travel works with clients (and their agents) who seek savings when booking their group and transient travel/hospitality needs. The division also works with hotelier clients (owners, REITS, management companies) to help drive additional revenue and new market share into their hotel properties.
What Kind of Additional Value?
Active Travel customizes corporate trading transactions to deliver the additional value desired by each client. Broadly speaking, most clients booking travel are looking to realize cash savings, while Active’s hotelier clients are looking to increase market share and maximize revenues. While these benefits may seem in conflict, through corporate trading Active Travel can deliver the additional value desired by each of them. For instance, many corporate clients hold Active Trade Credits, a cash equivalent currency, while many hotelier clients have received a commitment from the Company to make cash bookings in their hotel properties. Active then accepts those Trade Credits (in lieu of cash) as partial payment from clients for bookings at properties owned or managed by hotelier clients. The Company then pays the hotel properties 100% in cash for such bookings, thereby delivering the value desired by each.
How Do Clients Make Bookings?
For group stays (i.e. meetings and/or events), clients and/or their agents select hotel properties (owned or managed by hotelier clients) from Active’s Travel Portfolio for their group stays. Once selected, and prior to sending any requests for proposals (“rfps”) to any selected hotel property, Active Travel pre-clears the proposed group with each selected hotel property to determine if the booking would constitute “new” business to it. Since the goal is to create new market share, only “new” group business (of course, repeat stays for any corporate client initially cleared as new business) is booked. Clearance usually takes a business day. Since there are no commissions or fees for services (and there is never any obligation to book any of particular hotel properties), any booking commissions customarily paid by hotel properties will continue to be paid to our client’s agents. In rare instances, corporate trading transactions with the hotelier client may provide for net, non-commissionable rates. Clients continue to earn any brand loyalty points when booking at hotel properties in accordance with each loyalty programs rules. Transient stays are booked by Active’s onsite reservation center.
Are the Rates Competitive?
To maintain the integrity of the process and assure clients they are getting competitive rates, Active never negotiates with hotel properties on behalf of clients. With respect to group bookings, clients and/or their agents negotiate all rates, terms, and concessions (and makes site inspections) directly with the each hotel property as they normally would. Active’s corporate trading transactions are owned at new market share. For transient stays, the applicable rate is the lowest available prevailing rate available from the hotel property to the general public at time of reservation request.
If the Hotel Gets 100% Cash, How Does the Client Use Trade Credits?
For most of its group clients, Active implements Trade Credit usage after they stay and pay the hotel property by redeeming for cash the agreed upon amount of Trade Credit usage. Concurrently upon a client entering into a group contract, Active enters into an Event Authorization with them that sets forth the costs eligible for Trade Credit usage, i.e. room rate costs, and the percentage amount of such costs that Active will accept in Trade Credits (in lieu of cash).
Upon the client (or hotel property) providing Active evidence of payment for the group stay, the agreed upon Trade Credit usage is implemented, reducing their Trade Credit balance by the agreed upon Trade Credit usage amount.
While this is the method preferred by most clients, Active also can customize the process to be “payment agent” and accept a cash and Trade Credit payment directly from the client. From there, Active will pay the hotel property 100% in cash in accordance with the group contract. With respect to transient bookings, they are booked with Active’s onsite reservation center which allows us the use of trade credits at time of booking. The guest will be provided with a confirmation indicating that room rate, taxes and resort fee, if applicable, have been prepaid in advance by Active Travel. Upon check in the guest will have to provide a valid credit card only to cover any incidental charges.
What Costs Are Payable in Trade Credits?
Each corporate trading transaction with hospitality clients is unique. In all cases, however, room rate costs are partially payable to Active in Trade Credits. Depending upon the corporate trading transaction with the hotelier client, Trade Credits may also be used to pay Active for group banquet food and beverage, meeting rental costs, daily resort fees and other costs. Clients always know up front (and in the Event Authorization) when a selected hotel property from Active’s Travel Portfolio includes costs, other than room rate costs, partially payable to Active with Trade Credits.
What About Clients that Don’t Own Trade Credits?
Active can deliver the same amount of savings for clients that may not own our Trade Credits. In fact, Active Travel has many clients that enter into corporate trading transactions that do not include the issuance or use of Trade Credits.
What Other Additional Value Do Hotelier Clients Get?
In addition to shifting new market share into their hotel properties, as discussed above, all transient bookings made by Active’s reservation center are booked on a net, non-commissionable basis, delivering lower booking acquisition costs and higher revenues. Additionally, the Company’s experienced travel team acts as a no cost extension of each hotel property’s sales department to market and promote their property to Active’s clients as a new closed distribution channel. Of course, the hotel property also gets the trading benefit promised by us in the underlying corporate trading transaction as discussed above.
Ultimately, corporate trading is a win-win business for everyone involved.