Corporate Travel Strategic Sourcing Kathy Briski, C.P.M.,

Corporate Travel Strategic Sourcing Kathy Briski, C.P.M., GTP September 9, 2014

Global Procurement Processes Day-to-Day Purchasing Process Generate Requisition Approve/ Submit Requisition Process/ Submit Order Receive Goods & Services Approve Invoice Process Invoice & Generate Payment Strategic Sourcing Process Access Opportunity & Establish Team Profile Category Internally & Externally Develop Sourcing Strategy Conduct Competitive Exercise w/ Approved Suppliers Create Selection Factors & Evaluate 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 Knowledge Management Page: 2 Contract Management Catalog Management

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Assess Opportunity & Establish Team Activities Assess Opportunity Obtain Sponsorship & ID Team Deliverables or Tools Create Project Plan Project Plan Analyze Current Spend Document Requirements Profile Category Internally & Externally Validate Internal Requirements & Profile Category Develop Sourcing Strategy Develop Sourcing Objectives Create Selection Factors & Evaluate Suppliers Create Supplier Selection Criteria Fast Track for Quick Savings Build TCO Model Conduct Industry Analysis Internal Category Profile TCO Model Cost Reduction Ideas Industry Profile Conduct Competitive Exercise w/ Approved Suppliers Complete Traditional RFP Process - AND/OR Conduct eAuction(s) Develop Sourcing Strategies & Tactics Conduct Supplier Analysis - AND/OR Collaborate w/ Incumbent Supplier(s) Sourcing Strategy Plan: Competitive Supplier Selection or Existing Supplier Development Supplier Selection Decision Matrix RFPs / RFQs RFIs (optional) “Short List” of Suppliers Page: 3 eAuctions Collaborative Discussions Negotiate & Develop Sourcing Recommendaction Implement Agreements Prepare FactBased Negotiation Packages Implement Agreements and Monitor KPIs Negotiate Agreements Evaluate Performance and Develop Suppliers Fact-Based Negotiation Packages Finalized Agreements Supplier Negotiations Presentation Benefits Realization Sourcing Recommendation Continual Supplier Improvement

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Assess Opportunity & Establish Team Profile Category Internally & Externally Develop Sourcing Strategy Create Selection Factors & Evaluate Suppliers Activities Assess Opportunity Obtain Sponsorship & ID Team Deliverables or Tools Create Project Plan Project Plan Analyze Current Spend Document Requirements Page: 4 Conduct Competitive Exercise w/ Approved Suppliers Negotiate & Develop Sourcing Recommendaction Implement Agreements

SAMPLE High Level Travel Project Plan Travel Workplan Review April May June July August September Mobilization & Kick-Off Category Profile Internally & Externally Develop Strategy Screen Suppliers & Selection Factors Conduct Competitive Exercise Negotiate & Develop Sourcing Recommendation Implement Agreement 5

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

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Activities Assess Opportunity & Establish Team Profile Category Internally & Externally Develop Sourcing Strategy Create Selection Factors & Evaluate Suppliers Validate Internal Requirements & Profile Category Build TCO Model Deliverables or Tools Conduct Industry Analysis Internal Category Profile TCO Model Cost Reduction Ideas Industry Profile Page: 7 Conduct Competitive Exercise w/ Approved Suppliers Negotiate & Develop Sourcing Recommendation Implement Agreements

SAMPLE Total Cost of Ownership – Elements Price for airfare, room rates and rental rates make up a portion of the TCO for Travel with cost drivers laying hidden in process. Air Ticket Cost Airfare Cost Ancillary Fees Nightly Room Rate Price Hotel Cost Misc. Charges Daily Rate Total Cost of Ownership Travel Rental Car Cost Fuel Misc. Charges Internet Meals Parking Phone Fitness Center Daily Rate Taxes Self fill Fuel and Service Charges Fuel Purchase Options Mileage Charge Insurance Airport Fees Vehicle Fees City Surcharge GPS Concession Fee Recovery Labor Costs Time to register new online users on Cliqbook Time to train new online users Travel Policy Policy Enforcement Advance Booking Preferred Suppliers Procurement Process Management Fees Agency Cost Copyright 2007 Accenture All Rights Reserved. Air Ticket Cost Fuel Surcharges Taxes Security Fees Baggage Fees In Flight Internet Change Fees Status Level Room Rate Upgrade Fees Energy Surcharge Taxes Support Online Booking Agent Assisted Booking Client Negotiated Airfare Transaction Fee Emergency Travel Services Change Requests 8

SAMPLE Industry Profile - Objective & Key Questions 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: 9

SAMPLE Travel Scope The travel industry encompasses a variety of different categories each grouped with an NAICS (North American Industry Classification System) code. In Scope NAICS 481 – Transportation by Air Key Points 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: 10 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.

AIRLINE INDUSTRY – US Airline Mergers 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

SAMPLE Airline Industry: Overview 2013 Global Airline Industry Revenue reached 711 Billion. North America is the industry's revenue leader, generating about 44% of industry revenue. Annual Airline Industry Revenue 582 Revenue in Billions 638 590 561 Key Points 746 711 493 2008 2009 2010 2011 2012 2013 2014F 2013 Revenues (in Billions) 45 40 35 30 25 20 15 10 5 0 Am er a ic n U d te ni D ta el u So w th es t J ue Bl t e as Al ka Source: Airlines for America: airlines.org, Airline Financials.com, IATA, Wikipedia, CWT 2014 Travel Price Forecast Page: 12 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. 300 285.1 283.1 286 273.5 Producer Price Index 280 257.1 260 240 229.6 254.6 235.9 234.5 217.1 220 200.6 200.4 205.7 205.8 200 186.5 180 00 20 NAICS 481111 01 20 02 20 03 20 04 20 05 20 06 20 All indexes are subject to revision four months after original publication. Source: http://www.bls.gov/ppi/ 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20

SAMPLE Airline Industry: Cost Drivers Top 3 Drivers Account For 64.3% of Total Airline Costs. Key Points 2013 Cost Drivers 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: 14

Airline Industry: Jet Fuel Costs SAMPLE Fuel is one of the largest cost contributor to airlines’ operating costs. Key Points Increasing Jet Fuel Costs 140 129 Average Price Per Barrel 120 125 120 130 100 83 88 91 80 80 70 60 49 40 36 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: Airlines for America: www.airlines.org, www.bts.gov, www.iata.org Page: 15 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%

Airline Industry: Air Travel Price Index 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. Key Points Air Travel Price Index for Tampa, FL U.S.-Origin ATPI Tampa, Fl 430 Average Air Fares 380 330 280 230 180 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 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: 16 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.

SAMPLE Airline Industry: Baggage Fees Ranking * Airline 2007 2008 2009 2010 2011 2012 2013 1 Delta 96,546 177,063 481,719 952,250 863,608 865,879 833,183 2 United 52,002 132,994 268,977 313,207 276,817 705,547 624,821 3 US Airways 27,738 187,082 432,280 513,623 506,339 516,206 527,591 3 American 124,538 277,991 475,184 580,663 563,465 557,385 505,697 5 Spirit 46,848 81,503 133,970 168,229 211,961 6 Southwest 26,983 29,787 32,035 144,475 143,540 7 Allegiant Air 44,095 55,325 53,562 89,556 112,453 8 Alaska 16,151 22,028 58,669 108,997 157,013 151,475 96,033 9 JetBlue 16,416 35,308 53,267 57,019 64,078 70,788 74,316 10 Hawaiian 4,505 11,627 38,186 54,008 56,590 67,829 70,034 11 Frontier 4,618 15,156 55,160 62,115 54,862 70,173 69,226 12 Virgin America 231 2,569 19,364 36,075 33,482 57,410 58,525 363,544 887,084 2,000,732 2,844,572 2,795,821 3,464,952 3,327,380 TOTAL 20,799 25,266 * Airlines ranked by 2013 baggage fee revenue, dollars in thousands (000) Source: www.bts.gov Page: 17

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

Airline Industry: Price of Air Travel versus Other Goods & Services 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 2013 vs 2000 46 3,508 95 8,893 107% 154% 16,072 48.97 30,094 81.54 87% 67% 285.4 16.22 1.51 24,923 169,000 172.2 442.6 27.48 3.53 31,762 265,900 232.957 55% 69% 134% 27% 57% 35% 5.39 168.35 0.33 156.9 316.96 314.46 8.13 237 0.46 214.68 385 363 51% 41% 39% 37% 22% 15% 129.6 49.9 127.41 4.6 -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: 19

Airline Industry: Market Segment & Competitive Landscape SAMPLE 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 Source: www.ibisworld.com Page: 20 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.

SAMPLE Hotel Industry: Overview 2013 Global Revenue (in billions) 2013 Global Hotel Industry Revenue reached 592 Billion. The US Hotel Industry Revenue reached 144.4 Billion in 2013. Key Points 14.00 12.00 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. 10.00 8.00 6.00 4.00 2.00 0.00 M r ar t io t H ilto n C ar o ls n c Ac or St w ar Source: www.IBISWorld.com, Smith Travel Research oo d dh yn W am IH G Page: 21

Hotel Industry: Chains / Brands SAMPLE The majority of the global branded properties and revenue are mostly located in North America, Chain Portfolio by Hotels & Rooms Key Points Total Network (Rooms/Hotels) Main Footprint Brands & Segment 647,161 R Americas: 68% 7 brands from midscale to luxury Americas: 83% 12 brands from budget to upscale Americas: 85% 15 brands from midscale to luxury Americas: 86% 10 brands from economy to luxury EMEA: 56% 10 brands from budget to luxury Americas: 87% 11 brands from budget to luxury Americas: 61% 9 brands from midscale to luxury 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 Brands by Service Level Source: PWC Hospitality Directions, Smith Travel Research, CWT Hotel Solutions, Business Travel News, IBISWorld Page: 22 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

Hotel Chain Scales Chain Scale Brand Name Luxury Upper Upscale Upscale Midscale Economy Ex-Upscale Ex-Midscale Ex-Economy 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

Hotel Industry: PPI – Hotels & Motels, Guestroom Rentals 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. 140.0 136.2 134 135.0 Producer Price Index 131.4 129.7 130.0 126.8 125.1 124.3 125.0 124.1 120.0 116.4 115.0 111.7 110.0 104.5 105.0 100 100.0 03 20 04 20 05 20 06 20 07 20 08 20 NAICS 721110.1 All indexes are subject to revision four months after original publication. Source: http://www.bls.gov/ppi/ 09 20 10 20 11 20 12 20 13 20 14 20

Hotel Industry: Cost Drivers 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: 25

Top Business Occupancy Hotel Markets Worldwide – 2013 YTD CWT 2014 Travel Price Forecast Page: 26

CWT 2014 Forecast: Airline, Hotel, and Car Rental Pricing Page: 27

US Hotel Industry – Competitive Landscape 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. Source: www.ibisworld.com, Page: 28

Car Rental Industry: Overview SAMPLE Global industry spend is 36.4 billion of which 30% is business travel at airports Key Points Source: IBISWORLD, Auto Rental News, Business Travel News Page: 29 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.

Rental Car Industry: PPI – Passenger Car Rental The PPI for passenger car rentals had been decreasing since 2013, but for 2014 prices are starting to finally rise again. Producer Price Index 125.0 119.3 120.0 116.8 117.8 118.1 115.0 111.5 109.6 108.8 110.0 106.0 105.0 111.5 105.4 104.8 104.6 104.2 102.6 100.0 01 20 02 20 03 20 04 20 05 20 NAICS 532111 All indexes are subject to revision four months after original publication. Source: http://www.bls.gov/ppi/ 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20

SAMPLE Car Rental Industry: Market Share The U.S. car rental market is highly consolidated among a small number of major players and is getting smaller. Key Points Top 3 Car Rental Companies By Revenue 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 13.00 11.90 2013 Revenue (in Billions) 11.00 9.00 7.00 6.30 5.20 5.00 3.00 1.00 Enterprise Hertz Avis Budget Global Market Share Source: www.autorentalnews.com; www.ibisworld.com, Business Travel News, 2014 Corporate Travel Index Page: 31

Car Rental Industry: Cost Drivers SAMPLE Over 78% of costs in the car rental industry is distributed among four categories: (1) Purchases, (2) Other, (3) Depreciation, and (4) Wages. 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: 32

US Car Rental Industry – Competitive Landscape Key Findings 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. Source: www.ibisworld.com, Page: 33

Travel Management Industry: Overview 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 Key Points 40 39 39 35 30 2013 Revenues (in Billions) 30 25 27 22 20 16 15 10 5 0 Source: www.travelweekly.com Travel Weekly Power List 2014, www.bts.gov 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.

Global TMC Industry: Overview SAMPLE Global industry spend is 36.4 billion of which 30% is business travel at airports 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: 35

TMC Industry: PPI – Travel Agencies 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. 125.0 123.3 Produceer Price Index 121.8 120.0 117.0 114.0 115.0 113.2 112.5 111.7 111.5 111.5 110.0 112.4 113.0 113.4 114.0 108.6 107.4 105.0 00 20 01 20 02 20 03 20 04 20 05 20 NAICS 561510 All indexes are subject to revision four months after original publication. Source: http://www.bls.gov/ppi/ 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20

Global Travel Agency: Cost Drivers Over 60% of costs in the travel agency industry is distributed among four categories: (1) Wages, (2) Purchases, (3) Rent & Utilities, and (4) Marketing. Operating Cost Drivers Source: www.ibisworld.com Page: 37 SAMPLE

CWT Additional 2014 Perspective Business Travel News – 2014 Corporate Travel Index: Food 88 per day Page: 38

SAMPLE Appendix: Data Sources 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: 39

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Assess Opportunity & Establish Team Profile Category Internally & Externally Develop Sourcing Strategy Create Selection Factors & Evaluate Suppliers Deliverables or Tools Activities Develop Sourcing Objectives Develop Sourcing Strategies & Tactics Sourcing Strategy Plan: Competitive Supplier Selection or Existing Supplier Development Page: 40 Conduct Competitive Exercise w/ Approved Suppliers Negotiate & Develop Sourcing Recommendation Implement Agreements

Sourcing Strategies & Tactics Several sourcing strategies can be pursued, either separately or together. — Possible Sourcing Strategies — STRATEGIC STRATEGIC RELATIONSHIP RELATIONSHIP Establish Establish integrated integrated or or close close relationships relationships with with suppliers suppliers where where both both buyer buyer and and supplier supplier work work together together to to share share information, information, collaborate, collaborate, and and further further each each partner’s partner’s goals goals PROCESS PROCESS IMPROVEMENT IMPROVEMENT Identify Identify opportunities opportunities to to standardize standardize and and streamline streamline business business processes processes that that will will result result in in improved improved quality, quality, reduced reduced cycle cycle times, times, and and lower lower total total cost cost of of ownership ownership Strategic Relationship Process Improvement Best Price Analysis Commodity Sourcing Strategy Evaluate Evaluate and and model model all costs and all costs and use use negotiation negotiation tactics tactics that that increase increase transparency transparency and and maximize maximize competition competition Demand Management Volume Leveraging VOLUME VOLUME CONCENTRATION CONCENTRATION Aggregate Aggregate like like goods goods and/or and/or services services across across organizational organizational units units in in order order to to increase increase negotiation negotiation leverage leverage and and negotiate negotiate better better pricing, pricing, and and terms terms and and conditions conditions Page: 41 BEST BEST PRICE PRICE ANALYSIS ANALYSIS DEMAND DEMAND MANAGEMENT MANAGEMENT Address Address factors factors such such as standards, as standards, requirements, requirements, and and policies policies to to reduce reduce costs costs related related to to internal internal demand demand

SAMPLE Sourcing Strategy: Airlines 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% 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 Results Separate travel policy resulting in improved compliance Discount in Tier 3 level pricing Capture all Southwest spend Page: 42

Category Strategy Deliverable 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 Proposed Strategy Expected Outcome Volume Concentration Consolidate all Division car rental spend. Leveraging buying power across all Divisions to maximize savings. Primary and Secondary Considerations Pricing exercise to include using one primary vendor only or having one primary and one secondary vendor for car rentals. Award business to one primary only, or one primary and one secondary vendor, whichever is more advantageous. Service Consolidations Increase total spend to include cargo van/truck rental business to leverage buying power with Enterprise and Budget. 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. Additional Concessions 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. Demand Management – Global Policy Develop a global travel policy for all Division’s to follow. Consistency across all Division’s leads to demand management savings. Demand Management – Enforcement Mechanism Empower Global Travel Department to enforce global travel policy with key Division team members. Demand management savings in all areas, airline, hotel and car rental. Demand Management – Class of Service Standardization Standardize car rental class of service to “intermediate” size car only. Average daily car rental rate to decrease, providing incremental cost savings to the program. Page: 43

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Deliverables or Tools Activities Assess Opportunity & Establish Team Profile Category Internally & Externally Develop Sourcing Strategy Create Selection Factors & Evaluate Suppliers Create Supplier Selection Criteria Conduct Supplier Analysis Supplier Selection Decision Matrix RFIs (optional) “Short List” of Suppliers Page: 44 Conduct Competitive Exercise w/ Approved Suppliers Negotiate & Develop Sourcing Recommendation Implement Agreements

SAMPLE Car Rental Scorecard Car Rental Company 37% 0% 2% 7% 9% 1% 12% 7% 63% 10% 33% 20% Maximum Points 572 0 35 100 131 21 185 100 954 154 500 300 100% 1526 Weight Evaluation Criteria I. A. B. D. E. F. G. H. II. C. Non-Pricing Components Company Information Rental Locations Safety & Fleet Services & Amenities Billing Top 15 Cities - Rental Locations Top 15 Cities - Trans Method from Airport Pricing Components Additional Pricing Questions National Daily Rental Rate City Surcharge Rate Page: 45 Person A Score 549 0 35 78 130 21 185 100 666 92 437 136 Person B Score 526 0 35 88 121 21 185 76 667 93 437 136 Person C Score 538 0 35 76 121 21 185 100 671 97 437 136 1215 1193 1209 Total Score 538 0 35 81 124 21 185 92 668 94 437 136 1206

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Assess Opportunity & Establish Team Profile Category Internally & Externally Develop Sourcing Strategy Create Selection Factors & Evaluate Suppliers Conduct Competitive Exercise w/ Approved Suppliers Complete Traditional RFP Process Deliverables or Tools Activities - AND/OR Conduct eAuction(s) - AND/OR Collaborate w/ Incumbent Supplier(s) RFPs / RFQs eAuctions Collaborative Discussions Page: 46 Negotiate & Develop Sourcing Recommendation Implement Agreements

Supplier Engagement Options 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 On-Line Auctions RFPs / RFQs Should Should choose choose the the method(s) method(s) that that best best meets meets both both the the Strategic Strategic Sourcing Sourcing objective objective and and the the team team resource capacity resource capacity Page: 47

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Profile Category Internally & Externally Develop Sourcing Strategy Create Selection Factors & Evaluate Suppliers Conduct Competitive Exercise w/ Approved Suppliers Negotiate & Develop Sourcing Recommendation Prepare FactBased Negotiation Packages Activities Assess Opportunity & Establish Team Deliverables or Tools Negotiate Agreements Fact-Based Negotiation Packages Supplier Negotiations Presentation Sourcing Recommendation Page: 48 Implement Agreements

SAMPLE Negotiations Approach – Discussion Points 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 Description Supplier Pricing, Incentive Rebate Structure 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. ABC Pricing, Signing Bonus 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. ABC Pricing, Performance Bonus 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. 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. ABC 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. ABC *NACV – Net Annual Charge Volume (i.e. annual spend with Amex) Page: 49

Negotiations Approach – Projected Targets 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. SAMPLE 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. Financial 200- 400K Focus on sizing down the gap between rebate tires. Put business out to bid Stakeholder buy-in Executive sponsorship Procurement Support Performance & Signing Bonus – adjust bonus targets to align with the post spin-off spend portfolio. The current targets are far to aggressive. Financial 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 Stakeholder buy-in Executive sponsorship Procurement Support Deductions – reduce the expense subtracted from the *NACV and deductions from the base incentive rebate. Financial 0- 50K Focus on improving the rebate earned on HighROC volume Dedicate a resource to handle ad-hoc assessment activities Stakeholder buy-in Executive sponsorship Procurement Support Total 300- 600K *NACV – Net Annual Charge Volume (i.e. annual spend with Amex) Page: 50

Strategic Sourcing Process Overview ANALYSIS STRATEGY SUPPLIER SELECTION IMPLEMENTATION Strategic Sourcing Methodology Assess Opportunity & Establish Team Activities Assess Opportunity Obtain Sponsorship & ID Team Deliverables or Tools Create Project Plan Project Plan Analyze Current Spend Document Requirements Profile Category Internally & Externally Validate Internal Requirements & Profile Category Develop Sourcing Strategy Develop Sourcing Objectives Create Selection Factors & Evaluate Suppliers Create Supplier Selection Criteria Fast Track for Quick Savings Build TCO Model Conduct Industry Analysis Internal Category Profile TCO Model Cost Reduction Ideas Industry Profile Conduct Competitive Exercise w/ Approved Suppliers Complete Traditional RFP Process - AND/OR Conduct eAuction(s) Develop Sourcing Strategies & Tactics Conduct Supplier Analysis - AND/OR Collaborate w/ Incumbent Supplier(s) Sourcing Strategy Plan: Competitive Supplier Selection or Existing Supplier Development Supplier Selection Decision Matrix RFPs / RFQs RFIs (optional) “Short List” of Suppliers Page: 51 eAuctions Collaborative Discussions Negotiate & Develop Sourcing Recommendation Implement Agreements Prepare FactBased Negotiation Packages Implement Agreements and Monitor KPIs Negotiate Agreements Evaluate Performance and Develop Suppliers Fact-Based Negotiation Packages Finalized Agreements Supplier Negotiations Presentation Benefits Realization Sourcing Recommendation Continual Supplier Improvement

SAMPLE Implementation Plan Overview 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 Description Transition Plan Shift from old supply agreements to new ones. May or may not involve switching suppliers. Communication Plan 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. Compliance Plan Determine how compliance to new supply arrangements will be enforced (if possible). Closely linked to the “Communication Plan”. Benefits Tracking & Reporting 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. Performance Management Plan 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: 52