Open Booking and Travel Management Transaction Fees.

GOODBYE TRANSACTION FEES?

Smaller TMCs have the most to lose from open booking and the vendors that support it. The more an agency depends on booking fees, GDS overrides and similar transaction-related revenue streams, the greater the risk from open booking.

How big is the risk? Bob Joselyn, president and CEO of TAMS, said that some of the industry’s most profitable corporate agencies would find themselves in the red if GDS revenues disappeared.

And disappear is what Joselyn believes will happen to GDS revenues as open booking expands and travelers take control of more travel decisions. As transactions become increasingly automated and traveler-directed, GDSs will have less need to pay incentives to agencies that play a declining role in booking decisions.

Timing depends on airlines
GDSs will almost certainly cut TMC revenues, said Norm Rose, president of Travel Tech Consulting.

But Rose doesn’t expect sudden slashes. How soon and how deeply GDSs cut incentive payments depends largely on how successful airlines are in moving business travelers to direct-booking models.

“The GDSs are very powerful and profitable companies,” Rose said “They are not going to disappear. They are already evolving.”

Amadeus is moving quickly to become more of an IT company and less of a transaction company, he noted. Galileo and Travelport are taking similar steps.

Tags: Concur, Open Booking, tmc, Travel, travel management company, travelopenbooking.blogspot.com, concuropenbooking.blogspot.com

The Perils & Promise of Open Booking

The Perils & Promise of Open Booking (2 of 2)

by Fred Gebhart

February 04, 2013

This is Part Two in a series on open booking.

Open booking has clear advantages.

Proponents of open booking, aka Travel 2.0, point out that allowing travelers to book through non-program channels, then capturing that booking information, is an improvement over current practice.

Rogue travelers who book on their own are invisible in a traditional managed program. Programs that support open booking provide an opportunity to capture travel and traveler data that employers never had before.

Compliance still an issue
“An open booking tool solves the problem of where are your travelers,” said Lea Cahill, chief operating officer of Atlas Travel, which is in the final stages of developing its own open booking solution. “It allows travelers to go out of program and uses technology to collect the data you need.”

But, she added, “it does not solve the problem of policy compliance.”

There are other issues too, among them the fact that data capture and consolidation are not automatic with current open booking products.

One prominent open booking solution, Concur Connect, requires proactive buy-in from both suppliers and corporate clients.

Suppliers must have the capability to recognize corporate travelers and load negotiated rates.

Corporate clients, for their part, must turn the product on within the managed travel system and convince travelers to use it.

Work in progress
Here’s how Concur Connect should work. A road warrior books direct at a participating supplier, say Marriott.com. Marriott recognizes the corporate affiliation and automatically loads negotiated rates. And because the traveler’s company has signed on, Concur automatically collects and forwards complete trip data to the travel manager. That way there’s no need to create a work-around like signing up for TripIt and adding the travel manager as a contact.

But if that same traveler books direct at a chain that does not participate in Connect or fails to recognize the corporate identification, the system fails. The travel manager gets no data and the booking remains rogue. From that perspective, open booking is a work in progress.

“This is an evolution, not a revolution, – and it is going to happen,” said Norm Rose, president of Travel Tech Consulting.

“The shift will put Concur or some other technology provider in the position of being a technology link between supplier and client.”

Corporate culture is key
Whether the emergence of open booking solutions is good news or bad news for TMCs and corporate agencies depends to some degree on your clients.

The decision to use open booking, and to allow travelers to use it, is more a matter of corporate culture – including how a company wants to control spending – than of technology.

There are two basic methods of controlling travel spend, explained Cahill. Some companies prefer to manage by travel policy, which imposes pre-spending restrictions. Other companies prefer to manage by budget, which imposes post-spending restrictions.

Control or trust?
Organizations with a strong command and control culture tend to manage by travel policy.

They prefer to control spending before a trip is even authorized, much less booked and purchased, as it gives them more control over both travel and travel spending. So do procurement departments that are accustomed to setting hard spending limits and authorizing spending in advance.

Managing by budget, comparing the actual spend and spending trends against budget goals, requires a degree of trust – trust that in the absence of prior authorization travelers will spend appropriately. That is a bigger leap of faith than some traditional companies – or travel managers – are willing to make.

Generational issues
Generational changes are at play as well. Younger travelers simply won’t accept the kind of travel policy restrictions that Baby Boomers accepted as a matter of course.

There is no reason to expect their no-strings attitude to change as younger generations of business travelers advance into management positions. As Boomer managers are replaced by Millennials, there will be less insistence on strict travel policy limitations and enforcement.

In the not-too-distant future, what is now considered rogue travel will become the norm. Travel policy might remain as a guideline, but most travelers will make their own travel decisions and their own bookings.

No turning back?
In today’s world, Concur and other open booking providers are banking on the fact that traditional travel management programs are unlikely to re-capture the growing number of rogue bookings.

“We don’t think these rogue transactions will come back into the ecosystem in the old way,” said Mike Hilton, Concur co-founder and executive vice president of product management and strategy, global marketing.

“We are not going to go back to 100% of travelers booking 100% of travel on the system. That’s a seriously challenged idea. In order for agencies to continue to add value, they are going to have to evolve.”

Tags:  Concur, Open Booking, tmc, Travel, travel management company, travelopenbooking.blogspot.com, concuropenbooking.blogspot.com

Concur: Technology Partner or Competitive Threat? (Part 1 of 2)

Concur: Technology Partner or Competitive Threat? (Part 1 of 2)

by Fred Gebhart

January 31, 2013

This is the first in an indepth series on open booking.

There are two ways of looking at technology vendors that are targeting the open booking market in business travel.

One school says companies like Concur that push open booking are out to eat your lunch, your dinner and your entire business.

The other school says open booking solutions like Concur’s Connect platform are simply the next step in the evolution of business travel – i.e. Travel 2.0.

A wary view
For those who see a competitive threat, Concur, a travel technology company that built its name on expense management, is a lightning rod.

“Many of our corporate-oriented agencies are concerned about Concur and see them not as a partner, but as a competitor,” said TAMS president and CEO Bob Joselyn. “Questions have come up about Concur’s long-term role in the industry. A lot of agencies view them warily. Very warily.”

Though multiple vendors tout products that consolidate data from multiple booking platforms into a single stream that feeds into a corporate system, none matches Concur’s clout. According to Concur’s website, it processes more than $50 billion in travel and entertainment spend annually. That’s about 10% of the world’s T&E spend, according to Concur.

New foothold for Concur
Last year, Concur stunned the travel agency industry when it won an exclusive contract for the next iteration of e-Gov Travel Service, the federal government’s electronic travel program.

The 15-year contract covers 90 federal agencies and could be worth $1.4 billion.

Concur takes over in November as sole travel and technology provider for the government’s electronic travel program. The program is currently handled jointly by CWTSato Travel, HP Enterprise Services and Northrup Grumman Mission Systems.

In the eyes of some, Concur’s move signals a strategic move into the travel management side of the business, making it a clear competitive threat to corporate agencies.

Capturing rogue bookings . . .
Concur’s latest offering, Concur Connect, puts travel agencies in an awkward spot. The product, like similar solutions offered by other technology providers, promises to bring open booking back into managed travel.

The concept is simple, said Concur co-founder Mike Hilton, executive vice president for product management and strategy, global marketing. Travelers book direct at vendor sites, getting negotiated corporate rates, while the travel manager gets full data.

. . . or enabling agency bypass?
That gives agencies a tool to lasso rogue bookings that are currently outside the system.

It also gives Concur an opportunity to promote bypass and grab agency clients.

“We are providing a channel where travelers can book direct and take their itinerary direct to Concur,” Hilton said.

“If the company has Concur turned on, the data flows directly to the travel manager. Policy checks and compliance audits can be performed automatically. The traveler gets flexibility, the travel manager gets data, visibility and control.”

Concur & travel agencies
And what does the company’s travel agency get? That depends.

Concur is happy to work with agencies, Hilton said, but the choice lies with the company. As far as Concur is concerned, its primary relationships and responsibilities lie with client companies and with the hotels and other vendors that sign up to participate.

“On the agency side, we’ve seen mixed reactions,” he said. “Some agencies see Connect as a challenge, and some see it as an opportunity. These are bookings that agencies aren’t seeing anyway. This is a way to bring those rogue transactions and rogue travelers back into the system.”

Agents aren’t the only ones who see issues with open booking. Travel suppliers have concerns too, since open booking has implications for negotiated rate programs. (See sidebar.)

Managed travel falls short
The very fact that up to half of hotel bookings are made outside managed programs says that current travel programs are not meeting travelers’ needs.

As Hilton put it, it’s not a leakage problem when companies are losing half their travelers to non-program booking channels – it’s a flood. In his view, direct booking vendors are simply offering product to meet demand that more traditional travel management channels can’t fill.

More talk than reality?
Even given the scale of rogue bookings, not everyone believes that travel managers and agencies need to worry about competition from open booking vendors like Concur – at least not just yet.

It’s not that traveler discontent and the threat of bypass by open booking aren’t real, , said Carmine Carpanzano, CEO of nuTravel. But despite all the talk, he isn’t seeing any real shift in behavior.

“Open booking has been out there for a while,” he said. “I am not seeing any big change in the way people are actually booking and traveling.”

Lea Cahill, chief operating officer of Atlas Travel, had a similar assessment. “There are starting to be technologies that meet the need of open booking and managing by budget if you want to take that path. But that path is not for all,” she said.

“What we’re seeing with Travel 2.0 is technology getting ahead of corporate needs and policies.”

Tags: Concur, Open Booking, tmc, Travel, travel management company, travelopenbooking.blogspot.com, concuropenbooking.blogspot.com

Facing Down the Competitive Threat of Open Booking Vendors

Facing Down the Competitive Threat of Open Booking Vendors

by Fred Gebhart

February 07, 2013

This is the final article in a series on open booking and travel management.

Open booking, aka Travel 2.0, may be the wave of the future, but for traditional TMCs and corporate-focused travel agencies, open booking tools and the vendors who sell them are troublesome.

For one thing, open booking tools portend a shift of transactions away from agencies to other channels. For agencies that rely on transaction-based revenues, that’s a problem.

TMCs and agencies aren’t necessarily wild about technology companies like Concur coming between their travel suppliers and corporate clients either. It’s not just the fact that open booking often ends up in travelers’ bypassing negotiated rate programs.

Open booking tools put tech vendors a little too close to your customers, in the eyes of some, and that poses a competitive threat.

Foot in the door?
As one travel executive asked, “Does promoting Concur to your client base open the door to them soliciting your accounts later on as they continue to evolve into a TMC?

“It’s kind of like the problem agents face when they promote the American Express card to their corporate clients to help better manage their T&E and then two years later, Amex is pitching that corporation for their travel account, leaving the agency in the dust,” said the executive, speaking off the record.

So how do travel agencies keep Concur and other open booking vendors from eating their business?

One answer is this – rethink your business model.

Look beyond transactions
Yes, new intermediaries like Concur Connect that come between supplier and client are in a position to take a piece, maybe a majority, of travel agencies’ transaction-based business.

But transaction revenues are already under competitive pressures. (See sidebar.) Some innovative agencies have already moved to eliminate transaction fees in favor of expanded fee-based consulting programs.

Larger TMCs don’t have much to worry about in terms of revenues, said Norm Rose, president of Travel Tech Consulting. They have the resources to move from a transaction-based business to a more consultative role. Carlson Wagonlit, American Express, BCD Travel and the other industry giants have been adding consulting services for years.

Smaller agencies are making the same shift, sometimes more quickly than their giant rivals.

Offer your own tools
Atlas Travel’s response has been to develop an open booking tool on the new Amadeus platform.

The new tool, now in final stages of development, is not part of Amadeus, but will provide automatic data capture for traveler tracking and reporting purposes, according to chief operating officer Lea Cahill.

Here’s another answer to the question of how to keep Concur and vendors like it from eating your business – focus on delivering service that requires human intervention, just as successful agencies have always done.

That’s something Concur can’t do, co-founder Mike Hilton admitted.

Concur: agencies still needed
Concur can deal with the transactions, but it does not have the staff or the expertise to deal with the complications of travel, said Hilton, executive vice president for product management and strategy, global marking.

Moreover, Concur’s technology culture doesn’t mesh well with the kind of personal service that drives agency success.

“The reality is that travelers still need support and companies still need robust reporting,” Hilton said.

“If companies are embracing the process of open booking, they need agencies that embrace the same concept. We recognize that agencies are mission-critical to business travel.”

In Hilton’s eyes, open booking tools can enhance an agency’s value to clients.

“Open booking adds new data streams that were never there before for agencies to use. Having a fuller view of travel makes for better analytics for the company and better support for the traveler. Having a fuller view of travel makes an agency more valuable, not less,” Hilton said.

Into the future
Automation is the future of travel management, said Richard Eastman, president of The Eastman Group.

To make his point, he likened travel managers to airline pilots. Airline pilots rarely fly aircraft today; they manage the aircraft systems that do the flying. Pilots take over only when automated systems can’t handle some unexpected event.

In the very near future, travel managers won’t manage traveler itineraries or policy compliance; they will manage the systems that create itineraries and monitor policy compliance. The only time a human will step into trip management is to solve a problem, Eastman predicted.

If Eastman is right, travel managers and agencies that position themselves to ride with the change will survive and thrive. Those who expect transactions to continue to dominate business travel management should start polishing their resumes.

Ensuring compliance
In the meantime, travel managers still must deal with the perennial problem of travelers who refuse to comply with policy.

“If you are going to have maverick travelers, you need to look at ways to bring them back into the fold with gamification or some other strategy,” said Carmine Carpanzano, CEO of nuTravel.

“Give them an incentive to do the right thing. A lot of travelers don’t like to be told what to do, but companies still need travelers’ cooperation to meet the company’s duty of care and negotiated contract volumes.”

“We need to change as an industry to show our users that we care about their experience,” Carpanzano added. “At the end of the day, it is supplier discounts that are meaningful to the company. We have to find ways to demonstrate that reality to the end users, our travelers.”

Tags: Concur, Open Booking, tmc, Travel, travel management company, travelopenbooking.blogspot.com, concuropenbooking.blogspot.com