Corporate Booking Tools – an alternative view

The following article was submitted to TravelMole by Mike Fill, Partner, Item Consulting, in response to this week’s feature ‘Corporate self booking tools’.

A simpler time?
I well remember my first encounter with travel booking tools – maybe 5 years ago. One of the major global travel agencies came to see me to offer us a complete self-booking tool. The only cost was a transaction charge of £45 per booking that they argued was much less than the cost of travel agency fees and our own internal costs. We seemed to spend more time discussing the transaction fee than anything else!

Everything looked possible and very simple. So, have things changed in the last 5 years?

A confused industry
The industry is much more fragmented than 5 years ago. Distribution was dominated by GDSs for airlines and a belief that hotel and other travel products would go the same way, leading to fully represented GDS systems to support corporate needs.

Today however, we find ourselves in a position where there is no single access point for travel bookings – and the situation is getting worse!

In the last 5 years we have seen airlines attacking their distribution costs leading to commission reductions, direct distribution with additional discounts for booking direct via the web.

Hotels have some GDS connectivity but want to go direct. As various new hotel intermediaries come and go, hotels yield manage to such an extent that you can never be sure that online availability is correct without calling the hotel.

Low cost airlines have sprung up all over Europe with a book direct strategy. Initial reactions from the trade were that these were for leisure travelers – events have proved wrong. The major carriers are now price competing against the low cost routes.
Since September 11th, the airlines have been under such fierce competition that scheduled fares can now be less than corporate negotiated rates, even allowing for volume agreements. At the same time, Net fares abound but few have the time to load these for online access.

GDSs are still talking about rail connectivity.

All these issues call into question the whole viability of self-booking tools in the future.

The corporate view
The corporate is now in the position that they have no where to go to get a total self booking solution. Yes, technically the tools are capable, but without the right access to content, rates (from multiple sources) and availability they seem of limited value.

What the corporate needs is a Global Access System – where they can go to a single place for content, rates and availability.

Unfortunately, the travel providers are still in ‘distribution mode’. Even the ‘independent’ tool providers appear to fall into the same distribution trap.

The adoption levels of self-booking tools seem to bear these points out. With the exception of a few examples in the US, adoption levels seem to run at about 5%. You may hear about higher levels but these tend to be for limited city pairs or inflated by either the tool provider or user to endorse their purchase decision.

Perhaps the first question should be one of adoption potential i.e. how much can actually be booked online. The analysis is quite simple. If 80% of your air content is available on-line and only 25% of your hotel, then the adoption potential for an air & hotel booking is only 20%. Therefore 80% of the time you will not be able to complete a booking on-line. The user will tend to use call centers to book the whole trip rather than risking a partial on-line booking.

Perhaps the question is ‘who is taking the responsibility for trip integration?’. This could be provided via the Travel Agent, or the booking tool if the parties are prepared to work together effectively. Each model has it’s own advantages and disadvantages, and the corporate travel manager needs to assess this in terms of the quality/price of service they need and the capability/long term strategy of its suppliers. An effective alternative is to consider the use of an internal intranet to solve the problem.

In any scenario, the implementation of an integrated expense system must hold the key to obtaining relevant MI rather then the booking tools themselves as it becomes the only single point where travel information can be aggregated.

The future
Unless tool providers understand that they are not in the distribution industry but in the access industry, I fear nothing will change and the onus will be on corporates to provide their own solutions from various components. These will need to allow for content needs, availability and rates from multiple sources as well as both online and call center support.

In the meantime, the primary objectives of reducing distribution costs for providers will not be achieved and corporates will not see the benefits of technology.

Summary
Will corporate travel tools succeed? Regardless of the above points, I believe that they will. The question is who will provide them and when. In the meantime the onus seems to be on the corporate travel managers to take a much more hybrid approach to deliver real business benefits.

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Mike Fill has worked for over 20 years in both the business and leisure travel industry. He works extensively with Corporates, GDSs, booking tool companies, travel suppliers and portals advising on all aspects all integrated travel & expense management.
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