Online is not the differentiator – service is

Business Travel Show London 2005: A debate between traditional travel management companies and online rivals came down to whether the traditional company can adopt technology faster than online companies can improve their service.  

Speaking at a seminar at the Business Travel Show in London, Radius executive vice-president John Melchior said the argument wasn’t about being online. “Every TMC that wants to survive needs to offer online,” he said.

The differentiator is service, according to Mr Melchior. “It is not a negative connotation calling us traditional because that means service and acquired knowledge, but we must also keep up with the times,” he said.

Mr Melchior said TMCs had already weathered a history of change, for example taking their businesses from a commission-based to transaction-fee based model, and said the rise of the internet was no different.

“Check the coffin again,” he joked, “and you’ll see we’re not really dead.”

Also speaking at the seminar was Expedia Corporate Travel Europe chief executive Jean-Pierre Remy. He argued that his company is providing the necessary back-up services for corporate customers. “The online tool is the only thing you see – what you don’t see is the integration it has with the mid and back office,” he said.

Mr Remy agreed with Mr Melchior on one point though. He said: “The online tool is not the differentiator, you can get online from any travel management company, and if they don’t offer it they are dead.”

According to Mr Remy the differentiator with Expedia was the online adoption it achieved through offering a fast, useable and reliable system, the end to end solutions that include tools like fares optimisation, expense management and online statistics and reporting. He also said Expedia’s content was its strength and that fact that it lowered transaction costs by up to 70%.

Mr Remy said companies should aim to get around 80% of their transactions online, which would cost less than £10 per transaction.

Mr Melchior accepted that online bookings lowered transaction costs, but said they were a fraction of overall costs: “You can save something on the transaction fee if you don’t want to speak to anyone on the phone,” he said. “But don’t be fooled – 5% of the booking is handling it. And as far as finding savings on fares and hotels goes, any travel management company here will say they can save you money.”

Expedia Corporate Travel, a first-time exhibitor at the Business Travel Show, has 1,000 European clients and 2,700 worldwide. Mr Remy said his company continues to offer telephone booking and advice. “We offer technology and service – you cannot succeed on technology alone.”

Mr Remy said his company was after clients with managed travel policies – as those without can book on Expedia’s leisure website. But he said the limit of his company was serving global clients because it lacks global reach.

Mr Melchior countered: “Expedia is becoming a travel agent long after agents realised they needed technology.”

He added: “The internet will not replace TMCs because there is always a need for personal service.”

Mr Melchior named safety and security as a major concern to corporate travellers. He said that after the September 11 terrorist attacks, his agents spent days at airports in a bid to get their clients home – something not offered by his “pure online” rivals.

“Can someone who knows who their clients are and how to deal with them adapt technology faster than someone who knows technology can build their service? It’s a question of who will get there first. And we believe we already have.”

Report by Ginny McGrath