At some point every buyer hears the following line from a
self-assured traveler: "I can find a better fare online." Responses
vary. Eye rolls are common. There is a more permissive bunch who ascribe to the
nascent "Travel 2.0" school of thought and tell travelers to go for
it. Then there is Autodesk's Bruce Finch, who considered, just maybe, that his
travelers were better travel agents than travel agents, better travel managers
than travel managers and better deal-hunters than procurement professionals. To
test those sentiments, Finch last year commissioned an audit by Topaz
International to examine the program's value and the potential cost of buying
public fares online. He concluded that travelers cannot find better fares
online, at least not at his company.
Tearing It Down?
When Finch started with Autodesk about nine years ago, he
came into a "fractured" travel program with multiple agencies
worldwide and online utilization in the 30 percent range.
Applying the fundamentals of travel management and
procurement, Finch, who serves as the company's director of global travel and
workplace sustainability programs, spent years consolidating agency services,
bringing online booking adoption above 80 percent and securing supplier
discounts. While the program greatly improved through those efforts, Finch
noted that a consistent, if specious, counter-argument from travelers remained.
"The one thing that was constant for us was when we asked travelers about
the agency or the booking tool, the main complaint or concern that our
travelers had was inevitably the same thing," he said. " 'I can find
lower fares out on the web.' " Finch also took note of a 2012 Global Business Travel Association survey of 1,788 business travelers that suggested
those working for organizations with structured, mandated programs on average
spent more per trip than those in unmanaged programs. While some have
challenged the study's methodology, and GBTA is revisiting its findings, Finch
sought to settle the matter at Autodesk. He contacted Topaz president and CEO
Brad Seitz about an audit that would determine if the GBTA study was right and
whether his travelers could indeed do better.
Finch had been down this road before. A 2010 Topaz audit
showed that fares in Autodesk's program save the company significant sums. But
he "wanted to see if things had changed so much in two years that maybe we're
missing the boat here."
So began an audit consuming the full month of October 2012—a
period chosen for typically heavy Autodesk business travel volumes.
Seitz, whose firm for years has conducted such audits,
explained the plan: "We're going to receive from Autodesk the bookings
from whatever channel or country or region that they want. In this case it was
U.S. and Canada. Then we're going to replicate that itinerary on predetermined
websites—in this case it was Expedia, Orbitz and the individual carrier's
website for that flight—and find out at that point in time, how does it
compare? It's about how you create the most rational and fair comparison."
So, for a month, virtually every booking through Autodesk's
program was replicated in the spot market.
Finch provided a copy of the Topaz findings with dollar
figures redacted. More than 83 percent of all fares booked through the program
cost less than fares available online—a slight improvement from the 2010 audit.
In particular, domestic fares purchased through the online booking tool,
representing the majority of Autodesk transactions, were lower than public
fares 93 percent of the time. Bottom line: The audit showed that fares
purchased through company channels on average beat the public fares by a margin
of nearly 24 percent.
Even with agency transaction costs and other expenses
necessary to administer a managed program, Autodesk was saving "significant"
cash through its travel management practices, Finch said, explaining that "our
managed travel program way surpassed anything we'd get if we took the lid off
and let travelers book anywhere they want to."
[PROFILE_1] For Every Rule, An
Exception
There were cases when Autodesk travelers did not land the
best fare via the managed program, most commonly for international bookings
made through the booking tool. Those corporate fares beat public ones only 70
percent of the time.
Finch and Seitz noted the various reasons for such
occurrences: Inventory and pricing change rapidly in the airline industry, so
what's available one minute might not be for sale the next. More often, said
Finch, "Where someone was offered a lower fare, not always did the
employee take it," typically to avoid a connection or because of better
scheduling. These were reasons of convenience, not better content outside of
the program.
"We looked at that from a behavioral standpoint,"
Finch said. "Every time someone decides to take a higher fare, there's a
pop-up in the online tool with reason codes. The vast majority are the times of
the trip. We don't require somebody to take a connection, and in January you
wouldn't want to take a connection in Chicago to travel our number-one city
pair from Boston to San Francisco. If they're going to close a million-dollar
deal, you want them to take the nonstop."
Travel 2.0, Rebuffed
Cost savings is just one purported benefit of Travel 2.0,
which, according to one vocal advocate, industry consultant and author of Gillespie's Guide to Travel+Procurement
Scott Gillespie, comprises the following principles: Travelers should shop and
book anywhere as long as data is shared with the company, use any supplier as
long as it's safe and purchase anything within a defined budget as long as the
corporate card is used.
While Gillespie points to the GBTA study as support for his
theory, he also extols the notion that Travel 2.0 increases traveler
satisfaction and reduces employee "friction." To him, Travel 2.0 is
an app-rich iPhone, while managed travel is an old-model BlackBerry. Employees
should just bring their own devices, he argues.
Yet, even Gillespie, well-versed in the art of travel
procurement, isn't advocating open booking for all.
"Will the consumer site provide cost-competitive
prices?" Gillespie asked in a posting on his website. "It depends,
but why worry about a 2 percent discount on a $250 fare when there is a $10 or
$20 transaction fee getting tacked on by the corporate channel? On the other
hand, a 30 percent discount on a business-class ticket makes it well worth
booking via the corporate channel."
While an audit showed Autodesk falls into the latter
category, Finch also noted that cost savings isn't the end-all, be-all of his
program.
Beyond Costs
"The cost savings that we have captured is sevenfold
the amount of the transaction cost," Finch said. "I'd argue that even
if it were even, or cost us a little, it would be worth it."
That's because his program offers a slew of traveler
benefits that a spot buy on Priceline never could.
"Travel used to be profit centers, then morphed into
cost centers. Then they became value centers, which is where I see it today,"
said Finch.
Safety and security is among the first rebuttals travel
buyers offer when challenged by the promises of Travel 2.0. Gillespie and
others have argued that their model accounts for this: Just require travelers
to share the data with the company through an itinerary management application
like TripIt, and you can track them.
Finch and others have countered that safety and security go
beyond mere tracking. "When the [2011] Japan earthquake happened, 30
minutes after we were notified we were able to contact every traveler we had
there and were able to assess where they were, were they safe and what was
happening," he said. "In many cases we engaged our after-hours
services and got [travelers] on the first flights out we could." In such
instances, a relationship with the agency was crucial.
Meanwhile, Finch pointed to other services through his
managed travel program that provide both value to travelers and savings to the
company: waivers and favors, soft-dollar benefits and agency services that
address irregular operations or exceptions. As one example, things like unused
ticket tracking coupled with ticket change services have saved Autodesk six
figures in a single year.
Still, Finch understands the lure of traveler
self-determination, and has sought to soften the strictures of corporate
control. "We have tremendous leeway in terms of exceptions," he said.
"You just have to look at the GBTA study to see that most people will say
that they're better travel agents than their travel agent. And I encourage
them. If they can prove it to us, we don't stop them from buying it."
This report originally
appeared in the February 2013 issue of Travel
Procurement.