So much happened in 1996. Airlines and CRSs continued to grapple with commissions, reservations fees and even cancellation fees in attempts to create value equity across the distribution chain. It seems like everyone disagreed about how that could be accomplished. But when I read about 1996, one things stands out above all: Online Booking Is Here to Stay.
And corporate travel managers were here for it!
Big name companies Andersen Consulting, IBM, Hewlett-Packard, Price Waterhouse, Texas Instruments, Walmart and for sure, Microsoft, were figuring out how to leverage the technology to save money, drive compliance and even increase leverage with suppliers by showing they could shift share and command control over their travel volume. That said, it wasn't simple. There was a lot of discussion of "diskettes" that were passed across agencies and corporates and there were definite waiting times between reservations and bookings.
Of course that would change, eventually, but even with what today look like unmanageable gaps, travel managers were lining up for the online booking opportunity. A BTN survey of travel managers showed that uptake for online booking implementation had doubled between 1995 and 1996. The convergence of commission caps and the idea of 'agentless' bookings was also enticing for agencies that felt they could still get some margin off the top of a agent-free e-ticket booking (though airlines would begin to chip away at that soon enough).
In the automated self-service environment, corporations were getting the idea that they might be able to "do it themselves" when it comes to agency operations. On the front page of BTN's Oct. 28 issue (pictured at the top), we find two companies Franklin Quest and Microsoft doing just that, launching ARC-accredited agencies as a line of business. I *think* at that time, there was a requirement to sell travel outside the corporation—it's not quite clear. So if anyone can enlighten me on that point, I'd be grateful.
[Editor's update: The statement above is correct. Franklin and Microsoft both were required to sell travel to the public as well as to their corporate travelers in order to hold an ARC accreditation. That would change in 1998.]
On BTN's front page, the Microsoft story seems to play second fiddle to Franklin Quest, but it included coverage of a booking website called Expedia, which Microsoft employees and others could access via www.expedia.com. For Microsoft employees, fulfillment was provided by Atlanta-based WorldTravel Partners (which would eventually merge into BCD Travel along with TQ3 Travel Solutions and The Travel Company).
Sabre's consumer booking site Travelocity had already launched that year and Internet Travel Network, which eventually would become GetThere also had gained some traction even among corporates (see the timeline for August for developments from those companies, specifically for corporates, announced at the NTBA conference).
Expedia was part of a larger Microsoft initiative that the tech company placed in the hands of American Express, with the code name Rome that would be more tailored to corporate needs.
Read about it here, with reporting from Cheryl Rosen, BTN's then technology editor:
For corporate travel managers, the site bears scrutiny for two reasons:
as a reminder of the stiff competition agencies face for the loyalty of
travelers, and as a preview of Microsoft's corporate-oriented Rome
system, which will be rolled out under a two-year exclusive agreement
with American Express in early 1997 (BTN, July 29).
"Expedia
is a subset of Rome," said Greg Slyngstad, manager of Microsoft's
travel products unit, which is developing both products. "It does not
have preferred corporate vendors, but it will give you a taste of the
Rome booking product."
With Microsoft
management building Internet services as its core mission this year, and
with travel being the largest non-technical online industry,
considerable thought and money has been sunk into the Expedia
product-and it shows. USA Today rated it four
stars-the highest number possible-as a booking engine, compared to three
stars each for Sabre's Travelocity site and the independent Internet
Travel Network.
Part of the positive
reaction, no doubt, came from two unique features offered by Microsoft
as it elbows its way into the online booking field: a Fare Tracker
service that sends customers weekly e-mails of the best fares to any
three destinations, and a 24-hour help desk. Trained agents at
WorldTravel Partners will staff the desk under a private label, and also
will handle ticketing and other services.
"When
an Expedia customer needs technical support, the call will go to
Microsoft. But after they complete a booking, they will get us," said
WTP corporate travel and technology president Danny Hood. "We are not
only providing 24-hour service, but also e-mail service to customers,
and handling ticketing and fulfillment, ticket changes and
cancellations, scripting and quality control, and ARC accounting. It's a
lot more than we originally thought it would be."
So
much more, in fact, that WTP has spun off a new company, WorldTravel
Technologies, whose Online Fulfillment Division opened for business with
Microsoft as its "flagship customer." Online Fulfillment now has 25
full-time staffers ready to handle Expedia, as well as WTP's ResAssist
'96 and "a bunch of other potential customers."
Additional
staffers will be pulled from WTP's existing employee base "if the
volume goes off the charts," and that might well happen. When Microsoft
offered the beta version to the 2 million MSN subscribers, registrations
"poured in at a rate faster than one per minute," Slyngstad said. And
the list of Amex customers trying to get into the Rome beta test
scheduled to begin in January is much longer than Microsoft's ability to
accommodate them, he added.
Asked why
Microsoft chose WTP to handle the Expedia fulfillment rather than Rome
partner American Express, Slyngstad noted that the outsourcing contract
was signed about eight months ago, before the Rome contract.
* * *
It turns out the Microsoft-American Express project Rome would enter the market as the following year as AXI, American Express Interactive, a tailored travel booking and expense system. We'll cover more of that next week when we go in-depth with 1997.
Meanwhile, BTN had a big launch for its 12th birthday in 1996—the full rollout of its first website. You'll see evidence of that below, with live links peppered throughout the timeline, leading you back to those original articles. You can't find these pieces in a casual search of the site; in fact, I had to do a lot of spelunking myself to locate them, but I've resurfaced them throughout the timeline just for you (don't mind the formatting issues; these suckers were dusty gems, for sure).
See you next weekend!
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[Editor's Note: In last week's article, I mentioned that BTN print archives for 1995 and 1996 had been lost to our pandemic flight from our old New York City office. Former BTN editorial director (and, in 1996, BTN airline editor) Jay Campbell, who founded both The Beat and his current outfit The Company Dime generously contacted me with cover images of nearly every issue for 1996 and a selection of issues for 1995. Though he told me there was no need to credit him, I feel I must. So it is with his compliments that we have the following timeline for 1996. Thanks, Jay. You will see many of the articles linked below were his original work, as well.]
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Sabre levies a fee on cancelled bookings, looking to redefine the commercials of online distribution, 12 cents on domestic U.S. bookings and 14 cents on international, except for Europe, which would have no fee. Sabre adds this fee to the transaction fee and it is the second hike in six months. Airlines revolt; some refuse to sign contracts.
American Airlines introduces an Air Travel Card that is the first combo Air Travel and corporate payment system issued by GE Capital Inc. and the first North American product to result from AA's 1991 marketing partnership with MasterCard and a 1994 agreement with GE Capital. Other ATC-issuing airlines look at proposals from GE Capital to make similar moves.
U.S. federal government let lapse the 10% tax on domestic airfares, creating both confusion and a chance for savings as airlines reduce fares. Some companies advance millions for airline tickets while they can. The fed re-institutes the tax in August, at which time most airlines re-bake the taxes into fares. But not all. Northwest, Southwest and USAir did not. The tax lapse decimated funding for air traffic control.
"In what appears to be an emerging trend" writes BTN, Texas Instruments solicits bids for automated booking and expense reporting systems from potential TMC and third-party tech partners.
Hewlett-Packard, AT&T and DuPont collaborate with Marriott and Sheraton to produce and pilot a standardized electronic hotel RFP to replace paper processes. The initiative was developed under the aegis of the National Business Travel Association and the Hotel Electronic Distribution Network Association. The group aims to roll it out widely by 1997 "on disk or over the Internet."
American Airlines extends a market share-based override payment structure to European agencies. it quietly began in the U.S. in 1995. Rather than focusing on revenue, it rewards agents for moving market share on a route-by-route basis.
Rumors spread that CRSs Galileo and Worldspan will merge. Galileo is the the larger of the two, but Worldspan has clear tech ambitions that have eluded Galileo and a nascent partnership with Microsoft.
Delta pushes net fares to corporations that pay for agency services on fee basis. Net fares "eliminate commissions and overrides" for agencies in favor of the the corporate paying the agency fee. Delta claims the strategy saves the buyer 2 to 3% and basically keeps that agency whole.
Price Waterhouse, after 8 years with American Express, moves its business to Carlson Wagonlit in pursuit of an automated booking system "that will change the way employees book business travel in the future."
IBM signs a 7-year contract with American Express.
America West Airlines announces a direct booking and settlement portal for top corporate accounts, allowing the airline to bypass distribution systems and clients to bypass agency fees. The airline expects to save 4.5% off the cost of selling a ticket and promises to return some of that savings to the client. It's piloting with two clients.
Fee-based agency contracts and 'automated' booking trends are pushing some corporations to consider rent-a-plate program structures that would require them to hire an internal reservation agent, which traditionally had been considered more expensive that contracting to an agency. But with changing economics, there could be opportunity.
The General Services Administration rewrites policies, including mandating the use of a corporate travel card.
Bayer installs Value Integrated Network's automated expense reporting system that pre-populates expense reports with credit card data within 24 hours of the charge. It also pays approved charges directly to the card company via electronic fund transfer. Traveler are reimbursed for out-of-pocket expenses within 48 hours.
IBM buys a reservation system technology for airlines and
plans to market it small and midsize airline. AMSYS 2000 handles
reservations, inventory control, departure control, fares and ticketing,
GDS connectivity, management information and frequent traveler
tracking. IBM co-developed a similar system for hotels in 1995.
British
Airways re-evaluates override structures with some U.S. travel agencies
and restructures contracts with corporate account, focusing in both
cases on market share.
MasterCard, Visa, Citibank and
Chase Manhattan jointly plan to test "smart card technology" with a
standard electronic system to support stored value cards.
Carlson Wagonlit Travel is the first TMC to deliver a fully functional automated travel booking through expense system to the corporate market. The agency claims it can implement the tech in 45 days with any client.
Y2K—not yet called by that moniker—is on the minds of travel industry technologists. Techies at Galileo's international conference urge others to fix the issues now to avoid "the biggest event of our lifetime." At the same conference, the company gives the first view of a disk-based Travelpoint software that it would make available through its partner agencies later that year.
Computing giant Unisys is the latest tech titan to stake a claim on travel and expense automation, launching an expense management system and an airline reservation system targeted to midsize airlines.
Red Lion hotel chain centralizes its reservations into a single call system to serve its 55 properties.
A 20% rise in fuel costs puts the brakes on what could have been a runaway surge in YOY Q1 profits for airlines.
First Bank System rolls out a combined purchasing card and corporate card, it is the second vendor, after Nations Bank of Charlotte, NC to promote a combined product.
American Airlines and British Airways announce they will join forces as marketing partners, a deep alliance that allows both airlines to broaden their reach and gain revenue share, but stops short of a formal merger. The pact is part of a larger trend that has seen United pair off with Lufthansa and Northwest with KLM. The deal, which was scrutinized for competition reasons, ultimately does not come to fruition, largely due to the U.K. not opening London airports to expanded service by U.S. carriers.
More hotels—including Embassy Suites, Hampton Inn and Homewood Suites—jump onto the automated kiosk check-in trend, each piloting a kiosk strategy. Wingate, MainStay Suites and Choice Hotels are reportedly poised to do the same.
Apollo Travel Services—the marketing arm of Galileo in the U.S.—announces it will introduce a point-and-click booking system by years end. Millennium 3 will be launched to agents, not corporates, allowing new hires to start booking immediately and reduce training.
Delta Shuttle and Lufthansa Airlines pilot "smart cards" in electronic ticketing strategies. American, United and other airlines are testing similar strategies.
U.S. Department of Defense in developing the nation's largest model for automated booking-through-expense system proposes changing its guidelines to allow travel agency providers to charge fees to the federal government for the first time.
Weary international business travelers are changing the face of hotel club floors, transforming needed services from elegance and cocktails to convenience, business services and meeting areas.
USAir sues British Airways for breach of contract and fiduciary duty over the latter's proposed marketing pact with American Airlines.
Northwest and KLM announce they will pay only 5% commission for reservations made over the internet or other online booking systems. They will also be capped at $25 for round-trip domestic and $40 for round-trip international fares. It is unclear how the cap applies to corporate bookings.
The Business Travel Contractors Corp tries again to get major airlines to work out a new deal with corporate buyers. This time it focuses on net fares for specific city pairs, rather than a nationwide contract fare approach.
Walmart implements a customized version of Rosenbluth International's E-Res agentless system. BTN reporting says Walmart developed the system as a 'negotiating tool' that would add leverage to its then $87 million in travel spend by driving compliance to policy.
Nationwide Insurance is the first company to book trips in real time using Corporate Travel Works, the automated booking system developed by USAir and Galileo.
The International Air Transport Association allows the use of satellite ticket printers to enable crossborder ticketing in Europe. The move releases corporate agencies to issue and distribute airline tickets to employees in other European countries. Perhaps a case of too little, too late, as e-tickets have already gained momentum.
The buzzword at the National Business Travel Association is "Intranet." Sabre rolls out an intranet version of its Business Travel Solutions; TraveNet Inc launches an intranet version and Internet Travel Network—among the most popular booking sites on the internet and one used as the basis for a number of large corporate agencies—rolls out an intranet-based version called Internet Travel Manager. It looks like an early move toward 'cyber security' for travel management.
The concept of 'business-class' hotel rooms moves overseas as international business travelers clamor for more connectivity with the home office. This means in-room internet—wired and dial-up, for now.
The American Society of Travel Agents settles its lawsuit against the airlines commissions cap for $86.5M. That includes fees for attorneys. The remaining spoils would be distributed among 33,000 agencies signing onto the suit. The question remained whether corporate clients with revenue share agreements would get any payback.
FedEx builds worldwide satellite ticket printer system to improve agency service for its 1,000 non-crew frequent travelers. SatoTravel—once a government travel management service-only outfit—is facilitating the move. FedEx in a two-year deal pulled $10 million of its total $40 million out of its American Express contract and funneled it to Sato, leaving the rest with the incumbent.
Hilton Hotels Corp and U.K.-based Ladbroke Group which owned the Hilton brand in overseas join forces in an alliance that unites 400 properties in 49 countries and allows corporate buyers to strike multinational deals with the full brand.
Major airlines hike full fares by 10 percent, but leave short-terms bargains in place for leisure travelers, leading BTN to report "corporate travelers are subsidizing leisure fares more than ever."
The Association of Corporate Travel Executives endorses the National Business Travel Association's electronic hotel RFP standards.
Andersen Consulting announces it will launch a limited-liability company called Via World Network that will reengineer the way business travel is booked, processed, accounted and paid for. It's first product, it said, would be automated booking and expense reporting, accessible by phone, computer or internet.
America West says it will stop paying for passive bookings; it makes good on that promise in 1997.
Two corporations start their own ARC-accredited agencies: Franklin Quest Co. starts Franklin Quest Travel Inc. and—the second-run story on BTN's Oct. 28 cover—Microsoft launches a little outlet called Expedia.
IATA ratifies worldwide standards for airline smart cards and electronic ticketing programs, encouraging airlines for the first time to negotiate with each other on how to interline these services.
Hotel chains like Embassy Suites, Hilton, Marriott, Omni, Radisson and Sheraton begin testing internet-enabled televisions that can also fax and enable email.
Sabre Travel Information Network implemented a $3 fee on reservations made through any online booking system other than its own, meaning any booking tool that tapped Sabre content but the booking tool was not provided by Sabre. American Express and Carlson Wagonlit immediately moved to negotiate a discount on that fee.
United announces it will introduce internet booking: "over time, United's five diskettes will be converted into an Internet-based system where the data will be housed centrally, and we'll pipe it to you," said a United exec.
NBTA and ACTE jointly demand data for hotel folio, which has become more important as companies move to automated expense reporting.
IBM beta tests an automated expense reporting system called Neural Net Automated Auditing that uses artificial intelligence to identify unusual spending occurrences and patterns and will suggest to auditors potential abuses.
TravelNet and THISCO team up to forge direct links to hotel reservation systems in the first major challenge to the dominance of the computer reservation systems over the travel distribution channel. Avoiding the CRS will eliminate the CRS booking fee. Is this the first 'hotel solutions' attempt? Read this letter.
Agencies begin to consider incentives and lowering costs for e-ticket bookings. "If our corporate accounts can push e-ticketing, that reduces line-item costs for [satellite ticket printers] and delivery," said one exec at Tower Travel Management.
Lufthansa mandates e-tickets for agent commissions in Germany; it offers firms a 'corporate label' on its direct-booking service, Internet InfoFlyway. German corporate clients are upended by the news.
Hertz moves to expand a tested surcharge on one-day rentals. It had levied the surcharge on small corporate accounts but as contracts come up for renewal 'they're all going to do it," said an exec. The $3 to $5 surcharge accounts for the quick-turn work that must be performed, especially on peak midweek rental days. Avis followed Hertz with expanding the charge, both said it would be limited likely to Tuesdays and Wednesdays.
Texas Instruments chooses Internet Travel Network in the nation's largest rollout of automated booking, following an 18-month selection process that scrutinized 13 technology companies and included an "unusual partnership" between Texas Instrument's travel and IT departments.
Air Transport Association's Electronic Marketplace Committee sets rules for online booking, creating guardrails against online overbooking by travelers as well as time limits on reservations, limiting how many online systems can display inventory and capping the number of reservations allowed for each credit card.
United tests first corporate program to target accounts under $500K in annual air volume. It signed up more than 100 new accounts for what it called "Perks Plus." The program lives on today, but has seen a number of refinements.
United and American Express unveil a co-branded corporate card issued by London-based National Westminster Bank Plc., sidestepping Visa and MasterCard bylaws in the U.S. that prevent their issuing banks from also issuing cards on the Amex network.
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Elizabeth West is the editorial director of the
BTN Group. She has reported on the business travel and meetings industries for
24 years. Beth was editor-in-chief of Meeting News from 2006 to 2008 and
director of content solutions for ProMedia Travel from 2008 to 2011, when
ProMedia was acquired by Northstar Travel Media and merged with BTN. She became
editor-in-chief of BTN in 2015 and editorial director of the BTN Group in
2019.
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