Travel budgets are rising in 2016 and capital is flowing
into the travel industry. Startups weren’t winning as much of that money as in 2015,
but Warren Buffet himself returned to travel industry investment in 2016,
taking positions with American, Delta and United. Hotels were looking at an
influx as well. Chinese investment firm HNA Group took a 25 percent stake in
Hilton Hotels Worldwide that year. And there was a big commotion from Anbang
Group when it upset the applecart of what looked like it would be a smooth
Marriott acquisition of Starwood that year. Ultimately, Marriott prevailed, but
not before having to raise its bid to $13 billion.
Accor acquired Hong Kong-based Fairmont Raffles Hotels international
and there were smaller acquisitions in the hotel market here and there. China—and
all of Asia—were clearly a focus of these acquisitions. Marriott’s Starwood merger
doubled its presence in Asia, the Middle East and Africa. The cross pollination
of Chinese money flowing to the U.S., plus U.S. companies finding every which
way to increase their presence in China, in particular, began to rub Chinese
regulatory authorities the wrong way. There were considerable questions about
whether the Chinese Ministry of Commerce would stamp the deal for approval.
The hotel landscape wasn’t all about mergers and
acquisitions though.
Cancellation fees, loyalty accelerators for direct bookings and
fewer bids for corporate business were all in the mix in 2016. There was lots
of talk about the cost of distributing content through global distribution
systems, but even more it was the cost of distributing though major online travel
agencies like Expedia and Booking.com that spurred creative thinking. Indeed,
hoteliers began sowing some wilder oats in 2016, and abandoned a concept called
‘single image’ whereby 100 percent of a chain’s transient room inventory and
pricing is located in a single repository accessible by all channels regardless
of whether they are direct or indirect.
The moves in the hotel industry were pushing toward a common
outcome of driving more competition between distribution channels and reserving
the best rates and content for direct bookings. Bulking up with bigger and more
diverse platforms was part of this play to give consumers more reasons to come
to the hotel companies’ direct websites.
The biggest competitor for direct bookings were the OTAs,
and it looks to me like many moves were made to distinguish and incentivize
direct bookings from those OTA channels. Accor in 2015 had already opened its
platform to a variety of non-Accor content—a strange move for a hotel company,
which made it look and feel more like an OTA than a brand-exclusive platform. In
2016, in addition to the $2.7 billion Fairmont Raffles acquisition, Accor
invested in two home-rental platforms and brought that content onto its own
booking site.
Marriott’s big buy brought its total properties around the
globe to more than 5,700 and more than 1.1 million rooms among them in 110
countries. Becoming the biggest—by far—hospitality company in the world would
also come with benefits like having leverage with OTAs to reduce the company’s
distribution fees through OTAs. That benefit wouldn’t occur for a few years as
the contract had to come up for renewal first, but Marriott took the first
chance it got in 2018 to throw its bigger weight around.
Loyalty programs became a significant weapon for hotels in
this channel strategy re-think. Major hotel companies began to offer their
loyalty members special discounts and offers but only if they booked directly. A
few years later, hotels would flip that script and also begin to deny loyalty
points to bookings made on OTA channels.
Hilton led the way in January with a full campaign that incentivized
direct bookings through its loyalty program. Loyalty members gained perks like
free wi-fi and the ability to access online check-in, both uncommon in 2016. Not
only was the campaign successful in drawing loyalty members away from OTAs, it
also garnered more loyalty signups.
Marriott and Hyatt took notes. By July, both had mounted
similar campaigns tying lower rates and complimentary amenities to bookings
made on their direct websites or via their apps.
The thing was—it started to look like these efforts weren’t
just drawing bookings away from that expensive OTA channel. And the special
loyalty rates on offer were starting to undercut some corporate rates.
Then-BTN hotel editor Julie Sickel followed the impact
closely. Here’s an excerpt from a July article that hit the website just as
travel managers were prepping for their hotel RFP season:
One travel manager, who preferred not to be identified… expressed
concern about the growing trend from hoteliers. "It confirms my suspicions
that the sales teams are not working close enough with [the loyalty teams] to
protect the integrity of the corporate rates offered," the travel manager
said. "I am almost convinced that they are trying to take our travelers
from our managed programs and push them right into their own Brand.com. This
tactic may seem good right now, but long-term I think they will hurt themselves
as they hurt the relationship between the buyer and supplier."
Adding to travel managers’ worries of losing ground with hotel
partners, the impact to the corporate market of Marriott’s new size began to
show: In the 2016 hotel RFP season, Marriott declines bidding on
corporate hotel RFPs 18 percent of the time—far more than Hilton or Starwood.
Former Marriott global sales executive David Townshend who
had joined Partnership Travel Consulting in 2016 penned an op-ed for BTN that
foreshadowed some additional moves hoteliers might make to disintermediate
their distribution channels. His instincts would prove right a couple of years
later. It’s
a good read and, if you have time, you should give it a go.
More Than Hotels
Of course, there were many other key events for the corporate
travel industry in 2016. For BTN, the Amex GBT acquisition of KDS loomed large.
The hand of private equity group Certares moved deftly in the background of
this acquisition, forcing a C-suite replacement at competitor TMC CWT in the
process. Certares recruited CWT CEO and nine-year veteran Doug Anderson to lead
Amex GBT. Anderson abruptly departed Carlson and was replaced by former
Travelport chief commercial officer Kurt Ekert (who now sits atop the Sabre org
chart).
The sudden move seemed deterministic as KDS had struck a
tight deal with CWT a couple years earlier to move the KDS booking tool into
the North American market and ostensibly to serve as CWT’s main booking and
expense partner. But it had failed to gain traction.
Speculation had already circulated that GBT was looking to
acquire KDS and the unusual leadership change poured fuel on that fire.
When the acquisition did come to fruition, it brought new travel
and expense technology into GBT’s orbit—and the focus for Amex GBT tech
transformation was solidly on the Neo booking tool. KDS had introduced Neo in
2013 with advanced algorithms and embedded machine learning to deliver tailored
itineraries to users. Amex GBT has poured investment into the tool, it remains
in the tech stack and is still offered under its original name Neo. It is fully
absorbed into the GBT technology portfolio. The KDS brand and entity was
retired in 2021.
The Amex GBT T&E tech acquisition set another ball in
motion—or maybe stopped it. GBT’s long-standing relationship with Concur no
longer made sense. And, besides, Concur’s 2015 acquisition by SAP in many ways
obviated the need (and possibly the desire) for that kind of partnership. If
there was any concern about how Concur would fare without its staunch Amex GBT advocate,
there should not have been. Concur’s fortunes grew from 32 million users in January
2016 to 42 million users by September.
Enjoy the 2016 timeline—and Mother’s Day. Hope all the
mothers out there are having a great one!
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JANUARY
American Express was allowed to keep preventing merchants
from directing customers to cheaper payment options, after a U.S. appeals court
granted a temporary stay on a prior ruling against those provisions.
United and Delta ask the U.S. Department of
Justice to dismiss an antitrust lawsuit challenging their slot-swap deal at JFK
and Newark airports, which the DOJ thinks would give United excessive control
at Newark.
United joins Delta in offering corporate clients compensation in 2016 if it trails its top
two competitors in operational performance. The latter introduced a similar
guarantee in the summer of 2015. Should the carrier trail American and Delta in
on-time performance and cancellation metrics, it says it will compensate
‘eligible’ corporate clients with United Services Funds.
American declares it will roll out premium economy cabins on international flights on
wide-body aircraft. Alaska Airlines says it will add such cabins to 60
aircraft. American, United and Delta has already offered premium economy seats
but not in their own cabin.
AccorHotels acquires FRHI Holdings, parent company of the Fairmont, Raffles and
Swissôtel brands, for $840 million and 46.7 million new Accor shares.
In the middle of implementing Orbitz for Business,
travel program giant IBM switches to Concur. The company said it
was independent of Egencia’s acquisition of OFB. IBM travel manager Shari Quackenbush hints the program will begin by building
off Concur. IBM launches a travel bot, powered by IBM Watson, in 2017.
FEBRUARY
Industry professionals share that rising concerns about the Zika virus have not thwarted corporate travel.
United, Southwest, JetBlue, American and WestJet all
make new fleet purchases after most North American carriers reported rising
profits and revenues for Q4 2015.
The U.S. modifies the Visa Waiver Program Improvement and
Terrorist Travel Prevention Act of 2015, passed not long after the November 13 attacks in Paris.
The American Hotel & Lodging Association claims that Airbnb
benefits from illegal hotel operators. Meanwhile, Airbnb accuses AH&LA of avoiding taxes in Los Angeles
and other U.S. markets.
MARCH
Hoping to improve its automation features, value-added tax
specialist VAT IT collaborates with MasterCard.
The U.S. and Japan update their Open Skies pact to let U.S.
carriers have daytime flights at Tokyo's Haneda Airport for the first time since 1978.
U.S. Transportation Secretary Anthony Foxx agrees to re-establish scheduled air service
between the U.S. and Cuba.
The United Nations' International Civil Aviation
Organization introduces new standards to cut aircraft carbon emissions by over 650
million tons between 2020 and 2040.
Travel management companies like Carlson Wagonlit Travel and Expedia's Egencia work to integrate Uber ride requests into their own mobile apps.
Amadeus launches Cytric Travel & Expense and announces that the
long-used e-Travel Management will no longer receive updates. Executives say
Cytric is ‘aimed at creating an ecosystem’ and intends to compete with Concur.
Robert “Bob” Fornaro, newly named CEO of Spirit Airlines in 2016, expects to attract corporate travelers to the carrier with operational
improvements.
Extended Stay America restructures its sales team to pursue corporate business.
Travel and expense companies make a play for Europe: Expensify opens an office in London, Chrome River also ramps up in the U.K., while Concur launches TripLink in Germany and France.
Two explosions in Brussels, one at the airport in Zaventem and one at
Maelbeek metro station near the European Union headquarters—and both claimed by
ISIS—paralyzed the city on March 22.
To authenticate transactions, BMO Financial Group andMastercard plan to bring biometrics to corporate cards.
APRIL
The battle for 110 daily roundtrip airport slots in Cuba lines up for carriers both small and
large alike. Starwood Hotels & Resorts becomes the first U.S. hotel company to ink deals in Cuba in nearly 60 years.
Many in the industry wonder about who’s purchasing Starwood Hotels & Resorts and bet it’ll be Marriott
International. Yet a counterbidder from China almost de-rails the deal, and
the bidding goes over $13 billion.
After the pilot, Hilton does not push through with
implementing its cancellation fees. But CEO Nassetta says the hotelier got
“some nuanced intelligence” from the effort.
AccorHotels buys into two home-rental platforms, Miami-based Oasis Collections and
Paris-based Squarebreak.
American Express' 2015 financial performance led to a
26 percent year-over-year pay cut for CEO Ken Chenault, according to a filing with the Securities and
Exchange Commission.
Cvent’s earnings continue to grow, and private equity
firm Vista buys the meetings technology firm in a merger valued at $1.65 billion.
AirPlus International intends to replace its
corporate card for U.K. individual-pay customers with one that’s subject to
fees.
MAY
Ed Bastian takes the helm at Delta Air Lines from former CEO Richard Anderson. Anderson in 2017 would take a volunteer CEO role at Amtrak.
HRG chief information officer Bill Brindle says the
firm is working to direct-connect Lufthansa to its new Fraedom travel-and-expense product suite.
CTM agrees to buy travel management company Travizon Travel, its seventh acquisition, for $21 million.
Lufthansa’s GDS Surcharge Cut into Amadeus Bookings
Hilton Worldwide, Marriott International, Hyatt
Hotels Corp., InterContinental Hotels Group and Choice Hotels
International start offering discounted rates for loyalty members who book directly on
their websites.
Alaska Airlines purchases Virgin America for $2.6 billion. The carrier believes that
Virgin America’s network gives it the opportunity to expand in corporate travel.
After entering the U.S. market, hotel solutions firm HRS hires former GetThere CEO Suzanne Neufang to grow the business.
Beijing-based HNA Tourism says that it will acquire Carlson Hotels, including its majority stake in Rezidor
Hotel Group.
JUNE
Vista Equity Partners buys Marketo for $1.79 billion, building on its ownership of Lanyon and pending acquisition of Cvent, as industry players attempt to
integrate mobile, social, and marketing automation tools into event platforms.
SITA, which builds technology for airports, releases a
survey that shows 91 percent of those who use self-service technology to check
in will continue to do so, either at an airport kiosk or airline app.
American Airlines seeks to offer preferred seats for free to corporate travelers, as part of
a bigger strategy of extending access to American’s products and services that
have not been available in the GDS.
Delta Air Lines continues to improve its Operational Performance Commitment, and the carrier’s SVP
of Sales Bob Somers gives BTN an update on it.
The Association of Certified Fraud Examiners reports
that senior management accounts for more cases of expense reimbursement fraud than any other type of
employee.
TMCs are moving away from phone calls and toward
multichannel communication methods like chat and SMS to meet traveler preferences.
Concur debuts its ExpenseIt app in the U.K., after two years of setbacks from
adapting its receipt-scanning technology to the diverse formats and languages
of European receipts.
JULY
Brexit poses various challenges across business travel management, aviation, hospitality, and payment initiatives. Global distribution systems like Amadeus, Travelport, and
Sabre maintain their 2016 financial forecasts, citing global operations and
Brexit’s limited immediate impact.
The DOJ further investigates and delays the pending merger
between Vista Equity Partners and Cvent.
A Global Business Travel Association and Sabresurvey of over 1,700 business travelers shows that most
would rather manage their own travel if they had a choice; however, it also
shows that trips they book with an agent have higher satisfaction levels than
those booked on their own.
Hilton’s ‘Stop Clicking Around’ campaign led to more app downloads, loyalty sign-ups, and a
10 percent rise in direct bookings. However, it also prompted backlash from
some OTAs that downplayed Hilton listings in search results.
Airbnb sues San Francisco in federal court, claiming that a new ordinance requiring the removal of unregistered
listings and disclosure of host data violates the Communications Decency Act,
the Stored Communications Act, and the First Amendment.
Airbnb adds a new feature that lets users of its Airbnb Business Travel platform book stays on behalf of
others within their same company. Hence, travel managers will appear on a joint
reservation where both they and the future guest can modify the stay and
connect with the host.
American, Delta, and United continue to
improve the reliability and aircraft quality of their regional service, which accounts for as many as half the
departures for major carriers.
Southwest Airlines will start offering domestic
tickets on its new Amadeus-based reservation system later in 2016. It plans to have daily
operations on the system in the first half of 2017.
Sabre CEO Tom Klein announces that he will retire; he also says
airline-GDS relations have a better dynamic than at any other time in his
career. Meanwhile, Lufthansa claims Sabre is overbilling.
In the 2016 hotel RFP season, Marriott declines bidding on
corporate hotel RFPs 18 percent of the time—far more than Hilton or Starwood.
It raises concerns that the merger with Starwood could largely increase
market power in key cities, where their combined share may exceed 30 percent of
corporate room nights.
United Airlines plans for a $3.1 billion boost in its bottom line by 2018 via
operational improvements and regaining lost corporate market share, supported
by its Global Performance Commitment that ties compensation to
performance versus key competitors.
AUGUST
New technologies like iCar and Deem’s Whisk try to compete
with Uber for ridesharing in corporate travel.
Former DOT Secretary James Burnley, a staunch supporter of air traffic control
provision, talks to BTN about the Federal Aviation Administration’s
reauthorization.
Congress approves a 14-month extension of FAA funding through September 2017, focusing
on TSA PreCheck expansion and enhanced airport security, while deferring major
infrastructure and air traffic control reforms for future legislation.
Peter Neffenger of the U.S. Transportation Security
Administration looks to turn airport security checkpoints into fast-moving,
largely touchless experiences.
GraspPAY single-use virtual cards have become a payment
option for those booking travel on Concur. Bookers could previously
enter virtual card numbers like credit card numbers, but they'd first have to
generate a virtual card number elsewhere.
BMO Financial Group’s Steve Pedersen shares updates
on the company’s pilot for biometric payment authentication.
BCD, CWT and Amex GBT each form a data-capture partnership with Airbnb. Each TMC wants to
enable the capture of Airbnb booking data for traveler tracking and reporting
but are in varying phases of readiness to facilitate Airbnb bookings on behalf
of clients.
Under new leadership, Deem focuses on its core
travel, expense and ground transportation offerings. The technology firm is
developing a go-to app for travelers, TMCs and travel managers.
JetBlue expands its premium Mint product and considers service to Europe via an amended
purchase agreement with Airbus. The carrier eventually launches its service to
London in 2021.
Hoping to bring larger companies onto its platform, Uber
for Business creates three new features to give travel buyers added control over
payment and compliance. Moreover, Concur and Uber strike a deal
to offer Uber for Business at no charge to Concur clients.
Sabre overhauls its corporate travel assets with a
major investment in integrating booking, mobile, virtual payments, and expense
management into a “consumer-grade” platform centered around TripCase.
SEPTEMBER
Amex GBT acquires French travel and expense
technology firm KDS, with the deal expected to close in the fourth quarter
of 2016.
Analysts predict that this year’s top management changes in United Airlines and American
Airlines could allude to succession plans for both carriers.
China Southern wants to significantly grow its corporate business through both new and existing accounts.
It aims to increase corporate accounts to 3 percent of its revenue in 2016.
Delta plans to end service on three routes from Tokyo’s Narita Airport,
due to a competitive disadvantage from new daytime slots at the closer-in
Haneda Airport.
United Airlines softens restrictions on travel agency partners rebooking on behalf of their clients
after schedule changes and irregular operations.
Hertz Global Holdings’ revenue decreased 2 percent year over year in Q2 of 2016. Cost
reductions and improving trends suggest better performance ahead. In the same
quarter, Avis Budget Group upped revenue by 3 percent year over year due
to higher rental volume and pricing, but volume and pricing
were down for the company's commercial accounts.
AirPlus International’s adjusted earnings before
interest and taxes fell 30.5 percent due to lower interchange fees following EU regulations, yet
unadjusted earnings rose sharply from equity investment sales.
OCTOBER
Lufthansa Group implements direct-connect booking systems with Siemens and Volkswagen to bypass GDS fees and offer custom services.
Marriott International finally merges with Starwood Hotels & Resorts,
inheriting 11 brands from Starwood. This also leads to changes to the hotel
giant’s sales team and loyalty programs.
Amex GBT sunsets its reseller deal with Concur, and this coincides with
their KDS acquisition. Even so, Amex GBT says it "will continue to work
with and support other online booking tools across global marketplaces."
Despite economic growth, premium business travel has remained relatively flat or
slightly declined since 2013, indicating companies remain cautious about
expanding policies.
At select hotels, Hilton tests new rate types like Semi-Flex and Prepay Restricted to
limit booking cancellations and give customers more pricing options.
Coupa expects to use the cash flow from its IPO for more acquisitions and investments in integrated
procurement and expense management.
Conferma enables delivering virtual card confirmations to participating suppliers
through email, a practice which previously wasn’t allowed without proper
encryption. For hotels, the new service becomes an alternative to faxing
payment details.
Concur Expense and SAP’s enterprise resource
planning solution now feature native integration. This allows for automatic data
synchronization and eliminates manual file transfers.
American Airlines raises the number of domestic fare
classes eligible for corporate discounts, and all contract holders of this type
can benefit without waiting for renewals.
Serko launches Serko.travel, a free, simplified travel management platform for small and midsize businesses
in Australia and New Zealand. Noticing early interest, the company plans to
expand the platform globally, including to the U.S.
NOVEMBER
Donald Trump wins U.S.
presidential election. His platform on travel includes modernizing airports
and air traffic control systems, reforming the Transportation Authority Administration
and the Transportation Security Administration and an emerging focus on curtailing
U.S. visa access to citizens of countries with insufficient security protocols.
SAP
Concur claims to have grown from 32 million users in January 2016, according
to an SAP press release, to 42 million users, according to a presentation to investors.
Topaz claims Southwest Airlines is the cheapest to fly—if the business traveler
has bags.
Amex
GBT introduces a $10 booking fee for airlines that do not “follow
industry standards” on fare filing, booking and settlement. The charge sweeps
in bookings for such airlines as Frontier, Ryan Air, Southwest, Spirit and numerous
others around the globe.
Marriott
opens its M Beta hotel at the Charlotte Marriott City Center. It is an
experimental hotel where the hospitality giant tests new concepts in design,
food and beverage and digital services to help develop the brand.
Air
France-KLM plans separate carrier to compete with Gulf carriers. It calls
the carrier Boost and plans for it to operate on 10 highly competitive
long-haul routes. Boost never materialized. Instead, the carriers launched Joon
which was a short- and medium-haul airline that was ultimately absorbed back
into Air France.
Expense management software Certify shows that Q3 Uber
and Lyft transactions combined outpace car rental and taxi transactions
combined, for the first time.
DECEMBER
Southwest Airlines begins selling tickets on its new
Amadeus-based reservations system.
Timeline produced this week by AI and BTN editorial content and engagement manager Gianna Song
_______________________________________________________________________
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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