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Travel industry technology officials frequently use such terms as "direct connection," "supplier-direct," "direct booking" and "direct distribution," but what they mean has been less than clear in industry discourse. In some cases, what the officials are really describing is no more direct than a "direct flight," which airlines comically define as a flight "with one or more intermediate stops."
Like such flights, so-called direct bookings also often have an intermediate stop--and an associated cost. At a time when airlines and competing technology firms have questioned the value of the purportedly non-direct global distribution systems, it's important that travel managers know what people mean when they say what they say.
From a technology perspective, a direct connection hooks up the seeker of inventory--most likely a traveler or agent using a computer--with the holder of inventory, usually a travel supplier's internal inventory/reservations system (which itself is often provided or hosted by an outside entity). Examples of direct connections include Carlson Wagonlit Travel's and Expedia's proprietary connections into the inventory of certain hotels; Orbitz's links with a handful of airlines; and connections to the inventory systems of certain airlines, ground and rail vendors developed by such online booking tool providers as Concur, Amadeus e-Travel, Sabre's GetThere and KDS.
In these instances, the GDS is bypassed. But some would argue that true direct bookings also should bypass these TMC and technology intermediaries. After all, the intermediaries have to be paid, and if they are, it does not represent "direct distribution" from an economic point of view. As such, a true direct booking would be one which is made by a traveler with a supplier over the phone or via its Web site. Notwithstanding the fact that the supplier's Web site may be developed or hosted by a third party, this scenario cuts out all intermediaries and is generally referred to as "supplier-direct."
Since supplier-direct tends to break down some benefits of managed travel programs, however, travel managers frown upon it. The biggest loss is usually data at the level of detail managed programs require. Supplier-direct solutions that could preserve managed-travel data consolidation and other processes include reservations made via a company's travel intranet page on a vendor's Web site or reservations made on the vendor's Web site using a code which is unique to the client organization. The code would enable data tracking for negotiating purposes, but it also means the client organization needs to trust the vendor's data reports. Usage of such methods is not widespread.
Although supplier-direct is not favored by most travel managers, they need to be keenly aware of the trends that may increase its use. According to PhoCusWright, online and offline corporate travel bookings that bypass travel management company intermediaries will grow their share of total managed travel air, car and hotel transactions to 25.8 percent in 2008 from 19.7 percent in 2004.
Nevertheless, GDS bypass is more common than TMC bypass--largely because many corporate, university and government travel managers rely on the consolidation, content aggregation and management capabilities of TMCs and online booking tools. Also, many vendors favor situations in which they can work with these entities without a GDS.
Bypassing the GDS, however, does not always mean using a direct connection. Although some have referred to bookings through G2 SwitchWorks as "direct," G2 still charges a fee just like any GDS firm. It also uses booking pipes developed by a different firm, Navitaire.
Similarly, so-called Web scraping is a GDS bypass but not technically direct connect. Web scraping or searching technology is deployed by dozens of TMCs and technology providers, but it retains an intermediary and does not use a programming interface into the supplier's inventory system.
Officials interviewed by Management.travelsaid travel managers should understand all the different ways to connect because they anticipate an expanding variety of connections. Some channels will be cheaper than others, and the ability to move bookings may earn organizations improved information and servicing, better discounts and pricing, or--more likely--access to otherwise elusive content.
Some technology vendors are even developing tools that will enable travel managers to direct bookings to certain channels "on the fly," depending on the characteristics and economics of certain channels. These systems are only just emerging, but their apparent benefits in a burgeoning multi-channel distribution environment are obvious.
"I believe the GDSs overall will remain the most efficient mechanism," said Amadeus North America e-Travel president and CEO Scott Gutz, reflecting a common opinion among intermediary companies. "But there will absolutely be outside providers."
"In the end, the market will determine the channel," said Ron Anderson-Lehman, Continental Airlines senior vice president and CIO, speaking last week about direct connections at Eye For Travel's Travel Distribution Summit in Chicago.
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