Online Booking Still Lags In Europe

Online booking of airline tickets by managed corporate travelers continues to advance in Europe, but the rate of that acceleration and the reasons for it are grounds for industry argument.

Some buyers, travel agency executives and corporate booking tool providers told BTN online booking system penetration and adoption rates are picking up fast. Expedia Corporate Travel, however, said online penetration of European corporate travel remains "in low single figures." Joint managing director for the United Kingdom Mike Bor said the rate of acceleration is falling behind the curve experienced in the United States earlier in the decade. Bor blamed the major travel management companies for the slow uptake, accusing them of discouraging clients from pursuing the online channel because they do not know how to adapt their business model to the lower revenues that it entails.

Other industry participants concur that growth has been disappointing, but point the finger at other factors, ranging from inadequacies in the technology to lack of commitment by clients to the innate complexities of the European travel marketplace.

American Express, probably the most vigorous major travel management company to champion the "interactive" channel in Europe, claims 20 percent of the transactions it handles in the United Kingdom are online, with an average figure in the teens for most other European countries. TQ3 Travel Solutions said its online bookings more than doubled in 2004 and look set to rise at least another 50 percent this year.

GetThere said its monthly transactions in Europe exceeded 50,000 for the first time in May, but that compares with monthly transaction levels of more than 1 million in the United States. GetThere's European figures climbed 147 percent in 2004 and the first four months of 2005 were up 102 percent. "Our European figures have surpassed [GetThere parent company] Sabre's own expectations," said Floyd Widener, vice president corporate EMEA for Sabre Travel Network.

Widener took issue with Bor's assertion that TMCs are reluctant advocates of online booking. "We are ecstatic with the way we are working with our reseller partners," he said. "They are helping us drive this forward."

Expedia's Bor, however, said online penetration in Europe is in danger of stagnating. "Europe has always been about two years behind the U.S. in most travel management practices, but when it comes to online, we are falling more than two years behind," he told BTN.

Some buyers have complained, usually privately, that distribution and availability of non-GDS product is patchy, with solutions such as screen-scraping of supplier Web sites proving only intermittently successful. Coupled with the greater variety of fare options in Europe, such as consolidator tickets, their concern is that the booking tools cannot be relied upon to display the best available prices. A memo from one client to its self-booking tool provider, obtained by BTN, said: "The user must be able to find the cheapest fare for flights, hotels and rental cars in one single system. This is not available today."

Other buyers, however, are delighted with booking tools. Among them is Ron Mitchell, purchasing consultant for Zurich Financial Services, who has pushed adoption of GetThere in the United Kingdom up to 80 percent, reaping, he said, "savings into the hundreds of thousands of pounds."

Mitchell has had little trouble with issues such as screen-scraping. GetThere scrapes 40 sites on Zurich's behalf. Mitchell also is pleased with the fares sourced by GetThere. He recently benchmarked its fare quotations against Expedia and Lastminute.com on ten random itineraries and found it was the same or cheaper for all of them.

Mitchell attributes most problems in Europe to a lack of effort on the part of buyers. "We are continually going back to GetThere and American Express [Zurich's TMC] to ask for improvements," he said. "You have to manage the tool. It's like being married: You have to work at it, and it is a lot of work."

Walter Schmitt-Figgener, vice president of product management EMEA for TQ3, said he shared Mitchell's views. He said buyers should work harder at online in Europe precisely because the market is more complex. "There could be more online booking in Europe if the TMCs really pushed for it, but they cannot do this because the pace is driven by the demand of the customer," he said. "Processes are far less standardized than in the U.S., which is just one country with one language, two main GDSs, and six or seven major carriers. Europe is much more fragmented. Technology requires standardization, making it difficult for the online booking tool providers to cover all the alternatives here. If customers do not understand the need to standardize, they will find going online a tough experience."

Expedia Corporate Travel claims that since launching in the United Kingdom last summer, newly signed clients have reached an average adoption rate of 70 percent. The company is launching the same pledge in the United Kingdom it already has in the United States: It will help new clients reach 50 percent adoption in 50 days or it pay a financial penalty.

Meanwhile, Expedia Corporate Travel continues to look to expand in Europe, where it only operates in the United Kingdom, France and Belgium. Atop the list is Germany, but Expedia is finding it hard to identify an appropriate travel management company to buy to provide offline support. "We have U.S. clients asking why we are not there yet," said Bor, who added that the lack of pan-European presence is frustrating plans to target multinational clients.