This is a response to Andrew Menkes' Perspective, "Managed Travel 2.0 Is Really Unmanaged Travel 2.0 ... But Either Way, It's 2.Late" (BTN, Jan. 20, 2014).
There's been a lot of press surrounding direct-booking technologies since the advent of Concur's TripLink in August 2013 and the alternatives that followed. Critics charge that these products undermine the most basic tenets of corporate travel management and encourage noncompliance. And, as we know, without compliance we no longer have managed travel—we have unmanaged travel.
As someone responsible for procurement for thousands of travelers around the globe, I get it. The travel team here at ZS works tirelessly to get all of our travelers to consistently book through our travel management company.
However, though I am reluctant to authorize our travelers to book outside of the TMC channel—a strategy more commonly known as Managed Travel 2.0—I authorize it anyway. Why? Because booking outside the channel in some cases creates more business value than booking through it.
When 2.0 Benefits Outweigh Costs
I, for instance, often authorize this type of travel when it involves family members. We hold several meetings on an annual basis—typically at resorts or big-city hotels—and we often invite families as well. We found that employees usually want to book these trips using their own frequent-flyer miles, or have other needs not satisfied through traditional TMC channels. We invite family members to reinforce our employees' connection with the company, and forcing them to pay more or work exclusively through our TMC would counter this objective.
That's why, in these cases, I allow booking through the airline website—regardless of the "hidden" costs—because the business value (benefits minus costs) of booking through the website is higher than booking through the TMC.
There are some negative consequences for this, however, including the need for staff to manually track travelers' locations in case they need assistance. Also, some frequent travelers may become confused about when they must book through the TMC versus when it is OK to book on a direct website.
While the example may not apply to all programs, most companies do allow booking outside the TMC channel. Recently, ZS released research that shows 77 percent of programs allow booking direct for external meetings, and 45 percent allow it for internal meetings. More than a quarter of companies allow it based on manager or business unit preference.
Ultimately, of course, it is ideal to have both the lower cost and the benefits of booking through a TMC. At ZS, we tried booking passive segments in the global distribution systems, which proved clunky and ineffective. Thus, we have explored several solutions that would allow travelers to book outside of the TMC and still keep management in control of spend. While we have not selected a solution yet, we plan to start a trial within the next six months that, if successful, we will expand broadly.
Our role is to create maximum value for our companies, so travel managers and procurement professionals should not blindly adhere to compliance edicts with bookings through their TMCs. For many years, we followed booking-channel compliance as a means to this end—but it is only one way to create value.
No Universal Approach
When we encounter situations where it is obvious that business value is compromised, we need to look for alternative solutions. Unfortunately, many have had a knee-jerk reaction to the idea of allowing bookings through other channels.
I do not advocate that every program adopt Managed Travel 2.0. There are programs where the traditional "1.0" approach makes more sense and creates the most business value. Still, if you are a travel manager who has been challenged by others or by yourself about the business sense for the usual 1.0 approach, then you owe it to your company to investigate the emerging alternatives.
In that vein, it's important to also challenge some of the existing ideas about how Managed Travel 1.0 creates value. For example, the industry often talks about a single point of call in the case of travel disruptions. One call to the TMC, and all of the suppliers are notified, bookings modified and data updated.
But do your travelers actually call the TMC? Or do they call suppliers directly?
If they do call the TMC, great—this creates value for your company. But if they don't call the TMC, you shouldn't count that as business value.
What I suggest may not be easy to implement. Beyond our own program, one of the largest challenges is the TMC business model. Booking outside the TMC threatens all revenue streams: booking fees from corporations, GDS segment payments and supplier commissions. If you are like me, you still want your TMC to service these bookings when needed and be able to track and report on the travel.
The TMC needs to also be fairly compensated for these services and requires a new business model that is not tied to transaction fees. Fortunately, a number of forward-looking TMCs have started to investigate new ways of working with companies. These TMCs are best positioned to win the business of the roughly one of five companies for whom Managed Travel 2.0 is a good option today—a number we expect to grow over time.
The bottom line for travel managers is your company's bottom line. Managers need to actively watch the value they create and costs incurred, and constantly re-examine if they are maximizing value.
I cannot tell you if Managed Travel 2.0 will increase value for your company—only you can answer that question. But, I can say you are unlikely to maximize value by blindly following the same program as everyone else.
This report originally appeared in the Feb. 2, 2015, edition of Business Travel News.