Dean Sivley
Travelport by next year plans to offer corporate online booking solutions worldwide. Management.travelthis week spoke with Dean Sivley, chief operating officer for Travelport for Business and Orbitz for Business about content, international expansion and growing the corporate business. An excerpt follows.
For corporations, this year was marked by significant agency consolidation and cost increases due to distribution changes. What impact are these changes having on agency contracts, requests for proposals or agency reviews?
The good news as far as corporations go--and for everybody else in the travel channel--is that we avoided what could have been a far worse scenario and wound up with fragmentation. As far as changes for corporations, yeah, it will mean in most instances, increased costs. There are a few exceptions in very large agencies, which already tend to be the most expensive, that say, "If you utilize our distribution platform, we'll have little increase or no increases." The majority of people have come out with statements saying they would have to pass along the costs passed along by the global distribution systems via the airlines to ensure full content. As a result, what you'll see going forward is higher prices when people are responding to RFPs because everybody will have factored that into their cost structures. The fees will be incorporated into price in new agreements. You didn't ask this, but some ask, "Why don't we get full disclosure? We should know all the costs." I would bifurcate that answer and say if you're in a cost-plus arrangement, that's perfectly expected and an appropriately rational request. However, if you look at the advent of agencies like ours ... with a simple pricing structure and one flat fee, that's kind of an unreasonable thing. This is one of the reasons we priced the way we did. We eliminated all the need to try to understand all these costs. We think we have a very effective model and we have no interest in breaking out all these fees, so you'll see it folded into our fees. For all but those in the cost-plus arrangements, I think you'll see that same scenario.
You mentioned guaranteeing full content. How are you going to do that and where are you getting content from beyond Galileo, Worldspan and your existing direct connects?
That's what the airlines have with their relationships with the GDS. But you have to look at what kind of monitoring gets done. Our clients are still a very good source. If they find any inconsistency, or a traveler brings it to their attention, we chase that down and get them an answer. Secondly, I think you'll start to see services that will help do that as well.
You partner with KDS in Europe. How are you serving clients through this relationship, how many are there globally and do you expect this business to grow next year?
The Galileo GDS has partnered with KDS, so it's not actually with us in the Corporate Travel Solutions group. We're looking at our own deal with them as well. The next part is easy because it's zero in terms of CTS (serving clients on KDS). Galileo and their agency partners obviously have a number of KDS agency implementations. As far as our intentions, we have a number of clients talking to us about international needs. I think it would take a long time to build out all the fulfillment capabilities so we could offer it. I'm not even going to pretend that we could approach an Amex or Carlson sort of state. But what we can do is see if there aren't strategic relationships that we could form and get a fulfillment capability that would link into our capabilities in the U.S., so we could have integrated reporting and seamless global account management, and leverage the Galileo GDS. No matter where you are in the world, you'd be able to have an agent pull up your reservation within Galileo. That's our longer term direction and the key for us is finding the right partner, or partners, to work with. In 2007, we will be coming out with some announcements about how we're going to facilitate that.
What impact have the Travelport ownership changes had on your share of the corporate travel market?
The corporate travel market, if you look at PhoCusWright, which tracks the overall growth of the market, is growing at 4 to 5 percent clip--a little faster than some had predicted a few years ago, but still not rapid, rapid growth. What you do see is faster growth within online adoption. It always surprises me that online corporate travel adoption starts from as low as it does, really still being in the high 30s--38 percent or so--yet they're projecting that this will get above 50 percent in the managed space in the 2008 time frame. By far, the faster growing area is in online booking within managed corporate travel, which is estimated to be around $100 billion. We continue to enjoy high double-digit grow year over year. As much as I would like to grow faster, and still believe that we can, I'm thrilled with what we've done. I think we can do a lot more, but part of the key to that has to be this international component. There are a number of deals where we walk away today because clients say that it's really important that they have a global capability. With what we'll be announcing in '07, there are a number of deals that we would not walk away from, because we will be the right solution.
Can you differentiate the corporate and product brand names for us once again?
Our customers get it, but I understand why it's confusing. Travelport Inc. is our overall corporate name, so that has the Galileo, Gullivers and Orbitz worldwide groups underneath that. Within the Orbitz worldwide group, we have the Travelport Corporate Travel Solutions group, so it's like an internal name, not one that we try to brand, for the group that I head where we sell to all corporations. Within that, we have two products, Travelport for Business and Orbitz for Business. The Orbitz for Business product is geared to corporations looking for something very easy to use, out of the box--not anything very complex in terms of policy and reporting, just something they can put in very quick. The Travelport for Business product is one that grew up much more within the corporate travel world. It's easy to use, to get high levels of adoption, but it's built to add in sophisticated policy, corporate site branding and reporting, and to utilize all those types of capabilities. We figure out what clients are looking for and then we decide which way to go to encourage them in terms of which product to look at. We don't start having discussions about product until they tell us what they're looking to do and how they should be organized.