BTI Building Preferred Supplier Program
<B> BTI Building Preferred Supplier Program</B>
By Amon Cohen
Business Travel International is looking to build an international preferred supplier program of six airlines and six hotel chains. Part of the intention is to leverage greater benefits for clients through longer-term partnerships with suppliers. However, BTI also wants to reengineer its remuneration models with preferred vendors, ultimately scrapping commissions and overrides in favor of a management fee similar to that paid by corporate clients.
BTI U.K. is putting together a version for British clients and if it proves successful, it will be offered throughout the BTI network. COO Mike Platt told BTN that the projected new deal would involve the supplier paying a management fee for services such as distribution to the client, invoicing, providing booking information and managing client deals and relationships. It also means getting rid of what Platt regards as the pernicious influence of override deals.
"Currently, agents earn overrides paid for steering their clients' business towards a supplier," said Platt. "We think this is an unsound practice because it is our duty to support our clients' interests. The solution is that preferred airlines give us a management fee for supporting their product. They should give us the tools to deliver them business by offering improved incentives for clients."
Incentives could be traveler perks such as lounge access, as well as improved client discounts and services. BTI believes these benefits will be funded by removing costs through rationalization of the remuneration model and by customers delivering greater market share to suppliers.
Corporations are losing money in Europe through a dramatic increase in overbookings, BTI has found. BTI investigated one client in the financial sector and found that its travelers were overbooking by 40 percent. In other words, for every 140 tickets booked, only 100 were flown.
The same client asked BTI to benchmark it against three similar companies and the figures that came back were almost identical, with overbooking rates of 38, 40 and 42 percent. These statistics represent a direct cost to the corporation: under increasingly common transaction fee arrangements, the client is charged a service fee for every ticket.
"We had thought the benchmark was 10 to 15 percent, so we were astonished," said Eric Brannan. "The problem is occurring mainly on short-haul journeys, where the traveler is not sure what time their meeting is going to finish. They don't want the hassle of getting their ticket revalidated so they buy three or four instead."
Airlines often will pick up the problem if the traveler tries to reserve consecutive flights with it from the same airport but cunning travelers cover their tracks by booking tickets with competing airlines.
Brannan estimated that clients with an overbooking rate of 40 percent are adding 15 percent to their agency service bills. "It is ineffective and it is costly," he said. "In the end the customer pays for it."
There is also an indirect cost for all airline customers. Each reservation carries a GDS charge, whether the passenger shows or not. It also means that flights fill up with nonexistent passengers, preventing seats from being released to those who need them.
BTI U.K. is preparing a major importation of technology from the United States. "We are in the process of putting something big together," said BTI CEO David Radcliffe. Although he would not elaborate, an Anglicized version of a product from U.S. sister company WorldTravel Technologies is a likely bet.