Beta Tests Begin On Amex-Microsoft Booking Tool

<I>New York</I> - Forget "Rome." It's "AXI" from now on.

The American Express-Microsoft team of travel technology titans last week formally debuted their automated corporate booking system, and officially christened it American Express Interactive, or AXI for short.

In a press conference underscoring the possible financial return of online booking systems, Microsoft and Amex bigwigs shared the stage with the product's three corporate beta-testers, AlliedSignal, Monsanto Corp., and, not surprisingly, Microsoft itself. Each company will test the system with about 50 travelers at first, gradually adding more users until the total test group approaches 1,000. Twenty more Amex corporate accounts, culled from customers with strong travel-management programs and a technology bent, will then be added this fall.

John Neilson, vice president of Microsoft's interactive service media division, reiterated the message delivered by Rich Barton at last month's Travel Tech World '97 conference (BTN, June 9), emphasizing the partners' focus on the product itself, rather than speed in getting to market, to meet the industry's high expectations. As one of the first "industrial-strength" electronic commerce applications on the Web, the system previously known as Rome is being carefully developed and closely watched. Once the model proves successful, commerce-based applications on the Web will take the lead over the information-based sites that now dominate the Internet, Neilson predicted.

The three beta-testers fit the profile of computer-literate companies headed by full-time travel managers that the technology partners see as their prime audience. Microsoft travel manager Peggy Piesik said 70 percent of the company's reservations already are booked on an e-mail-based system. At Monsanto, 82 percent of travelers in a recent survey said they would use an electronic booking system, 10-15 percent already are accessing travel information on the Web, and an electronic expense reporting system is rolling out company-wide. Among AlliedSignal travelers, quality and technology manager Nader Nemati said he expects the adoption curve for AXI to follow the pattern set when the company added a voice-response-based front-end to its expense-reporting system in 1995, so that the company's 20,000 travelers could follow up on the status of their reimbursement checks without speaking to an accounting department staffer. Usage of that system has risen from 5 percent when it was first installed to 80 percent today.

Monsanto travel manager Betty Ryan said she sees the use of AXI as part of an ongoing reengineering project which already has resulted in the company replacing 61 different travel agencies and consolidating its global travel business under American Express. Monsanto's 11,000 U.S.-based and 5,000 European travelers average four calls to the agency for each of their 30,000 annual transactions, and spend an average 15-17 minutes per booking. Ryan hopes to use AXI "to bring our travel Website to life" and to automate 10 percent of Monsanto's bookings by the end of 1998.

Ryan has had preliminary talks with hotels about offering preferred rates online, "and they are willing to look more closely at our rates for 1998," she said. "They see that we mean business and that this is one more way for us to move market share without mandates."

Microsoft's Piesik also saw AXI as a way to improve the company's market-share figures with all its preferred vendors, but with preferred hotels in particular. Microsoft travelers currently book only 40 percent of their room nights through American Express, she said, which puts her in the unfortunate negotiating position of using data supplied by vendors themselves.

Microsoft believes that using AXI will allow it to move half of its 60,000 domestic and 20,000 international tickets online in the next 12 to 18 months, and slash the time it takes to make a booking from the current average of 33 minutes.

AlliedSignal, though, seems to have another plan in mind for moving market share to the Web. "As a government contractor, cost is the big driver for us," Nemati said. "When we charge back travel processing costs to the individual business units, we are going to charge back one price for bookings made online and a higher price for calling an agent. We have determined what the break-even point for us is going to be with this system, and we don't foresee it being a challenge to reach that."

Nemati said the overall goal at AlliedSignal is to automate every step of the travel process--"the planning, the reservation, the actual trip, the expense reporting and the auditing processes"--as part of a reengineering of all the company's shared business services, including human resources, finance and IT as well as travel. That accomplished, the company hopes to apply for the Malcolm Baldrige Quality award "in the next couple of years."

The developers, too, are determined to build a system that will be so compelling for travelers that it obviates the need for mandates, said Mike Mulligan, senior vice president of Amex's interactive travel group. To that end, AXI will include such frequent-traveler draws as seat maps, destination maps and flight status information. But if that does not work, the travel managers suggested they will consider offering additional incentives, like frequent flier miles.

Microsoft's Barton said early returns on a 50-percent-off companion fare promotion by American Airlines for travel booked on Microsoft's Expedia site suggest that price discounts can be wildly successful in the leisure market--but agreed that nothing motivates a frequent business traveler like miles.

All parties declined comment on a price for AXI or on the financial agreements with corporate customers; Mulligan said only that the system will be included in negotiations with each customer individually.

Mulligan also noted that the online commission cuts announced by a number of airlines in recent weeks do not apply to the corporate market. And he reiterated Amex's commitment to the CRS channel for both air and hotel bookings. "It is not our objective to bypass the CRSs, and we will book hotels through the CRS whenever possible," he said.

Neilson, meanwhile, underscored the long-term nature of the Amex-Microsoft partnership. Twice asked by reporters about Microsoft's intentions in this arena, he did not mention the fact that the exclusive contract between the two companies is for two years only, and begins ticking with the product launch in July. Instead, he said Microsoft's relationship with the nation's largest travel-management firm "will last as long as we both do a good job.