Consumer Sites Make Inroads Into Biz Booking Arena

<B>Consumer Sites Make Inroads Into Biz Booking Arena</B>

By Jay Campbell

Thousands of small businesses are using such consumer-oriented Internet travel sites as Expedia and Travelocity, which have responded with more business traveler-friendly tools. Though these features are far short of what an intensely managed travel program requires, these sites are making inroads into the "lightly managed" end of the market.

Booking vendors envision a scale along which business customers are segmented depending on their needs: from basic bookings and business traveler services through the use of a consolidated credit card, to the loading of negotiated fares and travel policies and, ultimately, enterprisewide integration with other software.

Companies with highly managed programs are buying such systems as E-Travel, GetThere and ResAssist for the managed-travel capabilities they offer, but the largest portion of the business travel market is lightly managed, if at all, which is where the line between consumer and business gets fuzzy.

Nowhere is that dichotomy more interesting than at Sabre, which owns GetThere and Travelocity. With the exception of the Web sites it runs for airlines and other suppliers, the former is focused solely on business travel. But it is the latter that has 6,000 companies signed up to aggregate their buying on a single credit card, providing purchasing data.

According to Marty Gast, vice president of segment marketing for Travelocity, the largest of the 6,000 has just 110 employees assigned to a single card.

"A market we were going after was the unmanaged, self-booking business traveler, and we already get 30 percent of those bookings," said Gast. "But we're also going after the semi-managed, self-booking travelers at companies large enough that they want to control their expenses, but too small to negotiate with carriers on their own. They don't want to have to pay fees to a travel agent, but they would like to be able to consolidate the business."

According to Gast, that differs from GetThere because "we draw the line on policy enforcement, but I'm not going to rule out management reporting."

GetThere is funneling its development for the smaller and midsize market through such distributors as American Express, British Airways and Carlson Wagonlit. American Express has about 1,400 clients using RezPort, its version of GetThere's self-customizable Mid-Market tool (BTN, Oct. 2, 2000). In total, GetThere has about 2,000 customers on Mid-Market, a version of GetThere DirectCorporate with less flexibility for policy variations and negotiated fares.

"The needs of the high-end through the low-end differ depending on the balance between capabilities to ease the life of the business traveler and how much responsibility the company wants to take to manage its travel program," said GetThere COO Jeff Palmer. "In all aspects of American business, the midmarket is the most challenging to address. It's more difficult to get to and harder to find one size that fits all. It's less a technology approach than a business model, and our strategy is to use multiple channels."

But Gast went a step further and took a critical look at managed travel from the end-user's perspective. "The companies that originally got into managed travel now are managing travelers, according to everything I've seen about policy enforcement," he said. "What we want to do is tell them that somewhere along the line, a good idea got over-managed and there's too much focus on policy enforcement. If a customer feels they need a lot of individual custom reports to make them feel good about what they're doing, I'll give recommendations to GetThere any day."

Like Travelocity, now celebrating its fifth birthday, Expedia also reports high corporate usage. About one-third of customers who make a booking on Expedia are doing so for business travel, said director of business travel and mobile services John Pollard.

Pollard said Expedia has not "rolled out company accounts" as has Travelocity, but that all options remain open in terms of expanding on business travel tools. In November, for example, Expedia enabled travel arrangers to book for multiple travelers using a single card. Expedia would not reveal how many customers have taken advantage of that feature.

Expedia and Travelocity both offer airfare search capability by schedule, repeat-trip bookings and some mobile solutions.

Biztravel.com and Trip.com, respectively owned by Rosenbluth International and Galileo International, specifically target business travelers and smaller companies. But, according to Nielsen/NetRatings, both sites registered less than 250,000 unique visitors in February, while Expedia and Travelocity counted more than 3 million and 4 million, respectively.

A major disadvantage in business use of such sites is that they do not incorporate negotiated discounts, which even small companies can sometimes attain.

"Conversely, from time to time I suspect Travelocity and Expedia may have some special Internet fares not available in the GDSs, though they are not the main sources of special Internet fares," said Princeton, N.J.-based Management Alternatives consultant John Heilner.

For some companies, even fares are not the issue.

Medina, Minn.-based recreational vehicle manufacturer Polaris Industries Inc., for example, has no airline discounts, despite its $2 million a year air volume. "The biggest thing is having control," said travel manager Jeff Schwaegerl, who operates an Airlines Reporting Corp.-approved Corporate Travel Department. "Tickets through Travelocity are issued by them, but I want access to the records to make changes."

Although he said all the managed travel products are "still in their infancy," Schwaegerl three years ago selected Worldspan's Trip Manager, which now processes 31 percent of Polaris' domestic tickets.

Heilner pointed out that while using the consumer sites could be seen as a time-saver in an age where good travel agents are hard to find, businesses must consider whether they want to be at the mercy of technology that can break. "At the extreme, if the server is always working and your people are Web-literate and your computer never goes down, you could make that the main way you're going to book," he said. "But if you have no relationship with a travel agency, you have no backup. Also, multi-leg and international trips can be a problem online."

The question becomes whether a business wants an informal relationship with a travel agency for trips not booked online, but that may not bring the services available from a formal relationship.

A bricks-and-clicks mix is what American Express sees as the best scenario for small companies. "All customers can't book every trip online," said Henry Blinder, vice president of the American Express interactive travel group. "There are lots of complex trips, so we offer the ability to have a local office support complex itineraries in the offline world and an online service they can use to roll into consolidated management reports."

American Express now has more than 100 offices dedicated to small-business travel, generally defined as companies with roughly $500,000 in annual air volume.

American Express has two possible arrangements for clients of the RezPort brand of GetThere's Mid-Market product. Basic RezPort does not include policy enforcement and allows "only the negotiated airfares and car/hotel rates we put in across the board," said Blinder, and for that there is no transaction or implementation fee of any kind.

A fuller offering includes policy enforcement and company-specific negotiated fares."We have varying pricing for that based on whether or not there's revenue sharing," said Blinder.

If Expedia's and Travelocity's advantage involves brand awareness and marketing, American Express has a weapon there, too. Itn.net, the former Internet Travel Network consumer site that was the forerunner for GetThere, now redirects buyers to the americanexpress.com/travel site. Itn.net recorded nearly 2 million visitors in February in the Nielsen/NetRatings study, placing it third behind the big two and just ahead of the most popular airline site, Southwest Airlines' Swabiz.

If travelers from a given company buy a significant amount of travel on americanexpress.com/travel, Blinder said, "we might offer them broader services."

But Expedia's Pollard questions whether small-business travelers require bricks-style service. "We had gotten a lot of feedback that this would be a group of people who had a high customer support burden," said Pollard. "But what surprised me is that in the BizRate Store Ratings, business travelers rated us higher than leisure travelers do. According to BizRate, repeat travelers tend to need that hand-holding a lot less. Unlike bigger accounts, small- business travelers hadn't been spoiled over the years."

Focusing on the individual's experience rather than the managed aspects of business travel is what gives the big two their edge.

"Our site validates that personal preferences outweigh corporate policy," said Travelocity's Gast. "That's why you see these managed solutions getting such low adoption rates, and that's why you see so many people coming from big companies shopping for a more convenient route, personal convenience over company policy."

Asked whether Travelocity would ever consider actively selling its services directly to smaller companies, Gast said "probably," and noted that the site has many registered users whose e-mail addresses are from larger companies as well. "We're just now exploring the very beginnings of what we can do to help business travelers achieve what they're looking for, which is to personally control their trips," said Gast. "Many employees tell you that their personal preferences are the most important thing, and say, 'Saving money for the company is great, as long as I'm not taking a redeye.' "

"The people who win in this space will pay attention to the end-user experience," said Pollard. "I think the penetration of corporate desktop booking tools is slowed by paying more attention to back-end policy authorization, reporting, etc., than to corporate users' behavior. Anecdotally, a lot of individual departments in large corporations are using the arranger functionality on Expedia." Of course, that's the scenario that vexes travel managers at large corporations.

Speaking at The Masters Program in Washington in February, Bayer Corp. manager of travel services Paul Lang, said, "The challenge we face is when the traveler says, 'I can get it cheaper on the Internet.' I'd like to see the ability to track and apply corporate discounts to those fares."

Though he appreciated the challenges travel managers face, Pollard argued that the Expedias of the world may be providing an unsung service to managed travelers, which is that they are better educated on fares and schedules when they call the designated agency, saving time on the phone.

"I bet that corporate travel desks are getting more refined inquiries, but I realize that it's also becoming a real pain," Pollard said. "So, I think on balance, we haven't hurt anything."

Steven Schoen, senior director of business development for E-Travel, sized up the large-market matter: "The technology is not the issue as much as it is the ability to manage a travel program in the open information age. Corporate travel managers can assess the best purchasing practices over the entire enterprise, and the onus is on the company to support him or her.