Content Issues Remain Despite GDS Gains

Although they are pleased with the recent successes by Sabre Holdings, and to a lesser extent Galileo International, in securing more content from the major U.S. network airlines, corporate travel managers face a distribution world filling with questions about where and how to access inventory at the lowest cost.

"As long as there are Internet fares and the Web continues to be a channel, we will be challenged all the time," said Glenview, Ill.-based Illinois Tool Works manager of strategic sourcing Caroline Kusher, one of the hundreds of industry professionals discussing distribution during this month's National Business Travel Association conference in Dallas. "If we don't have access in all global distribution systems, the Web fare tools need to really be developed and used. Unfortunately, if travelers at one point in time found a fare that bettered what they could access through the travel management company, or the corporate negotiated fare, they are going to need to be won back into the system. It will take a lot of education and marketing."

While the distribution companies would like corporate travel managers to tell travelers they have all the content, that has never and may not ever be true.

"The GDSs will only do so much," said Nancy Godfrey, manager of global travel with ChevronTexaco, "and the megas are getting into it with Web and consolidator fares. We're hot-linking Swabiz into GetThere and then how do you handle JetBlue? We haven't figured that out yet. We're going into an airline sourcing, and that's one of the issues. In partnership, airlines need to make it easier to get to low fares to keep our people on the preferreds."

In frustration, some buyers have resorted to less-than-friendly messages to travelers. According to one CT100 buyer, "The corporation wants to know where everyone is all the time, but we have whiners and rogue travelers. We tell them if they go out on their own, they have to solve problems themselves. 'Don't come to the company or to the travel department. Don't expect to be reimbursed for some much higher cost if you become a rogue traveler.' "

On the other hand, "Our agents book it even though it is on the Web," said director of global travel procurement Janan Johnson of GlaxoSmithKline, citing the company's use of non-GDS participant Ryanair of Ireland. "We want to make it transparent for the travelers, and we still are collecting a tremendous amount of data."

On the hotel side—where, as one buyer pointed out, "there are also still rates that come over fax machines"—travelers traditionally are less loyal to the company's preferred booking channel. Considering an already prevalent fragmentation of hotel rates and inventory, some worry the situation will further deteriorate.

"The hotel situation is a lot worse," said Marian Shapiro, manager of travel services at Ingersoll-Rand.

Generally low airfare levels may have taken the spotlight off Web specials, but hotel rates still vary widely among "published" prices, merchant model Web sites and direct channels.

"The same technology solutions you are seeing in air need to be applied in hotels," said FareChase CEO Trey Urbahn. "You don't know where you are going to find the best price, and it is not just a supplier issue. There are many intermediaries that add variables in pricing rooms."

On hotel, TRX executive vice president and general manager Steve Reynolds cautioned that price disparity is "more than just a Web site problem" and that "property managers play with rates based on the deal of the day." That, he said, is problematic because "you cannot automate calling 1,000 hotels." Online booking systems can search the Web after an air booking to see if lower fares were available, and a similar process could be employed for hotel, "but no one likes that," Reynolds said. "It is lots of shopping for very little booking."

"Travel managers want to move beyond the ability to access the information to the ability to book, manage the itinerary, manage the travel, manage the information and receive the reporting—all in one location," said Sue Powers, Worldspan chief information officer and senior vice president of worldwide product solutions. "That solution does not exist today."

According to TRX CEO Trip Davis, whose company this month said it partnered with FareChase to broaden Web-only inventory in its Xpedition service, "Some of the technology solutions in the interim have not been sufficient for corporate buyers to adequately service their travelers. It has put everyone in a very awkward position."

As the response to Web site fare scraping products has been mixed at best—partially renewing interest in the possibilities of making direct bookings in supplier res systems or on their Web sites—suppliers themselves are promising the gaming isn't over.

"Distribution cost reduction won't stop until we reach zero," said Continental Airlines chief executive Gordon Bethune. "The future is headed for direct connections."

Among the latest is Northwest Airlines' corporate booking Web site. "We are pushing down traditional transactions through agencies," said Northwest CEO Richard Anderson. "The GDS has the wrong incentive. Agencies push a button and we get the bill, so we have been dealing pretty aggressively with direct connections."

Northwest's CorpNet Direct, announced this month, offers an integrated display of published prices, Web fares and negotiated rates on Northwest and partner carriers. Corporate accounts are not charged any transaction or set-up fees and their travelers have access to the suite of Northwest's Web-based customer services.

Northwest exemplifies some airlines' efforts to supply multiple choice to corporate clients and/or their travel agency partners. The carrier's Web fares now are available through Worldspan's Trip Manager corporate self-booking product, CorpNet Direct, the Sabre DCA Three-Year Option, the All Fares program for non-Sabre agencies, the World Agent Direct Web site and Orbitz For Business.

Meanwhile, growth carriers also seek to expand on their direct channels. Executives with both America West Airlines and JetBlue Airways told Business Travel News that corporate booking tools linked to their respective Web sites are in the works. Southwest Airlines this month announced new features and reallocated resources for its Swabiz booking portal (BTN, Aug. 11).

"Low-cost carriers have found a successful distribution model of not paying GDS fees and they will continue with that model," said Management Alternatives vice president John Heilner.

"Providing Web fares through the GDS means providing the best fare at the highest expense," said AirTran director of sales Bill Howard. "That is a hard equation to make money on, but we continue to work with GDSs toward a viable solution."

Travel management companies have flirted with non-GDS booking connections. Carlson Wagonlit Travel recently announced going direct with four major carriers, possibly boosting the rate of corporate direct bookings.

However, there is no conventional wisdom on the matter.

According to American Express executive vice president and general manager for North America corporate travel Pam Arway, "You don't want to have to go to 20 supermarkets." Said Navigant chairman and CEO Ed Adams, "GDS bypass today is still pretty lumpy."

"We can do direct," claimed TQ3 Travel Solutions president Jack O'Neill. "And although we can, we support the GDSs." Still, there are savings to be had by buying elsewhere. TQ3 client Patty Gallant of I2 Technologies cited $10,000 in savings from booking Web fares via TQ3's Web fare solution.

"All fares in all channels is a pipe dream," said WorldTravel BTI president Danny Hood.

"There is no answer. No one has complete inventory," agreed Travel Tech Consulting president Norm Rose. "So the message is to be aware of that as you choose your travel management company, online booking tool and GDS. The emerging hotel merchant model is even larger for companies."

"I expect GDSs to be much more creative in a post-deregulated world," said Travelocity Business president Ellen Keszler, referring to Sabre's expectation of the U.S. Department of Transportation's pending decision on its GDS rules. Such creativity, she said, could lead to greater participation by low-cost carriers in GDSs. Keszler also suggested that some major airlines "selectively" will pull out of one or more GDS following deregulation.

"That will be a new issue: Make sure your agency is using a GDS that accesses the carriers you need," Keszler added.

"No system will be comprehensive. Rest assured that non-Sabre systems will still lack Southwest," said Corporate Solutions Group consultant Robert Lichtman. "And even in Sabre, there's less inventory than what you see in Swabiz. I am concerned about the outcome of the three-year airline-GDS agreements if you renew your reliance on the GDS."

Despite all the headaches of non-GDS bookings, there could be an upside for buyers when it comes to data privacy.

It "may be a good thing," FareChase's Urbahn said, to keep people out of the GDS channel so their activity is not tracked by the marketing information data tapes GDS companies sell to airlines. "There is an unholy alliance between airlines and GDSs," he charged. "Airlines use the GDS data to give you discounts, but they also use it to know where not to give you discounts."