Demystifying E-Biz Strategy For Travel

<B>Demystifying E-Biz Strategy For Travel</B>

E-business hype in the travel space has gotten deafening. Every player, whether buyer, supplier or intermediary, is aggressively promoting its "e-business strategy." But what does that really mean? And how can companies really benefit from implementing one?

While these are complex questions, one thing is clear: E-business holds enormous promise for travel management.

As an information source, the Internet has been embraced by consumers as well as Corporate America. A recent study by Forrester Research indicated that 76 percent of senior executives are using the Web for travel information and services. For travel managers anxious to provide fresh, accurate information to their travelers, the Web is a superior source for everything from driving directions to expediting a passport renewal to finding the hotel nearest a client's office.

Self-booking systems also attack inefficiencies in purchasing and administration while helping companies capture vital point-of-purchase information. Faster access to data allows for more fluid trend analysis, better strategic deals with suppliers, and clearer potential for finding savings opportunities.

The most significant potential of e-commerce is the transfer of purchasing leverage from the supplier to the customer. Before B2B e-commerce, purchasing power was in the hands of suppliers, who controlled the distribution channel and had a fairly strong lock on data capture as well. With the Web, companies can swing that purchasing power right back to the buyer side.

The three case studies that follow vividly illustrate how.

Challenge: In order to achieve an aggressive savings objective, a travel manager for an industrial manufacturer knew he needed to negotiate deeper discounts with his suppliers--and in order to do that, he needed better data and analysis tools.

Solution: NorthStar, Maritz's Web-based global data management and reporting product, was loaded with the company's transaction data for the past year. The travel manager was quickly able to project the impact of shifting market share from seven to three supplier contracts. With consolidation, air spend was cut by $250,000, or 2 percent.

Challenge: The travel manager for an investment company needed a way to introduce a new travel program and, at the same time, to establish an efficient method for providing information that would enable travelers to make better buying decisions.

Solution: Working with Maritz's ECom Client Web Site development team, the client created a site accessed by a single click from the company's intranet homepage. Maritz provides an ongoing stream of relevant industry data, supplemented by updated rules, policy guidelines, negotiated rates and online newsletters. Travelers can easily answer their own questions by drilling down into the site.

Challenge: The travel manager for a technology firm wanted to ensure that the self-booking tool that she deployed would result in quantifiable savings in both travel and transaction costs. A reduction in agency costs wouldn't happen if travelers continued to use agents to confirm a hotel, obtain a seat or verify a rate, she reasoned.

Solution: The technical infrastructure and integration for a "no touch" reservation was developed, allowing reservations to be automatically fulfilled and ticketed on a specific number of city pairs. Currently, electronic bookings account for 20 percent of all reservations at this company, and the percentage of "no touch" bookings is well over 90 percent. The latter saves the company more than 60 percent of the transaction fee charged for a full-service booking.

Clearly, a successful "e" solution can take many forms. What's critical to remember is that as you're transitioning toward an electronic solution, you have an important choice in business models: the one that swings the advantage to the buyer, and the one, still being refined by airline purchasing consortiums, that maintains a stranglehold on distribution and information.

Before you decide whether any of these ideas may work in your organization, be deliberate in your investment in research, software and infrastructure. A great e-solution in theory that doesn't work in practice is a wasted investment. If it is in fact the right time for you to enter the e-highway, choose your travel partners wisely. The right combination of agency, supplier and technology providers can help you reap tremendous benefits.

<I>Richard Spradling is chief information officer for Maritz Travel GTM.