Corporate travel buyers and many of the industry's key supplier and agency executives, gathered for the 13th annual Masters Program last month in Washington, D.C., generally seemed skeptical about GDS alternatives, but convinced that more changes in business travel distribution are imminent, particularly when it comes to pricing.
"If the discussion is, 'we want to spend five or six dollars less,' then let's have that discussion," Sam Katz, chairman and CEO of Cendant Travel Distribution Services told attendees. "We're all for having an honest dialogue about distribution costs, as long as we recognize what the reality is. We expect to charge less and provide more, but it needs to be a rational discussion."
Sam Gilliland, CEO and chairman of Sabre, whose three-year pricing deals with airlines are set to start expiring this year, said he hopes the industry can find a long-term solution to the pricing problem
(BTNonline, Feb. 17). "There may be things we need to do in the short term, but we need to be disciplined about how we approach this," he said. "Now we have an opportunity to move the industry forward. We need to spend more time in groups with corporations to discuss what we can do there."
While industry leadership tried to remain optimistic about the future of travel distribution, Scott Barry, director of equity research at Credit Suisse First Boston, offered the view from Wall Street. "The Street has really come to question the value proposition of third-party distribution," said Barry, adding that analysts and investors historically have viewed the travel distribution space with skepticism. "The turbulent, shifting, competitive landscape really isn't good from the Wall Street perspective."
Barry emphasized the emergence of online travel agencies as a key driver in transforming the industry playing field, but noted that the growth of the Big Three Internet travel management companies—Expedia Corporate Travel, Orbitz for Business and Travelocity Business—has not met Wall Street's expectations.
Sabre's Gilliland conceded in his remarks that "with Travelocity Business we have done a lot of learning, but we haven't grown it as big as we would have liked."
"There's not a whole lot of visibility on who's going to come out on top," Barry said. "Expedia looks like a winner to me, but it's still very much a portfolio of disparate resources." While the trend toward online migration is encouraging and "very much intact," said Barry, he anticipated that 2005 will be a watershed year for consolidation among all players, with some of the ITMCs "getting into the acquisition game" and converging with traditional travel management companies.
Hubert Joly, worldwide president and CEO of Carlson Wagonlit Travel, predicted that CWT would double its online adoption by 2007, increasing self-booking across its client base to 60 percent from 30 percent in 2004. Joly also said that, by 2007, global gross travel spend should reach roughly $900 billion, with 40 percent attributed to business travel and almost 20 percent of revenue generated from online bookings.
Alex Zoghlin, president and CEO of yet-to-be-launched alternate distribution provider G2 Switchworks, offered his vision for the future of travel distribution and incited debate among program participants. "We don't believe there is a one-stop solution anymore," Zoghlin said, explaining G2's integrated distribution model. "This is not about cost. This is not about technology. This is about business. This is about providing tools to the end user." Zoghlin, however, remained coy about the timeframe for G2's launch, offering only that the rollout would happen "a lot sooner than a lot of people realize."
Also at the forefront of the conference was the issue of security. "Security oftentimes is number one on the list of priorities for corporate travel programs," said Carlson Wagonlit CEO Joly. He said that top of the line, real-time reporting capabilities are essential tools of the travel manager. "The most valuable thing we do is be able to very quickly know whether the company had any travelers in or near the event. Once we know, we can support our customers in repatriating their people."
Jim Bernazzani, acting deputy assistant director of the counterterrorism division of the Federal Bureau of Investigation, informed participants that companies can enhance their security programs by enrolling in InfraGard, a partnership between the FBI and the private sector dedicated to sharing information and intelligence. Through local InfraGard chapters, members can receive value-added threat advisories, alerts and warnings, and can participate in counterterrorism and cyber-crime training and educational forums.
Trip Davis, CEO of TRX, with the support of co-sponsors Krisam Group and the National Business Travel Association, chaired the Masters Program for the third consecutive year. More than 170 people attended this year's program.