Travel buyers more than ever are wondering whether the corporate discount is under attack. If some of the industry's distributors have any say, it is.
For if it is not enough that airlines have eliminated discounts on lower-fare buckets, refused to open access to most special rates and increased their use of software that better grills the performance of corporate accounts, travel distributors that increasingly hold sway over the suppliers are taking control of prices through programs in which they trade the role of broker for the role of merchant on standalone or packaged travel products.
Following a late February comment in which Expedia CEO Erik Blachford suggested the company--king of the merchant model for online hotel bookings--would introduce packaging to the corporate market, a Sabre executive this week made similar comments of GetThere.
"Going forward, we're focused on becoming a travel commerce company and more of a merchant," said Sabre's Ellen Keszler, last month named president of Travelocity Business
(BTNonline, April 1). "We're looking to be a merchant through Travelocity and GetThere as well. It's a way to accelerate our growth going forward. To the extent that a corporation wants to buy a merchant hotel room, we want to make that content available because the rates typically are more attractive than what a corporation can get. There's no question that packaging is a real buzzword in the industry, and ultimately GetThere will provide that to their customers as well."
"The extent" that the corporate traveler wants to buy a merchant-model room night is less than clear, since such low rates come packed with onerous restrictions. If part of a complete trip, packaging also sometimes masks the vendor name, making that part of the itinerary an "opaque" rate or fare. For corporate buyers, the slew of concerns includes identifying what travelers bought and whether the company gets credit for the purchase, particularly since the merchant on the charge card statement may not be, for example, the hotel itself.
GetThere president Jeff Palmer's statement on the matter in late February was a bit more tempered than Keszler's. "It's a worthwhile experiment," he said, "but how interested are the corporations? The lower economics are attractive, but the branding and visibility or lack thereof mean the supplier reaction is less clear. You'll see merchant in corporate, but the suppliers run from 'I love it' to 'I hate it.' Another variable is that you're trading the contract market for the spot market, and the spot tends to be best place only in a down economy."
"The basic idea is that the retailer is charging you and within that there's opacity on the revenue going to the supplier," Blachford said at this week's Travel Commerce conference in New York. "Airlines have said there are limited places where they want to do it."
"With all the money and energy we're putting into finding Web fares, etc., what's the role of the corporate discount?" asked Robert Coggin, Cendant Corp. executive vice president of airline services.
One veteran corporate travel pundit who has advocated packaging--or at least a system that offers travelers a full trip rather than separate air, car and hotel components--is Corporate Solutions Group's Rolfe Shellenberger, though he is not certain it is up to the likes of Expedia to arrange it. "It will be the same in business," Shellenberger said. "A company can talk to a hotel and say, 'I'll give you all my business, but you have to work out a deal for me so I get the best fare and the best ground transportation arrangement.' Then you might let the hotel or airline or another set up the program. It becomes the supplier's responsibility to do the negotiating for someone else. I think there's huge potential there."
The issue bears watching for travel buyers, who consider negotiating with vendors to be one of their key roles.