Orlando - "Prime time is here," Orbitz CEO Jeff Katz declared. "Real companies are doing big business online." Katz's statement to the managed corporate travel industry, assembled here for the National Business Travel Association's annual convention, typified the optimistic tone emanating from Internet-based travel management companies. "It's an implementation queue, not sales that is slowing growth," Katz added. "Fifty of the Fortune 100 will be embracing Internet travel management companies in three to five years."
Co-panelist Robin Schleien, Carlson Wagonlit Travel North America president, said there has been "an awful lot of marketing hype" coming from both Internet companies and traditional travel management companies. "If you want to distinguish between the two, you need to look at more than just technology," he said. Traditional travel management companies, while expanding their own low-cost service offerings, continue to highlight service and international presence.
Meanwhile, the big three ITMCs—Orbitz for Business, Expedia Corporate Travel and Travelocity Business—keep making inroads in the corporate market. "Expedia is looking to build a global footprint," said ECT president Matt Hulett, citing offices in Paris, Benelux, the United Kingdom and China, with plans to "fill out Europe" in six to eight months. Expedia Corporate Travel also seeks to integrate reporting reconciliation with corporate card data, develop Sarbanes-Oxley compliance and provide simple access to enterprise data.
Ellen Keszler, president of Sabre Holdings' Corporate Solutions, told travel managers to no longer assume their agencies are gathering all the low-price content available in the market. "If you think Web fares were a pain before, just wait until you start getting swarmed by employees who begin to find big content gaps in your corporate travel program in the future," she said, noting Sabre is positioned to service companies choosing a traditional or an Internet-based travel management company. "We're taking that approach because we don't believe corporations are willing to be force-fit into a travel management model that isn't right for them."
In a white paper issued last month and discussed at the conference, the NBTA technology committee suggested travel managers assess costs, services, special rates, global presence and other factors when choosing a travel agency. Online TMCs, for example, can leverage merchant models to offer clients low rates, but the white paper asked, "Will negotiated marketshare be impacted by travelers purchasing through the merchant model?"
On behalf of buyers grappling with competing TMC models, the paper posed this basic question: "What benefits provided by my current TMC configuration are we willing to change and/or compromise in order to reduce our agency transaction fees?" The committee concluded that Internet-based travel management companies "will continue to mature and their service portfolio will continue to expand. This will become as traditional a method of procuring business travel as traditional TMCs provide today."
Many expect lines of distinction between online and traditional players to blur further as models converge to best meet the needs of the managed travel community. CWT's Schleien, like many industry executives attending the conference, suggested there would be "some interesting combinations" in the next three years between TMCs, ITMCs and global distribution systems.
Carlson Wagonlit helped advance the blurring of the lines earlier this year
(BTN, May 10), when it offered its ISelect program, which provides touchless transactions for a $5 fee and a menu of options that can be added from there. Carlson Wagonlit Travel announced at the convention that it had signed 10 new corporate clients for the agency's ISelect initiative, including restaurant chain Quiznos Sub, Trimble Navigation and Barilla America.
WorldTravel BTI followed suit at the NBTA convention in rolling out its SmartChoice program, which also offers a basic $5 transaction, although its menu of options is more limited than CWT's more than 140 components. WorldTravel BTI president Danny Hood said it is becoming incumbent on travel management companies to provide this option, even for clients who will need additional services, because of the increasing use of online auctions for selecting travel management companies.
"In the past year, 94 percent of bids were handled by procurement people, and 50 percent used some kind of electronic auction process," Hood said. "Even though corporate travel managers are still strong influences, relationship consultative selling is changing. Generally, travel managers narrow the choices and then procurement makes the final decision."
WorldTravel BTI rolled out several other products at the convention, including its CenTris Console, a customer relationship management tool for tracking and controlling electronic transaction fulfillment. The tool provides real-time, secure, Web-based reporting that can help increase adoption and touchless rates by allowing clients to write their own rules that can determine actions or interventions to take in specific circumstances. NBTA also saw the "hard launch" of WorldTravel Value Rates, which offers discounts at 18,000 hotels through a merchant model that is less restrictive. "Most merchant model rates require a 14-day advance purchase and are 100 percent nonrefundable," Hood said. "This program only requires a 48-hour advance purchase and assesses a $10 cancellation fee."
Travel management consortium Radius detailed new point-of-sale technology it said will ensure that clients receive the lowest fares and rates offered by suppliers. The new tool, dubbed The Wheel, searches the Radius database for any lower negotiated fares or exclusive "share-shift" fares after a Radius-affiliated travel management company agent completes a booking on behalf of a corporate client. Within a few seconds, the tool displays to the agent any lower rates that match the criteria of the original booking and comply with the client's travel policy.
The tool also encompasses quality control and detailed reporting functions and can be used with any of the major global distribution systems. Radius said the tool was developed for affiliates at no additional cost beyond normal membership dues.
The alternative "share-shift" rates include those offered exclusively to Radius by suppliers targeting markets at specific times. Radius president and CEO Tony Hughes said roughly 80 percent of the share-shift fares will be pre-negotiated. The rest can be unique, reactive fares and rates offered by suppliers before bookings go to a competitor.
Since information on competitors' bookings are not shared with the supplier offering the lower rate, as they are through MIDT, Bill Tech, Radius chairman and CEO of Radius affiliate Travel & Transport, is comfortable with the process. "It is a very competitive industry, and we are happy to offer our clients special rates," he said.
Radius executives said hotel consortia rates and parity rules do not apply since alternative rates from suppliers are not available outside of the Radius network. Radius said the system already is running at sites in North America, Europe and Latin America, with a more comprehensive rollout in the works.
A new travel management entity, Global Experts in Travel, a joint venture between Total Travel Management and many of the former members of the Rosenbluth International global partnership, also used the NBTA convention as a launching point.
Total Travel Management president Linda Garback, chairman and CEO of the new international concern, explained that 10 of the soon-to-be 20-member organization have equity stakes in the company. Garback holds 51 percent of the company and will head a five-member board. She said the company will begin serving its first multinational account on a beta test basis in the fourth quarter.
Garback also said the company plans to put a portal in place by the end of the first quarter of 2005 that will work with multiple booking systems and provide real-time global reporting, security features and meetings support. Garback said that each contract GET signs with clients states the commitment of the partners to work together for the next five years.
One session at the conference focused on the NBTA-supported Registered Traveler Pilot Program at Minneapolis St. Paul International Airport, which the Transportation Security Administration launched more than one month ago in conjunction with Northwest Airlines
(BTN, July 19).Mike Krebsbach, global travel management director of Minneapolis-based Personnel Decisions International and president of the North Central Business Travel Association, said only one of his company's eight platinum elite frequent flyers invited by Northwest to participate in the pilot did so. "There's still a lack of clarity about the program's benefits," said Krebsbach, who supports the initiative to allow travelers to voluntarily submit personal information, including a biometric finger or iris scan, in exchange for a potentially expedited airport screening process. "We need to market this better to frequent travelers. I'd like to see more communications from airlines and TSA as to what travelers can expect." Krebsbach said he has examined the Registered Traveler process at the airport and is pleased with the result. Northwest senior vice president Gary Fishman said 2,200 invited frequent flyers and flight crewmembers—200 more than the airline's target—signed up for the pilot by July 7, nine days following its launch.
United Airlines' unveiled to top corporate customers its new, all-premium product
(BTN, Aug. 2) and drew mixed opinions. Travel managers said their travelers would welcome the product, especially power ports at most seats, and praised United for improving inflight service without raising fares. Others said the product would improve United's position against rival American and suggested business travelers would bypass closer airports to get either to Los Angeles International, San Francisco or New York JFK, the three airports that will offer the service. Yet, some were uncertain the airline could fill all its seats in those transcon markets exclusively with premium-paying passengers, given tighter corporate travel policies and reduced opportunities for upgrading from discounted fares.
"I do not see demand on the customer side to pay a cost premium to make all-premium service work on the transcons," Continental president Larry Kellner told BTN. "It is hard to get paid for it, and there are costs to it. We want to keep product consistency and not confuse customers."
In a research note last week, J.P. Morgan analyst Jamie Baker said American is "unlikely to respond" and that America West and JetBlue stand to benefit most. "A good first step," he said, regarding transcon overcapacity. "For the industry, this represents an approximate 10 percent New York-transcon decline—not immaterial, though not nearly enough to declare the crisis over."
The National Business Travel Association is getting its state chapters involved with the organization's political pursuits through training initiatives that "establish grassroots programs at a local level," said NBTA director of information and legislative services Eugene Laney during the panel, Congressional Dynamics: How Capitol Hill Decisions Impact Business Travel. The discussion yielded a consensus that there is an ever-increasing link between political affairs and the corporate travel industry. The NBTA Legislative Advisory Council has given a DVD to chapter presidents, instructing them on ways to lobby for state and local issues of interest to business travel professionals.
NBTA also highlighted its stance on other legislative issues impacting the business travel industry, from its support of "opt in-opt out alternatives" to the CAPPS II program to its promulgation of passenger privacy and more effective and consistent screening processes. Passenger security funding and effectiveness was a particularly hot topic. Laney said one-third of aviation trust funds—earmarked for aviation improvements—are used to fund security. Laney said the Bush administration is considering tripling the $2.50 fee on airline tickets to help fund security.
Meanwhile, NBTA applauded Congress for extending by one year the visa-waiver program deadline and expressed concern that more stringent visa requirements will further inhibit business travel from abroad. A consultant from Germany in the audience said he has been advising clients not to host meetings or conventions in the United States due to "hassles, costs and visa issues." NBTA plans to take these and other issues to congressional representatives during next year's NBTA legislative day on May 17, 2005.
The controversy that has been brewing over property descriptors in online booking tools erupted during the hotel buyer/supplier session. Buyers repeatedly have complained that the language hotels use to describe their properties is unclear to the point where travelers do not want to book them.
"Have you gone online and seen your own descriptions lately because they're not friendly to the booker?" Sam Schisler, global hotel program manager for Limited Brands in Reynoldsburg, Ohio, challenged hoteliers. "As everyone knows, it's not the typical agent looking at a screen anymore on Sabre, Worldspan or other global distribution system. You have actual travelers booking on these tools, and the descriptors you put out there they don't understand, so they don't book you."
To illustrate the problem, panelist Christi Hedrick-Waters, hotel program coordinator for EDS in Plano, Texas, used online descriptors for two Atlanta airport hotels offering rooms on the same night at the same rate. The first clearly stated the name of the hotel and that the room was a nonsmoking king. The other used a code for the hotel name and did not mention room specifics. "Including the room type is a huge advantage to our travelers who want to be sure of the kind of room they're booking," Heidrick-Waters said. "The same is true for the value-add amenities they'll be getting."
In her first example, the hotel spells out free high-speed Internet access, breakfast and parking. "The other hotel mentions they have a gleaming marble lobby, an iron and ironing board and TV. That's meaningless. We expect those things."
Raising adoption of online tools to levels high enough for companies to realize significant return on investment remains a challenge for many buyers. Most desirable from an ROI perspective are a high percentage of reservations for which an agent does not get involved in any aspect of the booking. Two Fast Pass To Online Adoption sessions addressed the most common obstacles still facing buyers.
Senior-level buy-in is crucial. "It's important that your company's senior managers not only support use of the online tool in principle, but that they be vocal in their support," said Debra Vasseur, travel and meetings manager for Starbucks Coffee Co. in Seattle. "At Starbucks, this senior-level support goes all the way up to the CEO. The benefits of this buy-in also go beyond just the adoption issue. It's a good opportunity for the travel manager to gain visibility generally, which can benefit the entire travel program."
At the same time companies want to see higher adoption rates, travel managers need to set realistic expectations. "The learning curve can be steeper than many people realize, so companies need to be sure to allot the proper resources to training, communications and troubleshooting," said Adrienne Fox, manager of global procurement/travel for Avaya in Basking Ridge, N.J.
Travelers' tendencies to call an agent for help usually reflect the company culture. "Travelers at certain companies are likely to call for assistance, in some cases not once, but repeatedly," said Jack O'Neill, COO of Carlson Wagonlit Travel. "Travelers frequently just don't realize the added costs this is incurring, so it's up to the travel manager to communicate the cost of this behavior to both travelers and travel arrangers. Also, companies have realized that trips with complicated itineraries are less appropriate than others for online booking."
In cases where business travelers are familiar with the technology on consumer Internet sites, they tend to need less agent assistance, said Steve Tracas, president of Orbitz for Business. "Their comfort level is simply greater. Consequently, the costs of training—not to mention retraining—drop significantly, which also benefits ROI."
NBTA welcomed to the conference representatives from the Iberian Business Travel Association, the Swedish Business Travel Association and the Austrian Business Travel Association, which have just become new Paragon partners. Paragon is an alliance of business travel associations around the world formed in 2002. The new association entrants bring the total number of Paragon partners to 10 as they join national corporate travel associations from Germany, the United Kingdom and Canada.
Meanwhile, NBTA announced it had acquired the Canadian Alliance of Business Travel, the relatively new Calgary-based organization of more than two dozen corporate travel executives. NBTA said the move extends benefits to members of both organizations and expands "networking opportunities between American and Canadian business travel professionals, while allowing both organizations to maintain their unique identities," NBTA president Carol Devine said. NBTA said CABT will remain a separate subsidiary, "run by Canadian travel managers for Canadian travel managers." NBTA said the arrangement reflects its continued global focus.
The move irked members of the 35-year-old, 200-member Canadian Business Travel Association, a founding member of Paragon. Alain Legault, manager of travel and relocation programs for Nav Canada and current head of the Eastern Canada chapter of CBTA, said "This was a bad business decision by NBTA, and we do not support it. This is not the way partners are supposed to work together."
Legault was not alone in questioning why NBTA would partner with a national business travel association and then establish a separate presence in its market. In a Paragon meeting held during the convention, officials from associations from Australia, Spain, Germany and Britain all expressed concern that they might be undermined as national representatives of the organization.
Industry sources suggested the move might have been made to defend against efforts by the Association of Corporate Travel Executives to get a foothold in the Canadian market. Whatever the impetus, the move is causing some to question their Paragon membership.
"The way I see it," Legault said, "NBTA has until the September Paragon meeting in Spain to resolve this."
NBTA's Devine said she would meet with CBTA leaders soon to assure them that NBTA would continue to provide full support.
"We want to continue to work withthe CBTA," she said. "This was a proactive, strategic move that came about as a very unique opportunity. The fact that ACTE has made moves there shows that potential is there for all of us to grow. The potential in that marketplace for new members is greater than the memberships of the current associations."
During NBTA's final general session, president Carol Devine announced the election of three directors-at-large to the organization's board: Lynn Brunner, travel manager for Nashville, Tenn.-based Hospital Corp. of America, Michael Lyons, commodity manager at Brea, Calif.-based Avery Dennison, and Xerox supplier manager, travel, meetings and incentive, Tracey Wilt.
Meanwhile, NBTA passed a new bylaw, barring from NBTA leadership positions those who hold leadership roles at "a competing organization."