It's difficult to determine the right timeframe for assessing the success of business products from Expedia, Orbitz and, soon, Travelocity, but as the first two approach a year in the business of managed travel, their biggest success, as predicted, has come among small and midsize accounts. Few underestimate the possibility that they will do so, but online-originating agencies are not taking heavily managed corporate travel accounts away from travel management companies—at least not yet.
Thus far, the best example of such a potential account conversion is McDonald's, which has been testing Orbitz For Business
(BTN, March 10). Recent rumors that McDonald's gave up on the airline-owned agency may be untrue, though uncertainty remains about Orbitz's prospects with the tight-lipped fast food giant. BTN was able to confirm Carlson Wagonlit Travel still is serving McDonald's millions.
Elsewhere, Seattle-based Safeco is doing a limited test with Expedia and will make an agency decision in the fall, according to an Expedia Corporate Travel official. "Normally we don't do beta tests," he said, "but they have some special requirements."
Less of a corporate program but significant in volume, the Medical, Academic and Scientific Community Organization Inc.—with a $35 million travel spend among 19 member institutions, including Harvard, MIT and Northeastern University—is rolling out Expedia Corporate Travel.
"Many larger corporations are eager to make some tradeoffs if they can gain some price and cost advantages," said Rick Weber, Orbitz vice president of business services. "We've launched a number of pilots with large companies and are expecting many of them to become full-fledged programs in the fall, so we are developing the product along these lines."
Even if larger companies only just are beginning to go so far as to select one of the online players' offerings, some such customers are leveraging lower transaction fees from their existing agencies. That's forcing more agencies to take control of technology in ways they had not before, such as by buying and/or rebranding online booking tools in a bundled solution.
A prototypical online agency account is Akibia, a midsize consulting firm with 176 travelers, which chose Expedia Corporate Travel at the expense of American Express One. Akibia executive assistant Donna Jacobites said the company had experienced bad customer service with Amex One for a higher price. From March through June, just eight Expedia-booked tickets required agent assistance, generating Expedia's higher transaction price
(BTN, Dec. 9, 2002). All of the company's 51 other reservations were made for $5. Akibia's "complicated" contract with Amex One included revenue sharing, whereas with Expedia "There is no kickback. We'd rather pay the $5 fee."
Clients referred by Orbitz For Business include Omnicom division Marketstar and Bradley Pharmaceuticals.
Sally Mahoney, purchasing and supply commodity manager in global services with midsize Nova Chemicals in Ontario, said she now is considering an e-fulfillment offering from a mega agency after looking at Expedia and Orbitz. "We're quickly realizing the utopia solution is not out there, and there's a lot of development that needs to take place," Mahoney said. "For complex travel needs, like Visa requirements, these services don't provide service to the extent that our travelers would be satisfied."
Perhaps it's still too early to tell how these players will fare in managed travel. "If I had $15 million to $20 million, I would jump on it," said a buyer from one mega account. "Orbitz doesn't have all the policy pieces, but you can live with that. We're more complex as a government contractor, requiring travelers to make remarks, etc. There's just more documentation."
Both Expedia and Orbitz—as well as Travelocity Business, about which Travelocity president Sam Gilliland last month said, "Dozens and dozens of small to midsize businesses already are signed up for the offering, which we plan to implement in the coming weeks"—continue to add further capabilities for managed travel.
The latest features from Expedia include the automated filing of complex airfare contract terms and reporting on unused e-tickets, online adoption, service fees and "special request items not yet bookable online."
Officials last week said Orbitz For Business also is enhancing its reporting and that it would join Expedia in offering dedicated agents and a higher service level, which Orbitz is characterizing as an executive desk. Asked about the fulfillment of Orbitz For Business, Weber said the company's partnership with Upstream provides about 90 agents who today service corporate accounts within a general pool.
In May, Expedia announced the impending availability of negotiated hotel rates, as well as car and air rates, expanded capabilities for policy and compliance, more robust and real-time reporting and bulk loading of traveler profiles from any global distribution system. "We're now opening for business for big customers," said Matt Hulett, Expedia Corporate Travel vice president.
New policy levers in the offering can, at the buyer's discretion, require users to specify a reason for noncompliance and notify supervisors of such decisions. Among several other features, Expedia Corporate Travel also flags preferred vendors and the best "in-policy" options, as well as selections that are out of policy with an explanation. Partly to help build project code- and department-based reporting, Expedia partnered with Barrington, Ill.-based Trondent Development Corp. for GDS profile extraction and synchronization.
"It was just a matter of time," before Expedia began offering more intricate travel management tools, said one mega agency competitor, "but we still think they'll have trouble with large, complex global accounts."
"Interest in the online agencies is a very hot topic," said consultant John Heilner with Management Alternatives. "Clients are being forced to think through the $5 versus $40 to $50 all-in fee. It really comes down to clients having to weigh the advantages they perceive with the so-called, full-service agencies and the biggest is the feeling of comfort and reliability."
He said other considerations include global capabilities, data reporting, access to low-cost airlines online or offline, fulfillment configurations, such functions as pre-trip notification and nonrefundable ticket tracking and sophisticated preferencing of booking options based on real-time contractual performance. "Some managers are saying, 'I hardly use any of this stuff anyway,' " Heilner noted.