If you believe mainstream press accounts, and your senior executives probably do, corporate travelers are beginning to book on the Internet thanks to the Big Three online consumer agencies. Surely that's happening to some degree, but corporate travel bookings have been moving online for most of the past decade. The more interesting story is that the online-originating agencies now are suffering the pains of growing into full-service travel management companies, realizing there's much more to quality travel management than having travelers make their own reservations online.
Just ask Expedia, which last month told corporate travel executives at The Masters Program in Washington, D.C., that their profession is "harder than it looks," even two years into Expedia's second attempt at servicing them. The first was a two-year American Express Interactive partnership
(BTN, June 12, 2000)."We just had no clue" on data reporting, said Expedia Inc. and IAC Travel president and CEO Erik Blachford, "especially for big companies that have department codes and groups set up by the travel manager and they're tracking volume to support vendor agreements, etc." Blachford said that after Expedia entered the corporate market by buying Metropolitan Travel of Seattle
(BTN, July 15, 2002), the company faced an "uphill battle" to provide equal or better service to its inherited clients. "The Met clients said the service can't deteriorate at all. In fact, they wanted it to get better," he said. "You have to make the technology work to enable the service, as opposed to using the technology to replace the service, which is how it is on the leisure side." Corporate travel "is harder than it looks. Travel and procurement managers are paid to be skeptical, and you can't just claim a place in corporate travel. You have to earn your way in."
Expedia Corporate Travel president Matt Hulett elaborated: "We've taken on onsites and are trying to migrate people through the process to a touchless environment. The importance of the agent has been another shocker."
Orbitz For Business also struck a humble pose at The Masters Program, with vice president of business services Rick Weber saying, "We're very much in the middle of the learning process." The company now is hiring new agents to work on its international rate desk "for specific accounts on an as-needed basis," said a spokesperson. The vast majority of call volume still is handled by Orbitz partner UpStream.
Meanwhile, Travelocity Business is working to replicate in its San Antonio call center the corporate fulfillment services provided to some GetThere users by partner TQ3 Travel Solutions in St. Louis, which Sabre made a bid to buy
(see story). "There are some differences in service offerings between the two facilities," said Travelocity Business president Ellen Keszler. "Our preference is to do it ourselves, but in St. Louis they are a little more advanced in terms of the mid-office, although we continue to build that out. There are some differences still in terms of reporting, but you're seeing us replicating all of the capability."
"The consumer online brands have had less of an impact than I anticipated," said Richard Case, Microsoft senior service manager for global travel
(see story). "Some of what's cool with the sites is not the same when you add the corporate requirements. The needs for brick and mortar and globalization are some things they are struggling with."
Cutting costs and improving services for fulfilling reservations and supporting travelers en route clearly are big pieces of the game. On that score, so-called traditional TMCs, as well as online-originating agencies, frantically are looking both here and abroad to exploit the economies of scale that come with services of such business process outsourcers as India's WNS and Lawkim, as well as Atlanta's TRX Inc. At the same time, large TMCs continue to leverage such centralized fulfillment centers as Amex's Miami Lakes facility.
All of this, however, adds up to less than 5 percent of a typical company's travel and entertainment expense. The bigger-ticket item is the price of travel, and buyers consistently point out the difficulty in arguing for a booking channel that may not access all vendors. In addition, studies by Topaz International
(see story) and others continue to show that negotiated corporate discounts beat Internet rates. Air travel is the largest corporate travel cost, typically more than 40 percent.
"In December, we got our supplier-relations wake-up call because of a contract dispute with US Airways, which, by the way, was totally our fault," Blachford said. "We had Expedia Corporate Travel and expedia.com on the same ARC, and suddenly US Airways was not available on both sides. We managed to figure out how to book the carrier, though not online, before we happily resolved with US Airways on Christmas Eve." In the meantime, though, such clients as Harvard University were frustrated enough that Blachford joked that Hulett "almost shot me."
Orbitz is facing supplier-relations issues of its own, but the suppliers in question are its majority owners. Some airlines would like to push Orbitz For Business as a preferred channel, even earning an incentive to do so
(BTN, Jan. 19). However, Orbitz for the moment is not including OFB bookings as part of its Supplier Link direct connection program because, a spokesperson said, it's not possible to obtain negotiated corporate rates in an automated fashion directly from the carriers. Sources said that unless Supplier Link is involved, carriers would see no better economics from OFB than they do from many other corporate distributors.
Hotels are connecting directly to Expedia, which, like other Web sites, is perceived as offering highly competitive hotel rates
(see story). Blachford said supplier sensitivities also apply on the hotel side. "In corporate, if we're head-butting with a hotel chain, that's just not good business," he said.
"Corporate accounts can take advantage of discounts negotiated on their behalf," Travelocity's Keszler said. "Even large corporates are excited about getting access to some of our hotel discounts, where we can complement their deals."
While they still may be building their corporate products, "This online agency threat is absolutely real," said Scott Barry, a Credit Suisse First Boston analyst. "These businesses were built on technology. In terms of the rallying cry we hear from the TMCs that there's lots of complexity, well, in our opinion, complexity will be overcome through technology or through outsourcing."
Yet, the industry learned long ago that not everything works online. "The agencies for a long time were threatened by people saying, 'In two years, we won't need them anymore and they have to find other ways to make money,' " said ON Semiconductor global travel manager Colleen Guhin. "But even today, we do so much international travel, that's where online booking falls apart and we can't live without the TMC."
"We're not fighting to get travelers to book online as much as the real battle is to get the right mix on fees, in terms of touchless or not, as well as accessing the right fares," said World Bank travel specialist Deborah Horrell. "They've got to get the back-end right."
Horrell and Guhin are featured in BTN's historical look at online booking, The Trail Of Corporate Online Travel, which can be downloaded for free from
www.btnonline.com under the Selected Surveys section.