As Sabre tackles the migration of BTS users to a new booking tool based on technology from both BTS and GetThere's DirectCorporate, a handful of its potentially redefining corporate travel initiatives introduced in recent months thus far are not living up to their hype.
Nevertheless, Sabre remains far and away the leader in its field. With 43 of 77 Corporate Travel 100 companies polled by BTN naming Sabre as their primary global distribution system, and 58 of 78 utilizing its self-booking technology, Sabre's reservations system supremacy among top accounts is rivaled in the industry only by American Express' dominance on the corporate card.
Despite the ongoing consensus that GDS intermediaries are being squeezed out of the business, the Southlake, Texas-based GDS company's market position continues to translate into results.
According to Wall Street analysts who provided their outlooks to Thomson FirstCall, Sabre later this week will report earnings for the quarter ending in September of about 44 cents per share. By contrast, a per-share loss of $2.95 is expected at American Airlines, which generates eight times more revenue than its former sibling.
Clearly, Sabre faces a volatile environment, and GDS earnings during and since 2001 have been damaged severely by the double whammy of a weak economic environment and Sept. 11. Sabre even nearly registered a loss in the fourth quarter of 2001, producing earnings of three cents per share. But with American dropping $4.75 per share in that period, and some other airlines facing even graver losses and prospects, the pressures on GDS pricing by American and other carriers appears to have gained more steam.
Seeing further proliferation of the concept that business clients and travel agencies that choose to use Sabre should pay for it—more directly, at least, than they do already—key Sabre announcements were designed, in part, to bolster its value to such customers.
However, those initiatives have been delayed or stalled.
Sabre's three-month-old self-booking-centered approach to reforming GDS pricing, known as Corporate Connect
(BTN, July 29), has not yet been picked up by any agencies or corporate clients. A spokesperson last week said, "We have no names or numbers we can share at this time. Discussions and negotiations will take some time regarding Corporate Connect."
Another source within the company suggested Sabre may be "tweaking the approach a little," noting that the whole industry appears to be "throwing things at the wall to see what sticks" for GDS pricing reform. The spokesperson said Corporate Connect "proceeds as planned."
Corporate Connect has even less support than AA's new EveryFare program, which was designed with similar goals in mind. At least AA can point to a couple of travel management companies that are participating.
"This issue requires more thought than those two initiatives," said Pam Arway, executive vice president and general manager of American Express Corporate Travel. "We feel both are just passing on costs rather than reengineering. Still, there is enormous pressure on the economic model of the GDSs which is driven by enormous pressure on the airlines."
Pressure on two other topics—data privacy and Web fares—also generated movement from Sabre.
In terms of Web fares, Sabre's relationship with New York-based FareChase last month enabled the GDS to offer Web fare booking capability. The FareChase interface was delayed to allow for booking in addition to viewing, but activity is "very low," said Sabre senior vice president of North America travel agency solutions Ellen Keszler.
On data, meanwhile, Sabre in June launched its Sabre Magnify suite, which allows travel agency subscribers to use the same booking reports that Sabre sells airlines for the purposes of contract monitoring and competitive intelligence. Keszler said Sabre has 30 Magnify users, which "may not sound like a large number, but we're happy with it."
Magnify is "a winner," said Peter Vlitas, director of operations and development at New York-based Protravel, whose ARC volume is about $250 million. Vlitas went on to say, however, that the product is "not totally finished. There's a slew of minor things they need to do. I just hope it's priced accordingly."
Also delayed is Sabre's plan to launch a new corporate identifier to better protect company privacy. Sabre has moved that target to the first quarter of 2003, rather than year-end.
While these efforts may be taking longer than expected, another much bigger corporate travel initiative for Sabre and its GetThere subsidiary finally is underway: the migration of Sabre BTS users to the latest GetThere self-booking platform.
GetThere's self-booking competitors, some of which now are owned by Sabre's GDS competitors, saw the Sabre acquisition of GetThere
(BTN, Sept. 4, 2000) as a golden opportunity to attack the pair's stronghold in the large corporate travel market.
Competitors said that as Sabre focused GetThere on its true motivation—to generate segments for the GDS—it would displace GetThere's multi-GDS heritage and begin offering advantageous pricing for buyers selecting the self-booking tool on Sabre versus the other GDSs.
Not so fast.
Even a source at a competing, non-GDS self-booking tool agreed that while GetThere is beginning to push users off BTS, other GDSs "are subsidizing the online booking systems and taking two bites of the cherry, but I still don't think GetThere is playing that game."
Perhaps it doesn't need to play games. It's a lot harder, for example, to find substantial new users of Galileo's Highwire, Amadeus' E-Travel or such new products as Outtask's Cliqbook than it is to uncover BTS users who are sticking with GetThere—even after they looked at the alternatives and weighed the headache of conversion.
"They call it more of a migration than a conversion," said Janet Horvarth, corporate travel manager with Eaton Corp. in Cleveland. "GetThere is promising that a lot is being done on the back end." She said the key challenges involve moving over profile, contract and policy data. "It was apparent that BTS was going away, and back when we picked BTS, we felt GetThere was second best," she said.
"We're in the midst of migrating," said World Bank contract manager Debbie Horrell. "We have an excellent migration manager. I hadn't seen GetThere in a long time, and they have made a lot of strides. When we picked it, BTS at the time had a lot advantages, but not a lot has changed with it."
Horrell said the multi-GDS capability on GetThere is "critical," because the organization's heavy international travel is compelling it to consider moving off Sabre for its GDS.
"We've starting a migration to GetThere," said Melinda Samp, supervisor of the business travel center at State Farm Insurance in Bloomington, Ill. "They're handling a lot of it, and there is some work for our agency. We had been GetThere, then we were BTS and now we're back to GetThere. Our travelers are used to those kind of tools. BTS hasn't been maintained for almost a year now, so if we needed corrections, it was taking up to 30 days."
Nevertheless, Sabre BTS has lots of corporate users and not all of them will be as willing to move over—particularly those who like the product as is. There also are critics.
"3Com has BTS and they're very reluctant to move off," said Bob Lichtman, Santa Clara-based consultant with the Corporate Solutions Group. "GetThere claimed a year ago they would have a tool that would migrate within minutes. Until they have that, it's manual, arduous and prone to mistakes. This was supposed to happen in 2001, and then they said the whole process is delayed and that there's no rush to migrate."
Lichtman said GetThere had yet to "close the gaps" in functionality between BTS and GetThere, and that it had better do so before it "turns the lights out in the BTS office."
That and other issues have some very substantial BTS users sticking to the product for the time being. Such factors also serve to keep GetThere on its toes. "There is actually no set date to sunset the BTS product," said a GetThere spokesperson. "Many customers have upgraded already, and we expect the rest of the BTS customers will upgrade, along with all other GetThere customers, to the new product during the first half of 2003."
The competitive threat always is there. For example, Horvarth said the fact that Eaton is moving off BTS to GetThere does not mean it will not consider alternatives, including the latest from Atlanta-based TRX Inc. Yet, it is easy to see why Sabre is interested in maintaining the status quo without looking sluggish.
Former AMR chairman Robert Crandall is known for suggesting, during a particularly bad period for AA, that AMR sell the carrier and keep Sabre. It could be one of the best ideas Crandall never executed.
Nowadays, while American and Sabre jockey to derive the most possible value from the travel distribution system, it's clear which one is winning.
"GDSs continue to provide a very strong service and people should get paid for what they do," said Amex's Arway. "Until an alternative comes along that can do everything and more, we're going to have to pay for the GDS."