AmTrav's Jeff Klee talks
- Strategy and collaboration post-acquisition
- Intense competition for SME business
- Shortsightedness of supplier direct-booking strategies for business travel
A year after midmarket travel management company AmTrav was
acquired by Barcelona-based TravelPerk, AmTrav CEO Jeff Klee—the
undisputed poster boy of New Distribution Capability direct connects—sat down
with BTN editorial director Elizabeth West to talk about strategy after the
acquisition, how he sees the market moving forward with NDC and the intense
competition for small and midmarket travel programs, from both larger, legacy
TMCs and, increasingly, from suppliers themselves. An edited transcript
follows.
BTN: It’s been a year since TravelPerk acquired
AmTrav, what has each company brought to the table?
Jeff Klee: TravelPerk has a goal to grow
substantially in the United States. They’ve brought a lot of cool things to the
table, and they also have brought extra resources that we never had in the
past.
What AmTrav brings with it is a lot of deep, deep knowledge
and partnerships and technical work that we’ve done for the U.S. market. If we
have a new technical challenge, we [used to have] to solve it by ourselves.
Sometimes we haven’t had the expertise … but now we have TravelPerk people to
help.
We’re migrating to Amazon Web Services, for instance, which
is going to bring a lot of benefits in terms of scalability and performance. There’s
deep expertise within TravelPerk around AWS, and we’re taking advantage of
their partnerships for internal functions where they’ve had really great
partnerships and vendors that we’ve latched onto. It’s been pretty seamless
from a customer standpoint, but behind the scenes we’ve gotten a lot more efficient
in that way.
BTN: What about from a
supplier relations standpoint?
Klee: Yes, we’ve pulled our volume together so we’ve
got a lot more buying power and leverage to negotiate with suppliers, so that’s
been very helpful.
BTN: TravelPerk has done a significant rebrand—and
now AmTrav carries the TravelPerk name as well—along with a number of other
changes that join up the companies. Is there a platform integration eventually
planned?
Klee: There's no platform integration plan, but what I do think will
continue to happen is a push toward more commonality. If you look at our user
interface now, [it] looks a lot like TravelPerk’s user interface. If you look
at some of what we’ve done on the AmTrav side with a lot of details on flight
amenities, for example, or just the way we layout flights and showing multiple
fare brands … a lot of that you’ll now find in the TravelPerk platform. While
each platform has its own purpose and own market segment, what I’m really
passionate about and I’m pushing hard for … is to have a lot in common from a
technical standpoint, a lot of shared services. So even though there are
different platforms, we should be building optimally and leveraging across
[both] platforms.
BTN: AmTrav, has been the biggest advocate in the
market for New Distribution Capability. Is TravelPerk approaching NDC with
similar gusto?
Klee: AmTrav has built a lot of direct connects to airlines.
We think they are great. We know they offer considerable value to customers over
a GDS connection [to NDC]. So we want to extend those to the whole TravelPerk
group. I think we have seven connections now, but that’s it. Conversely,
TravelPerk has taken a different approach where they do lots of NDC—they have
like 20-plus carriers—but they’re using aggregators, and I include GDS as an
aggregator. I think by combining the two strategies where we take the airlines
and airline groups that are most important to us, we direct connect. But then
we also have a solution for the long tail so we can be offering NDC content
globally. We can take the best of both companies and be able to offer that.
BTN: AmTrav has always played in the small and midmarket. And from
my vantage point, there has been an intense shift toward SME business for all
suppliers, including several larger TMCs. What’s driving that?
Klee: The obvious piece is that it’s this giant blue ocean—depending
on whose numbers you use, 70 to 80 percent of the market is unmanaged. So when
you see that much potential it obviously appeals to everyone. But the secondary
factor as corporate negotiated rates have become a bigger thing—and it’s pretty
much universal that there aren't any supplier incentives or commissions on most
corporate negotiated rates—the larger the client, the lower the margins. So the
idea of SME business where maybe they don’t have their own negotiated rates and
can use the agency negotiated rates … is commercially much better for the
agency. That’s really, really appealing.
BTN: Popping back to your note above about higher consolidated volume;
has that put you in a better place to deliver competitive rates to SME clients?
Klee: For sure, yes. It does two things: It gives us more global
coverage—as AmTrav, we had very little leverage with foreign suppliers or
foreign hotels. TravelPerk has a huge business in Europe. And similar in the
U.S. market when you combine the AmTrav and the TravelPerk volume. So supplier relations was one of the first
things we consolidated, and it materially changed what we’re going to market
with, so there’s a lot more supplier interest.
BTN: So what about technology. Is the way the tech stack is changing
making it easier to serve the SME market and maybe gain higher margin with AI
and other tech?
Klee: I actually think the tech is more of an opening for the SME to
come to managed travel. The problem with the SME market for a traditional
legacy TMC is that while maybe there would be aspects of a TMC offering that
appeals to them … when they see what they would have to do to get that
benefit—like the clunky booking tools and, frankly, the horrific process that
your travelers would have to go through versus what they are used to doing when
they go to supplier site—it’s a game stopper. SMEs don’t want to inflict that
on their travelers.
I think what’s happening now is that the tech stack
is changing and NDC modernization is helping this some, but other pieces of the
tech stack as well, so that it’s increasingly possible to deliver what I would
call a supplier-grade experience for the traveler.
And I don’t think this gets talked about enough, but
I think we in the TMC space have to acknowledge and confront the fact that we
have provided really great value at the company level, but in many cases we ask
travelers to sacrifice their own experiences to deliver that value. I’ve been
obsessed my whole career with this—how do we minimize that gap between the
convenience of the supplier site and what we can offer in managed travel?
BTN: That brings up a really interesting topic,
actually. Suppliers like Marriott
and Qantas—and
even American to a certain degree, but not as much—have rolled out direct
booking sites with policy configuration included. In Marriott and Qantas cases,
with hotel and rental car partners, simple travel reporting dashboards, etc.
That looks like an attempt to pick off that unmanaged or lightly managed set
from entering the TMC pipeline.
Klee: They’re trying for sure. There’s no doubt about
it. But I think it’s a shortsighted strategy. Obviously, a lot of suppliers
would disagree with me. One area where I disagree with a lot of suppliers is in
the notion of loyalty. Suppliers want that loyalty, and I get it. But there is
a perception among suppliers that the way to foster loyalty is to have customers
come directly to their sites. I think that’s a false choice.
The example I love to use is, I have so many brands and
products that I’m loyal to, but I buy them on Amazon because Amazon is a user
interface that I love, and it has all my information and all the products I
want. The fact that I buy on Amazon doesn’t make me less loyal to the product,
and I think it’s the same with travel.
Of course, suppliers want a great experience for those who
come direct. And that serves many people well. But there are a lot of
travelers, particularly high-value business travelers, where there’s a lot more
to it than an airline ticket or a hotel room. And someone else is paying for
that purchase. There are multiple stakeholders. If I’m a supplier, rather than
trying to channel-shift, my strategy would be to try to meet my customers where
they are, where they want to be, and optimize that experience.
I do feel like for a lot of the experience gap between
managed travel and supplier sites, the responsibility lies with agencies and
OBTs and GDSs not being aggressive enough and progressive enough. But there’s
part of that responsibility that lies with suppliers as well. There’s
content—and I’m not just talking about fares, although there’s some of that—but
there’s more than that being withheld from indirect channels so they can
channel-shift travelers [to come direct]. That impacts the traveler experience,
and I just don’t think that’s a good long-term strategy now.