Marc Stec
Speaking last week at the Society of Government Travel Professionals' education conference here, SGTP president Marc Stec took questions from the audience after outlining the latest developments in global distribution system content programs and fees. Stec is also vice president for contracts and proposals at Carlson Wagonlit Travel's government and military travel solutions unit, SatoTravel. An excerpt of the discussion follows.
Will these new GDS agreements slow the fragmentation?
Since they are being extended for a number of years, most out to 2011, they provide some stability in the marketplace. I think the GDSs have shown they can react to the airlines' concerns and I do think the GDSs offer the best solutions for consolidation, data and information. But do I think the airlines will continue to push for fragmentation? Yes, I do. They want to control the market. The airlines introduced frequent flyer programs to try to buy loyalty and get travelers to come to them. They introduced Web sites with fares that were lower than you could obtain elsewhere, trying to bring the travelers to them. It's what we all would do.
The agreements the GDSs have been entering into with the various airlines only go for five years. Government contracts have a habit of not falling into the exact same timeframe. In particular, the new Department of Defense full and open competition which has yet to reach fruition will, in all likelihood, live longer than the GDS agreements. There's no provision in this new DOD solicitation package to deal with this topic, which makes it kind of difficult, for people who want to play, to know what would happen seven or nine years down the line. What are your thoughts?
I think that's a concern, since the DOD RFP is on the street. You need to address that in the contract models to see how they might deal with that. What happens is, events overtake contracts, and you just need to have flexibility in those contracts to address the issues. But you also have to understand the government's perspective; we pay taxes and we think they have lots of money, but they have to work within budgets and they don't have the ability to readily access money for these things, at first. It does take time and some understanding of their processes. We had a three-month time period, where it was supposed to be August and then the GDSs moved it back to September. While that's a little more time, the government does need time to react. The other thing occurring in the government travel area is the budgets are being hit hard. Discretionary spending, which includes travel, is all being hit hard as the Congress looks at the budget and needs to find money to pay for the war. So the budget for travel will probably be impacted, and plus we have increases in city-pair fares and hotel per-diems, so there will be a squeeze on those travel dollars.
What will happen when the next shoe falls, paying for hotel or car content, or will it be credit card fees?
The airlines are the titans of the travel arena, and the rest of industry does listen to and watch what they do. With commission cuts, you did see some car vendors and hotel vendors do that as well. I believe there will be a push in the next year or so for merchant (card) fees to be passed onto travel management companies, and again we'll have to address that issue. We just need to start educating so we have a plan or a process to address that before it occurs.
Most of us have non-disclosure clauses in our GDS agreements and we're not supposed to talk about them with others, yet customers are asking to see these contracts. Can you comment on that?
Customers, and not just the government, want to see documentation [of] what you're basing these costs on. The GDS agreements do contain confidentiality [clauses], so you probably have to ask the GDS vendors for waivers. Otherwise, you will have to get some documentation straight from the vendor showing that you're facing those costs. From a government standpoint, it's an appropriate request.
Do we need the GDSs anymore, with Web sites and other systems?
My personal view is there is no other system out there that has the content and ease of use at the cost that the GDSs have. Things like G2 SwitchWorks, etc., do have value and are looking to add content, but they don't have full content of cars and hotels that we use. If we need to use alternative systems--for example, there are certain city-pair carriers that have been awarded contracts but can't be ticketed through the GDS system--that means the agent needs to pick up the phone to make the reservation to get the ticketing done, then bring it back and enter it into the system. That's not efficient relative to tapping some keys on the computer. Hopefully, this issue will be resolved to everyone's satisfaction in a short period of time.