Nearly one year has elapsed since BTN last surveyed the European self-booking scene
(BTN, Dec. 3, 2001) and in that time the volumes of clients and transactions have at least doubled, but absolute numbers remain small.
GetThere estimated that 1 percent of all reservations made by the continent's top 1,000 spenders now are transacted online, but even that, said its EMEA director of product marketing Johnny Thorsen, is well above six months ago. GetThere now handles 5,000 bookings per month in Europe, up from 2,000 in January.
Clearly, this lags behind the United States
(see story). Nevertheless, there are grounds to believe that the market soon will accelerate in a manner similar to the United States. These include the rapid disappearance of airline commissions, determination by some travel agents to back online booking tools, a growing number of success stories to inspire cautious buyers and improvements to the products.
Pitted against that are continuing problems in Europe with slow uptake of electronic ticketing, the complexity of more multi-sector international itineraries and multiple currencies. Perhaps the biggest obstacle of all is greater use of non-GDS products in the shape of low-cost carriers and rail travel.
Unlike the United States, there are few hard figures to come by in Europe regarding booking tools. Amex said it has just over 50 clients in Europe using such a tool, many of them signed in the past nine months. BTI UK reported that fewer than 10 of its top 130 clients book online and most interest is in booking accommodation, rather than air.
As far as marketshare is concerned, one industry source said Amadeus-owned E-Travel has 30 percent to 35 percent of the market in Europe through its two products, Aergo Global and its SAP collaboration. E-Travel is followed by GetThere, with 25 percent, and French-owned KDS, at 10 percent. Direct airline Web sites and such e-retailers as Expedia and Opodo—the European equivalent of Orbitz—account for the remainder. E-Travel president and CEO Scott Gutz said, "The rankings sound right, but that would be guessing on the percentages." Gutz added that E-Travel has more than doubled its client and transaction numbers this year, and now is number one in six of Europe's top 10 markets. New accounts in Europe include seven existing U.S. clients extending their programs across the Atlantic. GetThere has 30 direct clients—up from eight in January 2001—in 11 countries, plus 300 more through such private-label versions as British Airways' Your Travel Manager. KDS has 60 direct and 500 indirect customers.
Skepticism is playing a part in holding back booking tool growth, with providers reporting greater reluctance by Europeans to sign up unless systems are blemish-free. "Travel managers are worried about being associated with a project that fails," Thorsen said.
One disbeliever is director of travel management for Universal International Tom Stone, who represents a familiar European preference to look and/or order online rather than to book. Stone is introducing the OAG online schedule and making its use mandatory among some bookers to reduce shopping calls to agents. "There is very little difference in value from a full booking system, and it is a lot cheaper," he said. "I wonder if some people exaggerate about the returns they get from a booking tool."
Another U.K. and Ireland travel manager for a major telecommunications company feared her "creative" workforce would find ways to circumvent travel policy if given online air booking capability. Her company has opted for e-mail requests and hotel reservations instead.
However, there are some notable success stories, such as Henkel, which has a 23 percent adoption rate with KDS Wave after 10 months. Its agency transaction fees are 50 percent lower for online bookings and average ticket prices are down 5 percent. Henkel has the system running in France, Germany and Spain and next month will roll it out in the United States. Dusseldorf-based Henkel now is mandating KDS for all point-to-point reservations. Asked whether Europe is ready for corporate booking tools, purchasing manager Sascha Kluewer replied: "It doesn't have anything to do with the region, but how far along you are with your travel program. To start without being consolidated under one travel agency, for instance, is dangerous. Europe will grow because travel departments are under more financial pressure. Soon, there will be no commission at all."
Some travel agents are delivering the same message. Amex is opening two e-fulfillment centers in Europe, while Mike Bor, managing director of U.K. agency WorldTravel, is giving customers a stark warning. "The only way to cut costs is to drive bookings online. Anything else is tinkering around the edges," he said. WorldTravel is backing its words by offering transaction fees 70 percent to 75 percent lower for online fulfillment.
GetThere's Thorsen said the shift within travel departments from profit to cost center is the main catalyst for booking tool growth. He added that although Europe now largely has weaned itself from agency commission and rebate, it remains stuck on flat management fees rather than transaction fees that allow online fulfillment to be charged at a lower fee per booking.
The online booking cause also is being abetted by continuing improvements to the product. Amadeus, GetThere and KDS all are making progress in integrating rail online and Europe-specific products, such as the SAS Travel Pass Corporate and Lufthansa's Pay As You Fly scheme in Germany.
The most pressing product problem is how to integrate low-cost carriers. The short-term answer is screen-scraping, although this is unreliable, with systems prone to downtime when carriers amend their Web sites. The three market leaders all claim they are about to launch a booking capability based on screen-scraping that will integrate booking data into back-office management information reports and build use of the carriers into policy. Long term, the companies are finding the low-cost carriers more willing than before to discuss direct connectivity, but all are hoping the GDSs will drop prices to sign up the budget airlines as the ideal solution. "The percentage of bookings we make outside of the GDSs will increase," said KDS president Yves Weisselberger, "but using a GDS would be a much cleaner approach."