GetThere's move last month to bundle its demand management application suite and assess a per-user profile fee on top of transaction fees has raised some travel buyer eyebrows as online booking tools move further away from the straight transaction model, creating potential for higher online booking service costs.
In many cases, corporations already pay several fees, including software licenses and tool use, agency fulfillment and site administration fees. Even in situations when a transaction does not ultimately take place, the self-booking tool provider incurs costs when users access the site to search or to use services like messaging, pre-trip authorization or referrals to alternative travel tools.
GetThere president Chris Kroeger called the new revenue-generation method "a natural evolution of the pricing model. We are beginning to see that there is value created even when a transaction wasn't taking place. We've evolved the pricing model to say that there are a certain set of capabilities and expertise that our client success managers bring to the table that creates value for the corporation, and there should be pricing associated with that."
GetThere's demand management package contains a series of automated components already in use, including trip request, expense integration and pre-trip approval. It charges an annual fee for every profile using any of the components
(BTNonline, March 30).Other online booking tools have adopted pricing structures that in some cases can shield them from reliance on the travel transaction.
Amadeus is considering adopting in the United States a four-tier bundled model for products and services, including its E-Travel Management online booking tool, that it has used in Europe for about a year, said head of global commercial operations Frank Palapies.
"Adding line item by line item is not a smart business model," Amadeus' Palapies said. "We charge you for each layer. You start with very basic services and off-the-shelf product, then you decide on other layers. We want to keep the transaction fee as small as possible. That's just the entry fee into the system based on usage."
Concur several years ago refashioned its fee model around its combined Travel & Expense product, which charges based on expense report generation rather than transactions through its Cliqbook booking tool. However, transaction fees are the basis of contracts for companies that exclusively use Cliqbook. Senior director of segment marketing Chris Juneau said charging for searches or profile maintenance does not drive the right traveler behavior. "You want everybody to load their profile in your online booking tool," he said. "You want every employee to process their expense reports through Concur. You don't want any separate processes for a minority of users."
Rearden Commerce's Personal Assistant tool is purchased through a licensed software agreement with no transaction fees. Vice president of worldwide sales Tony D'Astolfo said that with travel down, online booking tools operating on a transaction-fee basis must address their "diminishing revenue model. The way transactional models, particularly online, work best are with volume. A lot of costs are fixed. When business doesn't go up, my unit costs rise. I see models changing based on the value they deliver. With traditional online booking tools, there is more of a challenge: To what do you attribute the value?"
When transactions return to some level of normalcy, ancillary pricing not necessarily be reabsorbed into transaction fees. "You will see things that are ancillary or add-on be bundled," GetThere's Kroeger said, "and other times there will be services or features that may be separate from the bundled and transaction fee."