Tom Depasquale
Through its Cliqbook corporate traveler reservations tool, Concur Technologies now offers booking connections to AirTran, JetBlue, Virgin Blue and Hilton Hotels that do not use a global distribution system. Similar connections to Air Canada and Hertz are in development while Concur is in talks with such suppliers as Aer Lingus and Avis. Management.travelthis week spoke with Concur vice president and general manager of travel management services Tom DePasquale about content access, distribution cost savings and other non-GDS development. An excerpt follows.
How do you get over any hesitancy on the part of managed travel accounts that may be confused by multi-source booking configurations?
We have always been a multi-source provider, so people look to us for that function. Travel managers hate missing content. They hate when their users can find content somewhere else that they cannot find in their system. We have closed that gap. Ideally, we would close it with a direct connect. If we can't close it with a direct connect, we'll close it with Web integration. Because we still integrate to agencies' mid- and back-offices, all financial and security data and reporting is intact.
Regarding direct connections versus Web integration, can you describe the differences and clarify Concur's definition of a direct connect?
The only thing we would call a direct connect would be a true direct connect. We would not call a Web site integration a direct connect. We do some level of Web integration, mostly to low-cost carriers in Europe and Asia, but we do not call those direct connects. I do not understand how you can do a direct connect that [uses] Web scraping. In our case, our definition of direct connect is where there is a supplier-provided application program interface (API) that goes against a source--whether a single global distribution system, or directly to inventory, or a private application they have developed. In the case of Virgin Blue, for example, their API goes to Navitaire [which provides the airline's inventory system]. In the case of Air Canada, the direct connect, I believe, actually ties to the underpinnings of their Web site. But again, we are calling their API in those cases.
To build a direct connection, what does Concur require from suppliers?
Four things. First, the ability to have access to everything. It does not do any good to have an API that can only access some fares. The second thing, because we are in the expense business, is to require suppliers to give us receipts. In the case of hotels, folios. In the case of car rental companies, e-receipts. The area of electronic receipting will become very exciting for lots of people because it takes a key step out of the process and provides much better and accurate data. We can electronically pass a Hilton receipt into the expense process--see what was a movie and what was a tax--and the user has to do absolutely nothing to get reimbursed. That can be a tremendous savings, so you will see tremendous pressure on suppliers to participate in the e-receipt program. The third thing we require of them is a supportable API. If they cannot support a direct sale, we do not want to be in the business of writing it for them, being responsible for their pricing module, etc. The fourth thing is that there has to be some advantage to the buying company. We often have suppliers come to us and say, "We want a direct connect because it saves us money on distribution." We say, "Great, that is fantastic, but what are you going to give the buying company to use that direct connect?" If they say that they were really not thinking about giving the buying companies anything, why would they use it? And the conversation just stalls. A buyer does not set a goal of saving an airline $12 per purchase. They say, if they get something for that savings, they are willing to do something for it.
What exactly do buying companies get through Concur's direct connections?
Our strategy is to have content that the business traveler wants, regardless of how we get it, and also to empower companies to use the "where they buy" as a negotiating feature in the "how and what they buy." It would not make sense for us to build a direct connect for something that is readily available in a global distribution system, where the only advantage is $1 in savings. We don't look to do direct connects for items where there is no competitive advantage to buy directly. It is not a strategy based just on providing alternatives. It has to provide alternatives based on upside reasons, such as availability, better price, potentially more flexibility in what you are buying. In the case of JetBlue, for example, if you buy a ticket for one person in the company and they do not use it, you can apply those dollars to another person in the company. So there is a competitive advantage JetBlue gives through its direct connect. For car rental companies, it could be better access to small locations around the world that are not in the GDS.
Though you said there would need to be justification beyond distribution cost savings for direct connections, you have talked previously about how buyers are able to discuss the distribution line item cost with suppliers. Have you seen scenarios in which clients have been successful in negotiating for shared savings by way of deeper discounts?
There would have to be enough distribution fee to make it worth it, for there to be an upside for the buyer and the seller. That is easy to do on some airlines and very hard to do on others. Almost 100 percent of the time, there is an additional item--either content, availability or price. Distribution fees are significant, but not significant enough to justify going to alternative channels. So that is not the reason we do it. We do it to get more content, better access or better support for the content. All of those are things buyers use when they turn to a direct connect over a traditional channel. You would have to go to each of our providers and talk to them about what they give [in terms of deeper discounts], but that is one of the items that some of the providers have given. However, that would be a contract between the provider and the buyer, and not between us. But yes, that does exist.