OP-ED: Don't Compromise Accuracy In Touchless Quest

For the most part, our industry has stopped arguing about whether online booking is a good thing. Managed online booking tools are an essential part of almost every corporate travel program. Online booking tool vendors all claim large numbers of customers with 50-percent-plus adoption rates. Many of those same customers have documented that average ticket prices on specific routes are lower when booked online than over the phone.

I have talked personally with enough of these customers to believe the numbers. Online booking isn't right for every traveler or trip, but it's hard to envision a world-class travel management program in 2006 that doesn't offer online booking as an option for at least some trips and travelers.

There's also no debate that online tools have helped drive down agency service costs. There may be some holdout somewhere, but every agency I am familiar with charges less for online bookings than phone reservations. There is—or should be—a lot less travel agent labor required to process online bookings. Before the advent of online booking tools, labor made up nearly 80 percent of the cost of booking travel.

There still is healthy debate, however, about the best way to support online tools. If you've gone for, or been tempted by, the low fees offered by "traditional" or "Internet travel management companies," that would lower transaction costs by supporting travelers in a highly automated fulfillment center, then you've probably heard a lot about high touchless rates. Travel management companies and travel managers go on about touchless rates—the percentage of online transactions that don't involve travel agent intervention—like drunken fishermen yarning about the one that got away.

Yet, are touchless bookings always best for corporate travelers and travel managers? Think it through before assuming that more is always better.

Traditionally, agencies booked almost everything through the global distribution system, then used automated, mid-office quality controls to make sure they were accurate and logical. As mid-office technology improved, agencies became able to add or change information like employee numbers or policy compliance information that corporations wanted in management reports.

When online booking tools were first introduced, passenger name records created online often failed the mid-office quality control checks of travel management companies because they were in different formats. In some cases, every record had to be reviewed and reworked by agents. travel management companies complained that online booking tools actually increased the labor involved, and thus the cost of online bookings.

Fortunately, the online booking tools got better, and mid-office systems got more flexible. Automated fulfillment systems now can adapt so that they can successfully finish both online and offline agent bookings. Thus was born the no-touch booking.

Like all technology, touchless fulfillment is great when it works. A fully automated, i.e., no-touch booking has no direct labor cost. It's easy to see how this reduces agency transaction costs. And in theory, if agency costs are reduced, they will be driven by competition to lower prices.

At the macro level, this has happened. Whatever the merits may be of online booking tools and their progeny, the Internet travel management companies, agency transaction costs have fallen dramatically since they entered the market.

Expanding the capabilities of automated, touchless fulfillment systems is a good thing. Travel managers need to make sure, however, that they do not make unintentional compromises solely in the interests of higher touchless rates.

The issue of automated fulfillment raises another key question: Are online bookings best supported by the tool vendors themselves or by their legacy travel management companies?

In my view, the Internet travel management companies get props for driving change. No doubt that the established travel management companies would have pursued reengineering to lower costs both for themselves and their customers. However, I know of specific examples of agencies forced to lower prices faster than their costs fell in order to retain accounts. That has been good for customers.

Internet travel management companies philosophically seek to rationalize processes through automation. However, they have been forced to add such traditional services as human account management that increases their costs and prices. Inherently, their lack of scale and experience limits their competitiveness for very large or complex (international) accounts. They continue to grow, however, and as they do they will become more competitive.

The traditional travel management companies have leveraged technology and lowered costs relentlessly, which has provided great value to customers. These established service providers also have benefited from the host of other non-technical services they offer—as well as by their experience, resources and global networks. For the most part, so far, their efforts have succeeded and they have retained their marquee account base.

Corporate clients today should revel in the amount of choice they have. They should pay more attention to the growing capabilities of Internet travel management companies, but they shouldn't assume that bigger, more established agencies are more expensive—or technically less advanced—than their new competitors.

It's more important than ever to understand the capabilities of all providers. It's also important not to pursue automation that doesn't benefit your specific company. Companies that define their travel management requirements precisely, and take advantage of the technology's benefits while avoiding its pitfalls, will enjoy better services at lower cost than ever before.