Op-Ed: Midsize TMCs Different From Dinosaurs
If you believe the online travel agencies, or Internet travel management companies as they now like to be called, their business model is the only one that makes any sense for corporations today and moving forward. The speeches we hear, the opinion pieces we read, the pop-up ads we all get on our computer screens (Aaaaargh!), they all remind us that there's a new game in town. Mega "traditional" agencies are fighting back—with the gloves decidedly off—and are competing vigorously in the online booking arena. Where does all this activity leave the midsize regional travel management company—are they even worthy of consideration by any corporate buyer or has time passed them by like the dinosaurs?
The question is ludicrous—of course corporate buyers should consider all bidders able to meet their needs for travel management services. Our company and other midsize TMCs are successful in winning new business from both mega agencies and the online players. Why? It's not enough to say that such companies offer personalized service, nor is it enough to say that we have similar or even superior technology to the larger players. Today's buyer is much more sophisticated than that, and given that travel buying is more than ever a procurement function, the touchy-feely differences of the past play a much lesser role than before.
Today's corporate travel buyer is looking for a supplier that will differentiate itself from the masses at an attractive price. One size fits all never has been a good solution for corporate travel management, it isn't today and it never will be. The travel reservation process may have become a commodity—at least in the online world—but to overlook the additional services offered by all competitors today is to do your company a significant disservice.
Most importantly, the most significant travel distribution issue facing any corporation or TMC, regardless of size, is aggregation of content. Global distribution systems have a tremendous amount of content, and they will play a crucial role for years to come in this industry, but they do not have access to all content (notably low- cost carriers, consolidators, etc.) and they will not in the future. GDS deregulation will only hasten this trend.
While the industry has focused on access to content lately (and is already in turmoil about life after the DCA3-type deals begin-expiring), I submit that the quality of content is an equally large issue. That is because at any one point in time there are frequently different fares available in different GDSs and Internet sites. It's not that each global distribution system doesn't have access to the content, it's that different databases are loaded and maintained at varying times throughout the day.
It does not matter if we're talking about an OTA or a TMC that uses only one GDS, the fact is that if a company's travel services provider is not accessing multiple channels of information, that customer will never obtain the lowest fares. Quite simply, given today's technology, it is impossible for one distribution system to offer the lowest fares 100 percent of the time.
An internal analysis at my travel management company proves that there are fare discrepancies between GDSs and Internet sites routinely 5 percent to 10 percent of the time. Corporate buyers should ask, "Can I afford to ignore the potential of that cost savings?" Of course not. (And don't even get me started on the discrepancy in hotel pricing across all channels…) Any travel management service provider that relies on only one channel of travel distribution is doing its customers a disservice that will cost them a great deal of money, unnecessarily inflating their bottom line. Ask the OTAs or your travel management company how many sources of distribution they check—for each and every reservation—and ask them to prove it. You'll be amazed at the results.
As has been discussed extensively elsewhere, the role of data aggregator is moving from the GDSs to TMCs, be they traditional or online players. TMCsalways have been data aggregators of sorts, combing through GDSs, Hotel Travel Indices, Official Airline Guides and countless brochures, faxes, e-mails and Web sites aimed at providing access to the latest information on supplier offerings. It has been the responsibility of TMCsto cull through that information to find what's valuable and cost-effective for their customers.
That's why there's been so much discussion about the soon-to-be advent of the "Universal Profile" and the "Super Passenger Name Record." Why would these things matter if multiple channels weren't envisioned? "Traditional" TMCs are using solutions for these issues today, not two years from now.
Corporate travel buyers want choice, they want flexibility and they want a partner that is dedicated to meeting their goals. Perhaps due to their size, the midsize TMCs are uniquely positioned to employ multi-channel distribution strategies. In the end of this tussle over which type of company is better, a mega TMC, an OTA or a dinosaur-like midsize TMC, corporations need to know that many midsize TMCs are surviving—and thriving—because they can react to marketplace changes more quickly than their larger or newer competitors.
If that's what you call being a dinosaur, then consider the next Dinosaur Age to have dawned.
John Smith is president of Tower Travel Management based in Oakbrook Terrace, Ill., and a member of the Business Travel News Editorial Board.