Strategic Meetings Summit London, 26 September,
September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
Paul Tilstone, managing director of GBTA Europe and CEO of ITM UK & Ireland, questions how much change is wise, in an already fast-moving industry...
Whilst we should always challenge what we do and why we do it, we all know that constant change creates a world of work and pain before we get to the other side.
Whilst you will normally find me in the “challenge everything” camp, I have to say that recently I have started to wonder just how much change we can take in this industry. And I’ve started to consider just how important the timing of concurrent changes can be.
We are in unprecedented times in the business travel sector. At a time when we are looking to our legacy processes and systems to support managed travel programmes, we are seeing wider business change.
We need to work data harder, care for and service our travellers more and maintain our focus on costs, but every day a new issue arises in which we need expert knowledge to understand its impacts on our travel programmes.
In past presentations at Global Business Travel Conferences (GBTA) conferences I have presented the idea that we are in the midst of a jungle, and we are having difficulty in seeing which way we should go.
In that jungle, we are surrounded by five dangerous animals which distract us from finding the right path through the dense business travel vegetation. In Africa, these animals are called the “Big 5” because they are the most prized by hunters.
Each of the five represents a complex and compelling issue of change we are grappling with at this time in our sector and I would like to share the first of these big five with you. The Elephant. This majestic animal is the grandfather of the jungle, representing the distribution chain and the challenges it is experiencing.
As airlines strive for more sustainable business models, they are exposing the cost of distribution to the customer and greater price unbundling is occurring. This is presenting huge challenges as we strive to manage multiple elements such as fuel surcharges, payment administration fees, seat allocation charges, GDS top up fees, priority boarding charges, etc, etc – the list goes on.
These changes could be good if airlines really only unbundled supplementary items which buyers and travellers could choose to procure. But the charges are presented as a mish-mash of revenue raising methods at different stages of the sales process. There is no longer true comparative fare analysis at the point of sale.
The reality is that while the principle is good for all, the operation is not. It adds cost, time and creates data and processing issues.
Some carriers are challenging traditional engagement with the distribution chain, creating more direct connections and seeing their own net technology as more efficient or as giving them more control.
This is understandable and whilst we recognise that no-frills carriers’ innovation has created this opportunity, what if all carriers and other suppliers did this? Maybe they will, but you can’t help but think that it would come full circle and the GDS would be re-invented!
The net effect of all this activity is that distribution is becoming more complex and we need to ensure that our intermediaries’ priority is to get the content and then we can argue about price.
We need to make sure we keep in touch with what’s coming up and connect with the status of distribution-supplier relationships through our networks to get a broad perspective of opinions. And we need to build the financial and procedural implications into our forward plans.
I recently ran a breakfast forum for a number of buyers on the subject of cost-offload and revenue raising strategies of airlines. At the beginning of that session I asked each buyer to judge on a scale of one to ten their understanding of the distribution changes and their assessments of its impact on their travel programmes.
At the beginning of the forum they judged their understanding as a five and the impact as a one. After two hours of discussion these figures were reversed. It clearly showed that the deeper we delved into the issue the more complex it became and the more concerned they grew.
One buyer said that they didn’t have the time or knowledge to delve deeper and that their method of managing these potential changes was to account for a 10% increase in aviation costs for budgeting purposes.
Clearly setting financial expectation is smart, but the implications for distribution changes go far deeper than cost. They could potentially undermine everything we have worked hard to achieve in terms of inventory and transparency.
Just to be clear, I’m not saying that we shouldn’t challenge our legacy systems, I’m the champion of change remember. But I do wonder if the timing is good?
Just as we should be focusing on tracking travellers, providing greater care and adding more value to our businesses, this issue threatens to undermine all our good work to date.
With the elephant in our sites, we can now watch out for the remaining four of the jungle big five…
An extract from “Laws of the jungle”, a GBTA Europe presentation. To read the second instalment, click here.