BEYOND THE MARGINS
Air travel might dominate, but the distribution of rail content – and hotels – presents challenges for all parties too, but is progress imminent?
It may represent the biggest hunk of most travel budgets and have grabbed the most attention because of NDC, but air is not the only component of a travel programme. Rail too presents distribution challenges.
As Ben Park, senior director procurement and travel at Parexel, says, “Rail in Europe is terrible mostly because rail companies owned by governments are lacking many years of investment. Rail is in big demand to support sustainability goals but the biggest gap is in distributing the product.”
Many travellers find it the most convenient way to travel between their home, office and meetings. Most managers find it is often the cheaper total cost of journey and also aids productivity; after all, you can work on a train journey in a way you can’t while transiting through an airport. And it usually complies with corporate governance in contributing the least emissions per passenger kilometre.
But rail can make travel bookers pull out their hair. As if many different companies in different countries, plus different content between what’s released in home countries and what’s released in non-home markets, wasn’t enough, the offers themselves vary.
The fragmented nature of ownership isn’t the real problem according to Raj Sachdave, managing partner of Black Box Partnerships. Instead, he says, the lack of what he describes as ‘data normalisation’ is the root of the distribution challenge.
Sachdave explains: “The way hotels distribute inventory across borders is the same. Rail doesn’t have that luxury. If you can normalise data, like they do with air and hotels, you can distribute with ease.”
There are multiple reasons. There are many government-owned rail operating companies in Europe – France, Germany Spain and Italy, to name a few – and some impose traditional distribution constraints in the belief that this will protect the home nation. For example, SNCF has a low-cost product called SNCF Connect but it believes that it is a consumer product and so it is not made available to TMCs or the B2B market. Compare that to air, where low-cost carriers are happy to make pipes of content available for TMCs.
The result is frustrated travel managers. A recent survey of more than 60 buyers by the UK and Ireland’s Institute of Travel Management found that 45 per cent were dissatisfied with the availability of UK rail content in booking tools and a whopping 75 per cent were dissatisfied with availability of European rail content.
In a similar survey of more than 150 travel managers earlier this year by BTN Europe, 31 per cent of respondents said rail content was limited or very limited, while just 29 per cent said it was very comprehensive. In comparison, 58 per cent of buyers rated their OBT’s air content very comprehensive.
The EU isn’t happy with the obstacles to buying train tickets either. “Rail is our flagship mode of transport… however, it is also the one which faces the biggest hurdles,” said Walter Goetz, head of cabinet for the EU’s transport commissioner, at the GBTA Sustainability Summit in Brussels late last year.
But rail distribution is not sitting still. Some nationalised operators are hiding behind the EU but, according to Sachdave, “the EU really wants to open up distribution.” Train operating companies are expanding cross borders – Trenitalia has launched services in Spain and is planning to launch services in France in the next 18 months.
Access to content does vary with the location of the booker. Someone sitting in the UK can book a trip between Frankfurt and Dusseldorf but won’t be able to reserve a seat or apply their BahnCard. By the same token, in Sweden a traveller might want a guaranteed seat and a prawn sandwich. SJ Trains does not extend the ability to book such content to someone sitting in Barcelona. As Sachdave points out, the key challenge is “how can I make sure they’re distributing the same content in their home markets and across borders?”
Rail has always been strategically important to global distribution system Amadeus. Sam Abdou, the company’s executive vice president air, rail & global online, says: “It adds value to air content. A lot of rail providers, mostly in Europe – SNCF, ItaliaRail, Deutsche Bahn – are investing in more content but we need to have multi-modality – rail and flight options on the same screen – when booking.”
However, as Sachdave points out, this is sometimes already available for popular city pairs such as London-Paris or London-Edinburgh but how about when someone needs to travel between Lyon and Birmingham or Amsterdam and Manchester? With more people working virtually and more businesses setting up outside primary cities, the need for comparative shopping for travel between secondary cities is apparent.
Many years ago Amadeus launched Elgar to bridge UK and European markets when providing rail content. Technology in the form of TMCs and specialist rail tech companies such as Trainline, Silverrail, Evolvi and Amadeus (Travelport uses Trainline and Sabre has its own solution) is powering all these initiatives to normalise and extend access to rail content and get it into service streams.
“In the air industry everything is more or less consolidated into one place, which is the global distribution system,” says Cédric Lefort, senior director for solutions engineering at BCD Travel. “Air is far less fragmented than rail. Every rail provider has it own system and its own way to distribute content and does not make all of its content available via the standard solutions. You just have access to a piece of it.
“Most packages you need are not available via an online booking tool or the agency. You can only have access if you book via the website of the rail provider. It’s difficult for the GDSs or OBTs to develop connections to all this content.”
Bleak as this situation may appear, technical, commercial and regulatory solutions are emerging which may yet make rail more visible. One growing hope is aggregators. They offer both technical and regulatory relief and are able to take API-based content feeds from all the rail operators and funnel them into a single, global pipe to TMCs and OBTs.
Additionally, “what we’re working on is a sub-licensing model whereby we hold the licence and then all the TMCs, OBTs and GDSs we work with are able to operate on it,” says Trainline global distribution and business solutions director Liz Emmott. This is already the case in Italy.
Another factor helping to unlock the market is growing competition in some European countries. Consequently, says Emmott, rail operators are telling Trainline they want more business travel sales.
However, it remains the case, Emmott admits, that “some are more open than others”, which is why Lefort speaks for many managed travel professionals when he views regulation as unavoidable. “If we want to push people to travel more by rail, we need to have regulation,” says Lefort. “I’m convinced from a technical standpoint the operators could do whatever they want. The obstacles are mainly commercials and business models.”
Hope lies mainly with an impending EU regulation called Multimodal Digital Mobility Services (MDMS), a legal framework to ensure access to all rail content for all distribution channels. Draft legislation is expected in the first half of 2023.
Of course, just as with air, rail distribution isn’t only about sourcing and booking the content. The technology companies here too are looking at fulfilment, after service, administration charges for booking changes etc. It’s all part of the end-to-end cost of retailing.
SLEEPING ON IT
Hotels lost lots of ground with the pandemic. Occupancy rates and room rates tumbled. Floors of properties were commonly closed. And that wasn’t all. “Everyone lost people and resources. Hotel organisations had to let go of almost 50 per cent of sales forces,” says Lukasz Dabrowski, senior vice president, global supplier relations, at HRS.
It became a time to reflect and consolidate while technology continued to drive change. “Distribution and booking channels behaviour has changed,” acknowledges BCD Travel senior vice president, April Bridgeman.
BCD began to invest in hotel spend management before the pandemic with the aim of driving more bookings through the TMC. Bridgeman estimates that 40 per cent of hotel bookings are going outside the agency although some insiders estimate the industry figure to be closer to 10 per cent. She highlights that the emphasis on managed hotel programmes has continued to grow despite smaller and smaller returns. Revenue parity had become a challenge as the negotiated rates became available less and less often. And rates as business travel rebounded skyrocketed.
“We also invested in analytics to help companies figure out how to save beyond sourcing in the hotel category,” says Bridgeman.
“A company would negotiate over and over again with the same hotels so hotels felt they would get the business regardless. This was partially because the process didn’t allow travellers to influence decision-making – it’s not easy to get travellers to change where they book.
“We need to improve traveller decision-making at the point of sale and use every behavioural strategy that’s used in consumer business. We need to act like retailers more than we do,” says Bridgeman who would like to see data that comes with rooms and services to be rich enough to act more like retailers. “Retailing works. We want to retail. Technology is getting better and smarter and making it easier but a lot of things could be done to make it even easier.”
The industry trend is certainly for a more comprehensive technology solution. For example, Dabrowski believes that organisations are starting to understand the value of direct connect technology, data storage and transaction processing. He believes that cloud-based solutions are the future. “We need to reduce the dependency on physical servers – speeds now are so much more superior.”
And Bridgeman firmly believes integration between distribution and settlement is needed. “I’d love to see a world where if an agency is to be paid a 10 per cent commission, it’s an easy process or where tax is not charged if you’re going to reclaim it anyway.”