Judy Ferring gives the perspective from US travel managers as they prepare for 2012
IT’S BEEN hotel negotiation season here in the US, and travel managers are focused on the problems involved in that annual marathon. Two-thirds of the respondents to my snap survey of travel managers in September indicated that increasing hotel rates were a major concern, even though those rates are only beginning to reach levels equal to 2008.
What’s changed in those intervening years? Often, it’s senior management’s uncertainty about the reality of a strengthening economy and keeping travel budgets tight.
For more than 10 per cent of survey respondents, it’s the challenge of building and refining managed travel programmes in jobs they’ve had for less than a year.
“Hotel RFP [request for proposal] season without any kind of tool and with over 400 properties ... need I say more?” asks the new travel manager at a major engineering and architectural firm. But she does say more – her first priority is “maintaining and increasing travellers’ use of preferred vendors”, and second is “getting immediate buy-in from senior leadership”.
Preoccupation with cost control certainly isn’t new: 60 per cent of the respondents to a survey taken by US-based e-commerce firm Rearden Commerce at this year’s GBTA conference in Denver said their organisation’s top priority is managing costs. More than half (54 per cent) of the travel managers surveyed for this article said they were focused on maintaining or increasing travellers’ use of preferred vendors.
By mid-January, when hotel rates will have been loaded and booking tools configured to reflect new preferred vendor agreements, US travel managers will be able to fully face the emerging problems that have often got little more than a glance over their shoulders for the past quarter.
Nearly half the travel managers answering my snap survey say they will concentrate on tracking, and then controlling, their travellers’ use of airlines’ ancillary products. It will be an uphill battle but progress is possible. While inhabitants of the supply chain offer scant promise that they will deliver definitive data on individual travellers’ ancillary purchases in 2012, they’ve had little problem quantifying the volume in other dimensions.
Travel managers are testing policy provisions to stem the flood, often following a pattern suggested by Concur more than a year ago when it released its expense and business intelligence module. It’s based on the fact that most ancillary purchases are made separately from the basic ticket purchase, and most in-flight purchases must be made by credit card, whose invoices include airline merchant codes. The Concur system uses those codes in the card data imported into travellers’ expense reports to identify in-flight purchases, which – if under the threshold amount set by policy – are tagged for further identification by each traveller from a list of possibilities: baggage, upgrade, priority access, preferred seating, club use, ticket change, on-board entertainment and so on. Reimbursement for purchases above the threshold is withheld pending further scrutiny.
SEEKING NEW REVENUE
Meanwhile, the prevalence of ancillary fees is growing at an astounding rate, making them and their challenge to managed programmes nearly ubiquitous.
Possibly more vexing: much of that growth is based on mobile technology, the same enabler of social media problems. Guestlogix, one of the most aggressive facilitators of in-flight commerce, observed at its annual general meeting in May 2011 that airlines “have already monetised all of the low-hanging fruit” and are seeking new ancillary revenue streams, both on-board and off-board.
Technology companies rarely highlight their clients’ problems publicly until they are ready to offer solutions – and so it is with Guestlogix. In May, it identified destination-based ancillary sales as one of several of its customers’ opportunities for revenue growth.
In August, it announced the first successful deployment of its Ontouch Box Office merchandising platform, through which international carriers could offer passengers tickets to attractions and entertainment at their destinations. “At a 1 per cent passenger take-up rate, we estimate the potential annualised gross transaction value of the programme to be $45 million,” said CEO Tom Douramakos. More importantly, Ontouch Box Office was the first of 13 programmes the company plans to deploy by the end of its fiscal year.
In September, it unveiled Ontouch Destination Deals, through which airlines can offer passengers mobile access to promotions and special pricing on products and services that have been filtered to directly align with individual itineraries.
If the growth of ancillary fees is being facilitated by mobile technology, hope for a solution is also focused on there. It’s a logical assumption, with various polls reporting 75-85 per cent of business travellers using smart phones. Rearden’s August survey found 63 per cent of travel managers believing that mobile technology would be able to help them manage their travellers.
Also, similar to the Guestlogix deals, Rearden plans to implement a mobile-enabled purchasing platform to pass along discount offers to business travellers as they approach their destinations.
The immediate attraction for business travellers, says Rearden’s senior vice-president for travel services, Tony d’Astolfo, will be a decluttering of their mobile devices.
An offer from a downtown restaurant is not likely to be of interest to a traveller with a two-hour layover, for instance. One from a restaurant next to the airport would be, and he can be sure that there’s an open table available — both already verifiable with the Rearden platform. Using the same platform, the traveller can make reservations and call for a cab before he’s reached the airport entrance.
Just a quarter of those managers I polled said the benefits and pitfalls of airlines’ direct distribution plans were of interest to them – and of those none cited any direct effect on their day-to-day work.
With all the vitriol and conflicting statements being made, the main challenge seems to be to sort out and understand what the airlines, global distribution systems (GDSs) and assorted technology companies are trying to say – or not say.
So travel managers remain in the information-gathering mode while they wait for the dust to settle.
It’s a reasonable decision. Richard Eastman, a technology developer with a long history in the business travel industry, says although the current GDSs are inadequate to meet more and more of the needs of an increasingly demand driven economy (think Ebay or Amazon), it will take time and money to develop substitute systems.
Eastman cites the development of Amadeus’s Altea reservation system and Jetstream, an internal reservation system being built by HP for American Airlines, as early moves in that direction. The fact that they are early developments doesn’t mean they will be short-lived. Altea was launched in 1992 and is still being refined, even as it is in use by more than 140 airlines. The more recently-begun Jetstream project has been augmented by an agreement to incorporate ITA’s inventory control solution and continues under the software company’s acquisition by Google.
Travel managers’ window for learning the emerging landscape is beginning to narrow. The GDS community has been keeping it propped open for about a decade, with multi-year agreements for full inventory. The most recent round has extended the time frame into 2013.
Meanwhile, US travel managers are attending to a myriad of more immediate concerns. The majority are related either to increasingly global programmes or to the widening of their own responsibilities into strategic meeting management.
For a handful, going global means giving priority to deployment of card programmes and payment solutions designed to cross international borders. At a mid-sized manufacturing company, expansion of the card programme includes coordination with the Concur system so it can work internationally.
Several of the US travel managers I polled acknowledged strategic meetings management as a “long, long-term project”. One industry veteran described it as a priority after his “big three” – those being: managing a global data-feed from multiple travel management companies (TMCs) interfacing to an online travel management reporting tool; implementing new global TMCs with changes in his pre-trip approval process; and implementing a global security/risk/employee-tracking programme.
And for many, going global also means networking with peers in the UK as they face common challenges. Finding the opportunity to do so can also be a challenge for these busy executives – several I spoke to cited the recent ACTE conference in Paris and GBTA Europe conference in Noordwijk, the Netherlands, as opportunities to compare notes with their UK counterparts on what lies ahead.