A SIMPLER TIME?
I
well remember my first encounter with travel
booking tools – maybe 5 years ago. One of the
major global travel agencies came to see me to
offer us a complete self-booking tool. The only
cost was a transaction charge of £45 per booking
that they argued was much less than the cost of
travel agency fees and our own internal costs. We
seemed to spend more time discussing the
transaction fee than anything else!
Everything looked possible and very simple. So,
have things changed in the last 5 years?
A CONFUSED INDUSTRY
The industry is much more
fragmented than 5 years ago. Distribution was
dominated by GDSs for airlines and a belief that
hotel and other travel products would go the same
way, leading to fully represented GDS systems to
support corporate needs.
Today however, we find ourselves in
a position where there is no single access point
for travel bookings – and the situation is getting
worse!
In the last 5 years we have seen
airlines attacking their distribution costs
leading to commission reductions, direct
distribution with additional discounts for booking
direct via the web.
Hotels have some GDS connectivity
but want to go direct. As various new hotel
intermediaries come and go, hotels yield manage to
such an extent that you can never be sure that
online availability is correct without calling the
hotel.
Low cost airlines have sprung up
all over Europe with a book direct strategy.
Initial reactions from the trade were that these
were for leisure travelers – events have proved
wrong. The major carriers are now price competing
against the low cost routes.
Since September 11th,
the airlines have been under such fierce
competition that scheduled fares |
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can now be less than corporate
negotiated rates, even allowing for volume
agreements. At the same time, Net fares abound but
few have the time to load these for online access.
GDSs are still talking about rail
connectivity.
All these issues call into question
the whole viability of self-booking tools in the
future.
THE
CORPORATE VIEW
The corporate is now in the
position that they have no where to go to get a
total self booking solution. Yes, technically the
tools are capable, but without the right access to
content, rates (from multiple sources) and
availability they seem of limited value.
What the corporate needs is a
Global Access System - where they can go to a
single place for content, rates and availability.
Unfortunately, the travel providers
are still in ‘distribution mode’. Even the
‘independent’ tool providers appear to fall into
the same distribution trap.
The adoption levels of self-booking
tools seem to bear these points out. With the
exception of a few examples in the US, adoption
levels seem to run at about 5%. You may hear about
higher levels but these tend to be for limited
city pairs or inflated by either the tool provider
or user to endorse their purchase decision.
Perhaps the first question should
be one of adoption potential i.e. how much can
actually be booked online. The analysis is quite
simple. If 80% of your air content is available
on-line and only 25% of your hotel, then the
adoption potential for an air & hotel booking is
only 20%. Therefore 80% of the time you will not
be able to complete a booking on-line. The user
will tend to use call centers to book the whole
trip rather than risking a partial on-line
booking.
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Perhaps the question is ‘who is
taking the responsibility for trip integration?’.
This could be provided via the Travel Agent, or
the booking tool if the parties are prepared to
work together effectively. Each model has it’s own
advantages and disadvantages, and the corporate
travel manager needs to assess this in terms of
the quality/price of service they need and the
capability/long term strategy of its suppliers. An
effective alternative is to consider the use of an
internal intranet to solve the problem.
In any scenario, the implementation
of an integrated expense system must hold the key
to obtaining relevant MI rather then the booking
tools themselves as it becomes the only single
point where travel information can be aggregated.
THE
FUTURE
Unless tool providers understand
that they are not in the distribution industry but
in the access industry, I fear nothing will change
and the onus will be on corporates to provide
their own solutions from various components. These
will need to allow for content needs, availability
and rates from multiple sources as well as both
online and call center support.
In the meantime, the primary
objectives of reducing distribution costs for
providers will not be achieved and corporates will
not see the benefits of technology.
SUMMARY
Will corporate travel tools
succeed? Regardless of the above points, I believe
that they will. The question is who will provide
them and when. In the meantime the onus seems to
be on the corporate travel managers to take a much
more hybrid approach to deliver real business
benefits.
(Published on Travelmole.com June
2002)
Mike Fill
item consulting |
