Monthly Archives: February 2015

What Does Expedia’s New Power Mean For Lodging Rates?

Hotels had to reckon with Expedia before it acquired Travelocity and proposed the same for Orbitz. If it’s able to enhance its negotiating power, Expedia could reinforce the notion that online travel agencies offer lower lodging rates than traditional managed travel sources.

In a Feb. 13 research note, Oppenheimer analyst Manish Hemrajani wrote that Expedia’s “Hulk-esque proportions in the U.S. travel landscape” make it an “indispensable” channel with “immense clout in rate negotiations with the hoteliers.”

Atmosphere Research Group’s Henry Harteveldt pointed out that Expedia could also try to generate better commissions for itself or add-ons for users like free WiFi and breakfast.

Not everyone assumes Expedia’s acquisitions give it more leverage in the U.S. market.

Marc Casto of Casto Travel doubts the Orbitz acquisition will further pressure hotel rates. He said that “presumes Expedia hasn’t already extracted more than its pound of flesh from hotel companies.”

Other sources agreed that hotel companies won’t change strategies much, at least not the larger chains. Strong demand prevails in the market. The same may go for large travel management companies.

“The real pressure will be on small and midsize agencies, both corporate and online,” said Steve Reynolds, CEO of hotel shopping tool TripBam. “Consumers follow the rates.”

“I suspect that the lowest-hanging business fruit for Expedia is to get that unmanaged or lightly managed small business client to behave more like a leisure customer,” said Bill Carroll, a clinical professor of marketing at Cornell University’s School of Hotel Administration. “They’d stick to their knitting, casting that net to bring in the small business segment.”

If You Can’t Beat ’Em

Some may agonize over competing against an even bigger Expedia. Gant Travel Management is trying to harness its sway.

Gant president Patrick Linnihan said he’s been expecting Expedia to “play a much larger role in the corporate travel segment, especially in the SME market.” He sees that role as the source of cheaper, prepaid hotel rates that appeal to some travel programs, much as nonrefundable airfares do.

Gant had been offering prepaid hotel rates to its small and medium sized clients before joining the Expedia Affiliate Network in 2013. Now, EAN is the main source and Gant is planning a pilot for its larger clients this spring.

Other travel management professionals also see value in the open market. Norm Rose of Travel Tech Consulting suggested OTAs may supplant TMCs as a source of hotel content, supplementing whatever corporations can negotiate on their own. “There’s so much friction in the market for finding lower rates,” he said. “With how big Expedia and Priceline have become, it’s probably better to incorporate them in your program unless you have tremendous volume to leverage.”

Some agency executives said many of their SME clients are fine with hotel bookings leaking out of the managed program to sites like Expedia. Traveler choice on lodging tends to be more personal than for air travel or car rental.

But how applicable to business travel, in-program or otherwise, are the lowest rates available from Expedia and other OTAs? They’re typically nonrefundable and can come with other restrictions. This is one reason why a corporate TMC leader said his agency is in the Expedia Affiliates Network but doesn’t really use it: “Working into the proper processes has proven a pain in the butt for not much gain.”

Gant’s Linnihan argued “it’s a myth” that all Expedia rates are nonrefundable or very restrictive. Though they may not always be analogous to what a corporate traveler can get through a managed program, EAN rates often include Wi-Fi and breakfast.

“Expedia has been increasing its focus — and so has Priceline, and same with Orbitz — on rates that you pay at check-out, and in some cases they offer some degree of flexibility to cancel,” said Harteveldt. “Even some of the prepaid rates now may offer more flexibility in terms of modification and cancellation within certain parameters.”

Linnihan said prepaid rates can be cheaper than negotiated corporate rates and are particularly attractive in a client’s less-frequented destinations. Though EAN offers other types of rates, Gant uses only the prepaid ones. Of course, when rates are nonrefundable, they work better for trips that are unlikely to change. “For the right form of travel, it’s the path to the most value,” Linnihan said. “Travel managers are smart enough to know where the Expedia rate is right for their travelers and when it doesn’t make sense for us to offer it.”

To access the EAN rates, Gant agents use software from BookingBuilder Technologies that is connected to Expedia with an application programming interface. The process for now works only with agent assistance. Back-office and reporting needs require agents to store the booking information in the global distribution system with passive segments, which come at a small cost to the TMC. Gant earns commissions on the bookings and charges service fees to clients.

Several other distributors have signed up with EAN, including Sabre, Hipmunk and GetGoing. French corporate booking and expense firm Traveldoo, owned by Expedia’s Egencia, also participates. Overall, EAN has compiled 7,500 participants around the world — including other OTAs, airlines, rail companies and other travel suppliers. Its hotel inventory encompasses 173,000 properties. EAN claimed it doled out $630 million in commissions during the past three years.

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Amex May Face Tougher Competition Following Court Decision

A federal court in Brooklyn, N.Y. on Thursday ordered American Express to revise its merchant agreements. Provisions that bar merchants from preferring another form of payment need modification or elimination, the court found. Absent a winning appeal, the decision seems likely to hurt Amex’s competitiveness.

It appears merchants such as airlines would be free to promote alternative payment platforms, perhaps by using lower fares. To prevent such activity, known as steering, Amex may have to reduce its fee, the so-called discount rate. That could weaken service quality or reduce client rebates.

American ExpressIt’s bad news for the dominant corporate card provider, but how bad is unclear.

Airlines likely would not save more than about a percentage point on payment costs by moving corporate clients to, say, their own UATP payment network — but that’s a lot of money. If they shared with the customer a fraction of a point of savings on a typical airfare, that may not add up for a lot of clients. But for large corporations or those that use premium-class air travel, sharing in some of that savings could be significant.

A downside for an airline making such an offer is alienating Amex, which negotiates lower rates for its best partners. There also are negatives for a client pursuing alternatives. Amex has been the most expensive payment choice all these years for several reasons. Its fees fund renowned customer service, the Membership Rewards program and other features like purchase protection. Amex pays some of the revenue back to corporate clients as rebates. Expressed in fractions of a percentage point (basis points), rebates depend on how quickly clients pay their bills and whether they use the loyalty program. Some or all of that would go away for companies using alternatives, even if only for their air travel purchases.

Some downplayed the potential impact. “I think it’s probably a little overstated,” said one person with intimate knowledge of American Express. “The premium charged to merchants is not that significant versus MasterCard and Visa. How much of a fare reduction could an airline offer? It would have to be a high number of transactions and I don’t know there are that many corporations who are willing to change their form of payment.”

The source acknowledged, though, that freeing airlines to discount their fares for clients using cheaper payment models can only be bad for Amex. It’s the leading corporate card issuer, with about a two-thirds share of the U.S. market, according to court documents.

Alaska Airlines declined to comment on last week’s ruling. In testimony, the airline indicated it would like to cut fares for corporate clients that move tickets to lower-cost payment platforms. But Alaska’s American Express agreements disallowed that, according to managing director of revenue accounting Kevin Thiel. He said the airline “continues to seek flexibility from Amex to pursue this idea, but Amex has continued to reject the necessary changes.”

A UATP spokesperson welcomed the decision: “As the lowest-cost form of payment for the airline industry, the more competition there is, the better-off we are in the long term. We think this would allow merchants to be more selective.”

Susquehanna Financial Group analyst James Friedman in July estimated that losing the case could cost Amex 2.2 percent of its volume due to merchant steering. A 1.8 percent drop in revenue and a 4.7 percent drop in earnings per share also would result. The figures assume that 5 percent of larger merchants institute steering. But in Friedman’s worst-case scenario, as many as 10 percent of larger merchants and 20 percent of smaller ones could do so, doubling the impact.

American Express could try to prevent such activity by negotiating lower rates with airlines. Reduced charges to merchants seems likely, further pressuring Amex’s position as a premium card.

“Long term, Amex would have to prove their high-cost option is justified,” said Oppenheimer & Co. analyst Ben Chittenden. “My gut says the discount rate would have to migrate to more the MasterCard/Visa level. Then you would reduce the rebate, but it will vary from one corporate to the next.”

It Was Already Tougher

Amex for years had been dealing with downward pressure on its rates and tougher competition. According to testimony last fall by chairman and CEO Ken Chenault, the company five years ago ended a program designed to raise rates on merchants. It failed and angered merchants in the process.

The average discount rate fell from 2.55 percent in the December 2006 quarter to 2.45 percent eight years later.

A program instituted in 2013 enables third-party merchant acquirers to offer small merchants rates equal to what they pay MasterCard and Visa. Amex expects acceptance in the United States to improve as a result, though its bigger acceptance handicaps are outside the United States.

The firm recently lost Costco and JetBlue as strategic partners, and the stock is down nearly 13 percent so far this year. Amex is planning to cut 4,000 jobs in 2015.

And the competition has no interest in letting up. According to Friedman, “MasterCard has been growing above the market rate in general, and they attribute a lot of that to their corporate programs.”

Amex and the government have less than a month to come up with a negotiated settlement. If they fail, the court will prescribe remedies. Meanwhile, an appeal likely would delay the final outcome by many months.

“American Express is disappointed in the court’s ruling, which we believe will harm competition to the detriment of consumers and merchants,” according to the company. “American Express intends to appeal the court’s ruling at the appropriate time.”

Additional info: Sources also included five other equities analysts who cover American Express Company, two payments consultants and a corporate travel consultant.

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Performance Issues Plague Concur Travel

[UPDATE, Feb. 27: Concur indicated the service was back to normal operation.]

Concur is working to identify the cause of errors and slow processing in its Concur Travel web application.

“Over the weekend, the engineering and operations teams identified key areas where transaction performance was negatively impacted and implemented configuration changes that significantly improved transaction processing times,” according to a Monday message to partners from Concur vice president of TMC services Cindy Allen. “While those changes have produced some benefit, users may still receive errors or experience slow processing when performing administrative functions or attempting to search or book travel.

“We are now in a ‘research and diagnosis’ stage,” Allen continued. “Our goal is to narrow our focus and identify the root cause as we continue to evaluate system performance.” The problems continued as of Tuesday morning.

outage

The issues are occurring “during periods of high transaction volumes,” according to a spokesperson. “We value our customers above all other priorities and are working to resolve the issue as quickly as possible.”

Performance issues went public for Concur Travel in 2011 and last year for Concur Expense. Some users on Monday complained on Twitter that errors and timeouts are not unusual. Two travel management company executives said clients expressed concerns about the travel-booking system’s viability.

According to Concur’s status website, Concur Travel in North America has had a rough few days. “We want to assure you we are using every available resource to address the disruptions and bring the services back up to the level you deserve from us,” the site indicated on Monday. It showed performance issues on Feb. 20, “partial” performance issues on Feb. 17 and a partial outage on Feb. 18, each for an hour or two.

The technical difficulties come at an important moment as SAP absorbs Concur. Executive vice president for the enterprise group Rob Cavanaugh and EVP of marketing Robson Grieve have left the company, following co-founders Mike Hilton and Raj Singh. Concur also is working through its product roadmap, shutting down some products (notably at the former TRX) and making associated layoffs.

Independent of the acquisition, Concur scheduled the end of last month to transition the last of its travel and expense clients to a new user interface. Concur expected this “modernization of the user interface” to have “minimal” client impact. It recommended clients transfer themselves to the new UI before the “final cutover to ensure the smoothest transition possible.”

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Just As Egencia’s Fusion Begins To Bear Fruit, Expedia Buys Again

Egencia three years ago said it would begin building technology globally rather than regionally, and now it’s on the verge of some real accomplishments.

Although the endgame is beginning to emerge, the 325 software engineers working on Egencia’s Fusion project need not update their résumés. Parent Expedia on Feb. 12 announced plans to buy yet another corporate travel platform in Orbitz for Business.

Fusion is about creating common applications for the U.S. Egencia and the non-U.S. Egencia. The two entities have behaved differently since Expedia in 2004 bought France’s Egencia and gave Expedia Corporate Travel a new name. Like a lot of tech projects, Fusion at times has taken a back seat to business needs.

Egencia CTO Sravana Kumar Karnati

Egencia CTO Sravana Karnati

CTO Sravana Karnati in March 2012 said Egencia would take on the tech consolidation. Three weeks later, the company announced an agreement to buy Oslo-based TMC Via Travel. This doubled the size of Egencia’s European operation and set Fusion back.

“Also, we now understand how hard it is,” Karnati said in an interview last week. “Is the progress as fast as I had hoped three years ago? It is not.”

Customers now are “incrementally” migrating to the global technology platform for certain components.

“We work in ‘agile’ fashion,” said Karnati, whose résumé includes Amazon, Disney and Oracle. “It’s not a ‘waterfall’ method with a date in mind that we execute towards and perhaps miss out on some functions.”

In the waterfall approach, engineers follow a planned set of steps leading toward a finished product. Post-development changes are difficult. Agile is a process emphasizing collaboration — sometimes with clients — on smaller modules.

As for what Egencia has accomplished, a lot is close. A new global data reporting product is “95 percent complete,” said Karnati. Egencia is piloting a mobile-inspired itinerary product for its desktop, first in Europe. A new authentication module, also now available in Europe, eases sign-on using the OAuth standard found on many websites.

In Sweden, Egencia is piloting a “next-gen” rate platform as part of Fusion’s supplier components. “Hotel is 100 percent global,” said Karnati. “We’ve made significant strides on air, and with car and rail we’re almost there.” Demoed since July, a new iPad app making use of personalization is coming within weeks, officials said.

Egencia soon will tackle another key piece, its policy engine, said Karnati. He added that “we’re not all the way there yet” on traveler profiles.

Egencia senior vice president for the Americas Mark Hollyhead

Egencia senior vice president for the Americas Mark Hollyhead

Given the difficulty, why go through this? Some companies don’t bother combining their different regional tech stacks. For Egencia, the benefits are faster innovation and a consistent customer experience.

One example is a new capability in its TripNavigator mobile app. “We were able to craft ‘click to call’ or ‘call me back,’ ” said Mark Hollyhead, Egencia senior vice president for the Americas. “If your flight is canceled, you get notification, you click to call and it sends a data package into the call center. When the agent calls you back, they know your profile and the problem you’re currently facing. That’s borne out of a mixture of the innovation we have created through the global platform.”

Two Egencia customers contacted by The Company Dime had few details on the status of Fusion, and maybe that’s by design. Hollyhead and Karnati emphasized that their aim is to all but leave the customer out of it. “We want to do this in such a way that travelers are least impacted and then to incrementally deliver ease of use,” said Karnati.

A third client was aware of the project and had seen some demonstrations. This travel buyer expected no disruption and looked forward to a more uniform approach in Egencia’s technology.

When asked about client considerations amid a tech migration, Hollyhead said, “So far, nothing has come to the fore.”

Egencia is not attempting to globally homogenize its telephone services. The company in Europe employs its own agents in call centers. In North America, it offers a mix of services including “designated, dedicated, VIP and other hybrid offerings.” Some service levels in North America incorporate outsourced agents who are certified by and work only for Egencia.

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With A Bit Of Strategy, Airlines And SMEs Can Find Value In Small Business Programs

When organizations don’t have enough air volume to earn negotiated discounts, many find small business programs are better than nothing. But they can be a bit more than that. They can, for example, fill gaps for midsize companies averse to contracts with multiple carriers. For airlines, these programs offer access to a fertile segment at costs below those of traditional discount programs. Several carriers now are tweaking their programs to better address this market.

Delta is changing its SkyBonus program to reward the biggest of its smaller-spending business customers but also disqualify the smallest. JetBlue is poised to officially launch a brand new small business portal. American’s program in the United States will merge with the pre-existing British Airways one. And United is working to enhance three SME-oriented programs.

“You can grow a small business program organically — anyone can sign up,” said United vice president of sales in the Americas John Slater. “But getting a better share of wallet is much more of an art form than we have deployed in the past.”

Airline small business programs

Image: Thinkstock

The specifics vary, but these essentially are loyalty programs for businesses. Simple as that may seem, program participants can apply strategies to optimize their earnings.

Barry Rogers of TCG Consulting said the value can be “substantial.” In one scenario, an organization has a traditional discount program with a primary carrier but doesn’t want to commit to a second — even if its volume could warrant that. Rogers said his firm has found instances where points-based small business programs are more valuable than a formal discount.

Grant Caplan of Travel Consulted has seen the same. He said some clients worry that a secondary carrier contract “could dilute the primary carrier contract too much, and they use an SME program with secondary as a safety net.”

Slater said United probably wouldn’t mind when companies take that approach — especially when located in a competitor’s hub. In those cases, securing any loyalty is only a good thing. “But I don’t know that I want that to happen everywhere,” he said. “Creating fences to keep that from happening would be difficult, but the key is having a program out there that is meaningful enough that people pay attention to it.”

Delta last month added an “elite” tier to SkyBonus that affords more benefits to participants achieving a certain threshold of accrued points. On Jan. 1, 2016, Delta will limit the program to those organizations that have at least five employees completing at least one travel segment each year. It currently has no minimums.

“We are setting expectations for smaller companies who may not find as much value in the structure of the program or its benefits,” according to an official.

In August, Delta will alter the accrual structure by sorting fare types into three levels rather than pre-existing two. That, according to the official, will “align with the introduction of new product choices including fare-based products like Basic Economy.”

JetBlue has had the CompanyBlue small business portal for a while, but its about ready to market a new small business program. Blue Inc is live and accepting enrollments, though an airline spokesperson said the program still is in beta. It appears to have some typical SME air program characteristics as well as some not-so-typical ones. Appointed administrators, for example, can establish policies and designate corporate cards for groups of travelers.

Unlike programs offered by JetBlue’s larger competitors, Blue Inc tickets earn credit only when booked through the portal. Like other programs, though, travel agents can use the program on behalf of their clients. Redemption seemingly is limited to tickets, “based on the published base fare at the time of booking, which depends on, among other things, the flight chosen and applicability of peak travel periods,” according to program information.

United Airlines also is looking to make a bigger splash in the SME segment. “Because the people you would sell to in the SME market wear a lot of hats and aren’t dedicated to travel, you have to keep the program simple and easy. Sometimes that has driven a one-size fits all approach,” said Karen Catlin, the airline’s managing director of worldwide sales resources. “We’re finding that one size doesn’t fit all.”

The airline offers PerksPlus, the biggest of its SME-oriented programs. It’s similar to Delta’s SkyBonus and American’s Business Extra.

Though United’s PassPlus prepaid program has large clients participating, it’s mostly SMEs. Catlin said United is enhancing PerksPlus and PassPlus this year.

A third program — which Catlin said “straddles the line” between the SME and large markets — got an update in 2014. The Corporate Partnership program first provided a small discount for all fare types. Now it’s a “hybrid,” Catlin explained. Small discounts apply only on higher-yielding fares combined with opportunities to earn points redeemable for perks.

At American Airlines, Business Extra has grown in recent years to include point accrual on codeshare flights operated by partner carriers. It also incorporated US Airways operations following that carrier’s merger with American. When asked about other options for SMEs, AA officials, like United’s, noted the carrier’s prepaid AirPass program.

On May 20, British Airways in the United States will shut down the On Business program in favor of AA’s program. Business Extra participants then will have the ability to also redeem (as well as accrue) points for flights and perks across AA, British Airways and Spain’s Iberia.

Creativity Pays

Points redemption can be for more travel, upgrades, club memberships, individual loyalty program status, other soft-dollar benefits or perhaps charitable donations. With limited inventory available for reward tickets, though, a little creativity goes a long way. A relatively cheap ticket may not be an optimal use. An upgrade or airport club membership may be.

Caplan, who also serves as an outsourced travel manager for some clients, said he is more likely to redeem points for less frequent travelers and for travel planned well in advance (internal company training, for example). More frequent travelers, he said, may fret about using reward tickets that won’t contribute to their elite loyalty program status.

Duty of care is another consideration. While several air programs count bookings through agencies for points accrual, they typically require online redemption. That means some organizations could lose sight of their travelers’ whereabouts. As such, Caplan said some companies ask travelers to send those itineraries to the travel agency. That also helps companies keep tabs on the value they realize from the SME program.

Small business programs come with lengthy terms and conditions, but clients have no real commitments. In most cases, airlines base qualification only on a minimum number of travelers and/or annual spending. A pre-existing traditional discount program with that airline also makes a company ineligible. Participants usually earn points based on airfares purchased, but not ancillary products and services. Some programs reward fewer points for lower class-of-service bookings and/or travel to or from hubs.

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U.S. Market Challenges KDS

A leading provider to European companies and multinationals, 20-year-old travel and expense automator KDS is a new entrant in the United States. Some are pulling for it as an alternative to Concur. It has opportunity, but KDS also faces a lot of challenges.

KDS CEO Dean Forbes in a Feb. 5 interview acknowledged that the Neo door-to-door travel booking product so far has no U.S. corporate clients. “I’m not concerned about the absence of customers at this point because it was never in the plan to have them at this point,” he said.

KDS and its partners have actively marketed Neo since December, and Forbes predicted 50 clients by the end of next month. KDS works with Carlson Wagonlit Travel, Executive Travel, Travel and Transport and TravelSolutions by Campbell. The company introduced Neo to the U.S. market in fall 2013. A year ago it hired former StarCite exec Mike Concannon to run North America operations.

One handcuff on Concannon, it would seem, is the conscious decision not to sell directly to corporate accounts, even when they invite KDS to bid on their business. Many corporations work through their TMCs for online booking. But some prefer to own the relationship for reasons including more responsive servicing and help.

KDS CEO Dean Forbes

KDS CEO Dean Forbes

“You need relationships with TMCs to do the fulfillment,” noted Forbes. “We have seen some competitors much more aggressively pursuing direct relationships and perhaps not having such great relationships with TMCs as a result. Our approach is the reverse.” He said TMC partner contracts do not prohibit KDS from pursuing corporate business directly, and he didn’t rule out exceptions to the TMC-only approach. Forbes said KDS soon would have twice as many TMC partners.

Clare Murphy is a travel and expense consultant with Bouda, outside London. She said going primarily after TMC partnerships is a “sensible strategy. KDS absolutely needs the TMC on board. As the client, you don’t want to have to try to put them together and be the guinea pig.”

“This whole space is really tough,” said GoldSpring Consulting’s Will Tate. “Margins are slim. You need volume. To get that you need to go with TMCs.”

TMC partnerships require training, an expected hurdle. The Neo door-to-door booking solution also required some Americanization. This included access to Amtrak and Southwest, and some adjustments related to seat maps and unused ticket management. KDS previously partnered with U.S.-based nuTravel to go after joint business. It still relies on nuTravel for access to content from Southwest Airlines, with which it does not have its own agreement. KDS reaches Amtrak through SilverRail.

Doing The Math

Adding to the task of familiarization, KDS is bringing a new pricing model to the U.S. market. It plans to charge TMCs based on the number of “active” Neo users (technically, profiles) rather than per transaction. Common for other types of enterprise software, this model is unusual in online corporate travel booking. Competitors almost universally charge per transaction. If the client is not contracting directly with the online booking firm, TMC partners typically bundle the fee with their other transaction fees.

“If the vendor is making money each time the customer is spending money in the program, that just always seemed at odds to me,” Forbes explained. “We charge per profile and that’s working really well for us because customers have a fixed cost for use of the application across the year, which they have told us they like. If they find themselves in high-traveling seasons, their cost doesn’t increase because of that. If they have to complete their expense claims more frequently than before, their costs don’t increase because of that. I wouldn’t say it has made the application more or less expensive. It kind of nets out on an annual basis.

“We have worked with TMCs to help them get their head around that model,” Forbes added. “After we’re able to explain how it works, we haven’t had any pushback at the contracting phase.”

Murphy said TMC execs have told her “it works.” KDS does “some pretty comprehensive reporting to prove what’s active,” she said.

Travel and Transport CIO Mike Kubasik said the model can be “intriguing” for corporations that have a lot of high-volume travelers. “There are pros and cons,” he said. “If a company grows and each traveler is doing more trips, this model may not benefit KDS. Conversely, if a company slows down, KDS is getting a guaranteed revenue stream.”

Executive Travel chairman and CEO Steve Glenn said, “I think some would argue it’s a more sustainable model.”

Forbes said TMCs in most cases intend to charge customers the per-user fee, which requires a little education. But TMC partners are free to pass the cost to the customer how ever they choose. That could mean it’s reformulated into transaction fees. “Or they may not charge it at all because they’re offering other value,” he suggested.

Executive Travel offers a no-transaction-fee model for clients that push lodging through the TMC or its designated technology. TMCs make pretty good money on hotel commissions, and Glenn likes the way Neo prompts users to add lodging to their airline bookings.

According to Forbes, Neo users attach hotel reservations to 85 percent of overnight air bookings, versus no more than one-third in the legacy KDS booking tool. He credits automation. When Neo identifies that the flight is heading where the traveler does not live, a “logical” hotel according to policy and location drops into its timeline. A single-digit percentage of users will take it out of the timeline, Forbes said.

After four or five months of testing, though, Glenn thinks the product has to work a bit differently in the United States. “It works great but we also need some flexibility with hotels,” he said. “It brings up the preferred property, which is great unless I’m going to a different one for a convention. So it needs an easy way to opt out of the preferred. KDS has been responsive to building it that way.”

Glenn’s impression is that European travelers are more likely to accept the recommended option. Executive Travel has yet to introduce the product to clients, while Travel and Transport has talked to some customers about the pricing model. CWT and TravelSolutions by Campbell did not respond to requests for comment.

KDS corporate customers elsewhere on the planet include Coca-Cola, Deloitte, HSBC, KPMG, PwC and Shell, according to its website.

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United Seeks ‘Four-Star’ Service With Employee Behavior Standards

In need of an image makeover, United Airlines opened the year by holding employees accountable for lagging customer service. New baseline standards developed last year measure frontline workers on courtesy, graciousness and consistency.

United had been working with Forbes Travel Guide on standards for each of the carrier’s work groups. The idea is to get impartial input from outside the organization.

Jayne Griswold

United Airlines managing director of service and hospitality Jayne Griswold

The airline last spring hired Jayne Griswold from Forbes to serve as managing director of service and hospitality, reporting to customer experience VP Jimmy Samartzis. At Forbes, Griswold helped create criteria and measurement standards for hotels, restaurants and spas.

She impressed some travel management company executives at a United meeting last month. They said the airline is taking a step in the right direction.

The new standards “are ostensibly the steps of service that any customer-facing employee will use when engaging with customers,” Griswold explained. Behavior and a four-star service mentality are key.

The airline is employing an external firm to conduct “incognito evaluations” of various behaviors. Examples include whether a given staffer “closes conversations with a polite and appropriate remark” or “demonstrates a genuine sense of interest and concern for the customer.”

Leaders of the working groups and CEO Jeff Smisek review monthly reports. When performance isn’t up to snuff, Griswold’s team steps in with one-on-one training, role playing and briefings for employees and supervisors. She said United embedded the standards in employees’ quarterly and annual training.

“It’s important to note that we are not there yet,” according to Griswold. “We are early on in this initiative, but our teams are striving towards achieving consistency against these standards.”

New automation also is part of the plan. That includes proactive rebooking and bag tracking notifications during irregular operations, and better information on boarding times. The carrier’s new website also is about to go into beta.

“The more automated we get, the more critical that any interactions we do have become, because they are more and more rare,” Griswold said. “That four-star moniker is a nebulous term. It is something that you would define in a number of ways – how gracious are we, how courteous and friendly are we. But also how convenient have we made it for our customers to do business with us.”

Though the airline’s flight attendants, for example, don’t yet have a single contract covering pre-existing United and Continental workers, Griswold said each working group uses a single set of customer service standards. Union partners, she added, have been “very supportive of this effort.” Unions representing United’s flight attendants and airport passenger service personnel did not respond to requests for information.

On Track To Recovery?

United botched some key parts of the Continental merger that began in October 2010 and suffered through a hellish summer in 2012. In the eyes of many customers, it hasn’t fully recovered. Travel managers and agency executives identified inconsistency as the airline’s most glaring customer service challenge.

“It was quite bad after the merger,” said Michelle Fontaine, global travel manager at Bay Area electronics manufacturing services firm Sanmina. “Even our execs and our premier flyers got the attitude with airport personnel. It didn’t make a difference who they were. It’s all in the delivery. We think taking [the new] approach could be really helpful.”

Monty Price is a skeptic. The Denver-based corporate travel and risk manager for Danish wind energy company Vestas said it’s no sure thing that “dissatisfied” workers will respond the way management intends.

United is the opposite of a start-up airline and some long-tenured employees who experienced a bankruptcy and the merger come with a lot of baggage. It may be a tall order, but there is precedent in the airline industry for turning around customer service. British Airways did it in the 1980s. Delta did it more recently, and is collecting accolades.

Though it can’t start “fresh” by hiring new employees, United is on “the right track,” according to airline and aviation industry analyst Robert Mann. “This is not rocket science, but it has to be a continuous improvement approach.”

Corporate culture expert Ann Rhoades shared similar sentiments. “Even if [airline employees] have had longer tenure, if they feel good about the way they are being treated, the response is different,” she said. “And I know sometimes we have to rebuild trust.”

Rhoades is founder of PeopleInk. Her airline industry experience has included executive positions at Southwest Airlines and JetBlue (where she served as the founding executive vice president of people and currently sits on the board of directors). “Setting standards so everyone knows what behavior is expected is critically important,” she said.

Some of United’s agency and corporate customers said the airline’s new effort should only help. “I would bet on the strategy of implementing the methodology [Jayne Griswold] brings to the table,” said Gant Travel president Patrick Linnihan, who acknowledged that United is the agency’s top carrier. “The measurement and her coaching follow-up is what sold me.”

Others said they’ve already seen improvement. Staff at S.R. Travel in San Francisco, a United hub, have “noticed a marked change in attitude” when calling the carrier’s executive service desk, according to Jessica Lewin, the agency’s CEO. Lewin also praised United for being more proactive during irregular operations. “We are now sent advance waivers to rebook passengers during inclement weather rather than having to call and wait on hold.”

Mann said that the key to differentiating airline performance — and cutting costs — is handling disruptions. Doing so, and establishing “structural and operational integrity,” may help air consumers “react better to the prices being charged, and place the airline industry higher in product and service quality surveys — not with cable and cellular services firms.”

Rhoades noted that customer service in all industries has become more of a focus now that consumers instantaneously can share negative experiences with the world. She thinks that’s a good thing. “Frontline employees are so critical,” she said. “Every single interaction becomes representative of the brand.”

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In North America Push, Amadeus E-Travel Signs Southwest

Amadeus confirmed plans to boost its e-Travel Management corporate booking tool in North America. It’s starting with a “multi-year” deal struck this month to access Southwest Airlines inventory and fares “in the coming months.” The carrier also would be available worldwide in e-Travel and the Amadeus i:FAO cytric booking tool and mobile app popular in Germany.

The deal is not surprising given Southwest’s decision to move to the Amadeus reservations system. Amadeus gains by offering an airline that has been relatively hard to come by for corporate booking tools. Southwest exposes its large network to more U.S. and, more importantly, non-U.S. corporate travelers.

According to Amadeus, the deal represents “advancement in North America.” It complements other “high-priority efforts around corporate booking tool innovation which will begin rolling out later this year.”

Amadeus Southwest

Image: Thinkstock

The Company Dime last week reported that Amadeus plans to reintroduce e-Travel to North America. The move comes as KDS is ramping up its U.S. presence and SAP absorbs Concur.

Southwest agreed to provide e-Travel and cytric live availability, ticketing functionality and loyalty program booking. The companies also plan to explore enhanced connectivity stemming from the airline’s position as an Amadeus Altéa reservations system user.

Asked whether the deal offers all Southwest fares and inventory to the Amadeus channels, a Southwest official appeared to say no. Amadeus’ corporate booking tools “will have access to all of the fares that Southwest makes available to our corporate customers,” according to an emailed statement.

Southwest for most of its early existence wasn’t available at all in corporate travel channels. Later it participated at a lower-priced level in the Sabre GDS. A similar change in economics highlighted Southwest’s later participation with Travelport. TMCs receive lower incentives from the GDSs on Southwest bookings. Among self-booking tools, Southwest has “active” participation in Concur, Deem, Egencia, GetThere, nuTravel and Orbitz for Business. The airline’s Swabiz business booking product remains the most successful airline direct distribution effort in U.S. corporate travel.

Southwest’s press representative declined to comment on whether Southwest is charging any sort of fee for access through e-Travel or cytric.

Amadeus claims more than 6,000 worldwide corporate clients for e-Travel Management and more than 2,600 for cytric.

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Saving Money With TripBam And Yapta Means Considering How Much To Annoy Travelers, Hoteliers

Yapta this month rolled out its RoomIQ hotel rate assurance product, claiming that in beta it saved clients $109 per stay. Like TripBam’s, the service beats rates for existing reservations and alerts travelers or their agents to the rebooking opportunity. Clients can calculate agency processing fees into rate comparisons. Both firms charge transaction fees, while TripBam offers the option of charging a percentage of accepted savings.

Meanwhile, WorldMate last year added Price Alerts and Counter Offers to its mobile itinerary and hotel booking app. The service notifies users of cheaper rates based on their itineraries. They can touch a couple times to cancel the original reservation and book a new one through WorldMate’s Expedia affiliation. WorldMate vice president Ian Berman said he could envision a managed version incorporating policies and preferred suppliers in CWT’s To Go app.

James Filsinger

Yapta CEO James Filsinger

The CEOs of TripBam and Yapta said they’ve never heard “no” from a prospective corporate client. Why wouldn’t you want to plug and play some hotel savings?

Let’s just say there’s no such thing as a no-brainer. Here are some considerations.

Will travelers accept a new hotel, or only a new rate at the same hotel?

The surest thing in rate assurance is a lower price where the traveler already booked. He or she may need to take no action. Widespread adoption could prompt hotels to react (see next question), but otherwise why wouldn’t you? At the moment, Yapta searches for better rates only at the already-booked hotel. TripBam does that but can also shop in clusters defined by the client. The savings opportunity is greater, but shopping other hotels has pitfalls.

“They may have a good reason for having picked the hotel they did. Maybe they’re staying with clients. Hotel is very emotional and very personal to people,” said Hitachi Data Systems global travel and meetings director Denise Adleman. “Overall I do support tools and processes to help manage preferred hotel usage. It’s just painful at times.”

“One of our clients asked, ‘How do we know our travelers haven’t already reviewed these properties and rejected them?’ ” said Tower Travel Management president John Smith. “We don’t know that. But it provides additional information we can report to them for audit or policy compliance purposes.”

The savings are much greater if the traveler will switch hotels. According to TripBam’s 2014 data, shopping within a cluster of preferred and non-preferred hotels generates $120 in average savings per stay. When it’s the same hotel and room type, the average is $40.

TripBam claims users accept lower rates for the same hotel and room type every time. When clients use a cluster of both preferred and non-preferred properties, travelers accept one in five offers. With those wider search parameters, TripBam finds a cheaper rate on 50 percent of bookings; within only the same hotel and room type, the figure drops to 5 percent.

Anthem Inc. uses TripBam to look for better rates only at the already-booked hotel, said director of travel and events Cindy Heston. Bookings by executives are not sent to TripBam. Nor are bookings at preferred properties in top markets, as these might include free WiFi, parking, breakfast or commissions.

If you do use TripBam to shop beyond the same hotel, as Sapient does, “You have think about how you want it to be programmed and how you want it to present offers,” said the company’s director of global travel and client experience Michelle DeCosta. “Travelers need to understand they’re going to get these offers. Most people think it’s spam, even though we have communicated about it.”

It certainly seems too good to be true. Sapient is saving $174 per booking on average, DeCosta said.

Steve Reynolds

TripBam CEO Steve Reynolds

“We see a lot of feedback from travelers,” said TripBam CEO Steve Reynolds. “You know, ‘How dare you recommend a different hotel!?’ The primary drivers of that are convenience, perception issues, loyalty … but there’s never a good excuse. Some of our clients almost mandate that the traveler takes the savings; for others, it’s just a suggestion.”

“There is no doubt that hotel spend is the largest opportunity for savings in a managed travel program; the question is whether there is a corporate appetite for additional steps in the booking process,” according to Partnership Travel Consulting’s Andrew Menkes. “I would tend to believe that at the C-level if the numbers validate the savings potential, then the traveler will be made to understand that the hotel that they booked may not be where they are ultimately sleeping. It’s a far easier sell to leave the property the same, and improve on the rate and/or the amenities.”

Is there an impact on relationships with preferred hotels?

It’s not hard to imagine hoteliers asking clients what’s going on if suddenly they’re getting less revenue but the same number of room nights. Still, it seems like a risk worth taking.

Purveyors say their tools can instead support preferred relationships. “Companies with preferred hotels can chose to only include these hotels in clusters and only apply clusters if the traveler is booked at a non-preferred hotel,” said Reynolds. “The tool can be used to improve compliance as much as cost savings. We have one client that has improved preferred property usage by more than 20 percent.”

Yapta plans to offer a cluster concept, in part to help clients move business from non-preferred to preferred hotels.

Might the hotels try to stop this yield erosion?

Chartres Lodging Group EVP Maxine Taylor called these models “horrid” for hoteliers.

Some lodging firms have been fiddling with their cancellation rules. These changes haven’t hurt Yapta and TripBam but a cancellation fee would. Reynolds thinks that would alienate the corporate market and that hotels instead will “get better in yield management.”

WorldMate’s Berman said the company hasn’t heard grief from hoteliers about the rebooking approach, but “once it starts proliferating they may knock on our door a little bit. It could redefine winners and losers.” WorldMate’s parent company is Carlson Companies, which owns Radisson and several other hotel brands.

Can travel departments do this themselves?

The concept of using booking reports or an auditing firm to review hotel bookings up to the day before the trip isn’t new.

Some travel pros do their own post-booking shopping, including the on-site agents at Meritor. “We track ‘surplus savings’ and share the reward by paying a percentage of savings to the agency we contract with,” said global travel manager Jack Reynaert. “We show value in service and savings, reducing cost and reinforcing why it is mandatory to secure travel arrangements via our department. We never are challenged with ‘I found it cheaper online.’ ”

SAS employs its own agents in an ARC-accredited Corporate Travel Department. “We are not constantly checking all reservations repeatedly,” according to travel operations director Richard Clowes. “I understand some people have annoyed the GDSs with that tactic. We allow for the agent to ‘waitlist’ a hotel and/or keep ‘price checking’ a hotel. Then we use GDSX to run scheduled processes to check the latest. It’s been very useful. In our case presently the agent makes a conscious decision to turn it on. As long as the vendors do these pricing fluctuations then there will be a need for some automation to handle their ‘games.’ We remain pawns in the chess game and we just look to find creative solutions to stay competitive.”

Reynolds questioned the capability of human agents to do what his automation does: “There’s not enough labor in the world to do manually what we do. Asking an agent to shop every day for every booking across a cluster of only preferred properties and chains filtering out all non-flexible rates then sending an email to the traveler (if it’s not like-for-like) for approval would take a very large army.”

Yapta CEO James Filsinger agreed that it can’t be done effectively.

Are the compared rates comparable?

A $120 rate that includes breakfast and parking may be better than a $100 rate without them.

TripBam will “review the hotel segment, rate description, room description, ‘other service information’ lines, rate codes, etc., to determine what is included,” said Reynolds. “Since we’re not using just the GDS for shopping, the information is lot cleaner for us so we can make accurate rate offers.” TripBam uses Pegasus Solutions to shop.

According to Filsinger, Yapta’s RoomIQ “shows our customers side-by-side rate comparisons so they can visually see the rate-level differences between the current booking and any savings opportunity. This allows customers to see potential amenity changes — gains or losses — and to make more informed decisions about changing rates.”

Is there real savings in hotel rate assurance?

Yes. But travel managers may need to take into account that their TMCs will charge something to support such programs, whether a transaction fee or share of the savings. Reynolds said it takes an average of three to five minutes for an agent to update a booking record with a new hotel. He has suggested TMCs consider using an offshore rate desk to keep a lid on costs.

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Years Of Consolidation Gave Concur Market Power, But No Monopoly

You may have read that as SAP swallows Concur, business travel innovation goes down with it. This is absurd. Concur is much more an expense management software company than a business travel company. Is it innovative? Yes, but that’s not how it got its travel cred. Concur has no monopoly on ingenuity and now, perhaps at its zenith, competitors smell blood.

As much as anything, Concur got to where it is because of a keen sense for acquiring development by others. In the years leading up to SAP’s acquisition, Concur achieved significant market power in self-booking and expense management. The products were solid, barring a few outages. The marketing was strong. Benefits of using both products from Concur were real, if not as important as advertised. Implementation support and customer service were weak.

Image: Thinkstock

Slack service is a typical consequence of consolidation for customers, as are arrogance, higher prices and rigidity on terms.

Competition can be another consequence — one that seems now to be getting a boost for the first time in years.

It’s an interesting time to be in business travel technology.

Chrome River Rising

Concur all but invented automated expense management two decades ago. Later it made a bold but winning move from software licensing to what is today called cloud computing. Acquisitions helped Concur reach the top of the expense management market. They included Captura (2002), Gelco (2007), Etap-On-Line (2009) and GlobalExpense (2011). IBM left the market as a competitor in 2014 through an alliance with Concur. And now SAP’s own travel and expense management solutions will no longer compete with Concur’s. Concur eliminated at least six key rivals in 12 years.

SAP with Concur leads the automated expense management market by a wide margin. Of 106 U.S.-based travel managers The Company Dime polled since last summer, 58 percent said their companies use Concur for expense management and 12 percent indicated SAP. Oracle was second at 17 percent and IBM’s GERS product had 5 percent.

“There is no number two to Concur,” said SAP CEO Bill McDermott on the occasion of the acquisition. “They essentially own this market.”

It has been hard to name the second-biggest expense product. According to Gartner, there are more than 100 software vendors in expense management globally. Here’s a bunch. Oracle iExpense is for Oracle’s ERP customers. Upstart cloud-based enterprise software provider Workday is offering an expense module for its HR and financial clients. It comes with a connector to import travel booking data. U.S. firms offering standalone expense systems include Apptricity, Certify, Databasics, ExpenseAnywhere, Expensify, ExpenseWire, Insperity and Interplx. Most target the small and midsize markets. Banks and payment companies offer products. Plenty of corporations still use their own automated or manual processes.

But Chrome River is on quite a run. In the latter part of last year, the Los Angeles-based company signed several large clients including at least three refugees from IBM: Anthem, Goodman Networks and Harman. Concur and SAP also have collected clients from IBM.

“It’s still too early to tell what SAP-Concur will mean to the market overall,” said Chrome River Technologies co-founder and COO Dave Terry. “You do strongly sense this gaping white space opening up in the enterprise market.”

Management Alternatives vice president Will Tate attributed Chrome River’s success to flexibility. “The backlash you get against larger players is inflexibility,” he said. “They get a position of strength so when customers have issues they sometimes find it difficult to navigate through.”

Chrome River is “probably the most important competition we’ve had in a long time in business travel technology,” said Travel Consulted’s Grant Caplan.

Amadeus Readies Relaunch In North America For E-Travel

After Concur bought Outtask’s Cliqbook booking tool in 2006, it began selling corporate customers on the benefits of tying together travel and expense systems. Integrating them simplifies the initial contracting for and acquisition of the tools and can save keystrokes for the traveler. If travel management pros are into this sort of thing, they can also investigate the traveler’s behavior through the lifecycle of the transaction. Sales of Concur’s integrated travel and expense took off. This meant nearly every travel management company had to support it. It helped that Cliqbook wasn’t tied to any one GDS.

Today, some corporate travel buyers and management companies are unhappy with Concur’s clout. The alternatives are a mix of staid and a bit too interesting. GetThere is working on some minor things, but has been relatively quiet. Customers like its user interface, but Deem is borderline manic. NuTravel is for midsize companies. Orbitz For Business sold IBM on using its booking tool globally alongside a different travel management company. It could compete among standalone booking tools, though now its parent company evidently is for sale. Another relatively new player adding competition to the U.S. market is KDS, although its well-received Neo booking tool still has few clients.

Once a subsidiary of Oracle’s, later a partner of Concur’s and still later an ally of SAP’s, Amadeus e-Travel Management has been around. Partly owing to the small Amadeus GDS market share in the United States, AETM is more popular outside the nation of its birth than within it. This year, sources said Amadeus will reinvest in the United States for e-Travel. The company declined to offer details.

Although they serve important functions, some analysts question the future for standalone travel booking and expense management software providers. Both are tough businesses in which to make money.

“Are the bells and whistles worth it in travel and expense?” asked Christa Degnan Manning, senior vice president for research at HfS. “Will anyone pay for it? What we hear now is big enterprises want to buy the outcome — the happy, safe traveler. They’re thinking about how to focus employees on real work instead of interacting with dozens of best-of-breed applications. Productivity is stagnating in most of the developed world, and it may be because so much self service is being pushed on workers.” Degnan Manning suggested that could lead to more success for broader platforms like Oracle, SAP, Salesforce or Workday.

With Correx Sunsetting, TMCs Seek Options

Already offering leading travel and expense tools, Concur in recent years widened its vision and went after the business traveler, duty of care and travel agencies. It bought TripIt in 2011. Then in 2013, it bought risk management-oriented SMS messaging service ConTgo. When Concur that same year bought GDSX and TRX, it wiped out much of the competition for travel agency automation services in the so-called mid-office.

Mid-office or quality control tools offer critical functionality for travel management companies. They automate tedious tasks like searching for low fares, securing seats and ticketing reservations. GDSs provide some such functions. The likes of Yapta and tripBam offer discrete fare- and rate-checking apps.

GDSX’s Compleat product had reached the top of the market during the previous decade at the expense of TRX’s Correx and Cornerstone Information Systems’ iQCX. Sources said Concur now is phasing out the Correx product and maintaining if not raising pricing for GDSX.

One potential beneficiary is Cornerstone. “We are seeing a lot of demand from new customers needing to explore alternative solutions,” CEO Mat Orrego said. “Mid-office transitions can be time consuming, but it’s also a great time to standardize and improve your fulfillment processes.”

These tools run on thousands of so-called routines written by programmers. They need to be rewritten for anyone changing platforms.

Lee Brubaker is president of a smaller competitor, Colorado-based Agency Technology LLC. He said the company has “seen an uptick in the number of agencies that are looking as a result of the Concur acquisitions, especially agencies on Correx.”

There’s a case to be made that larger travel management companies should invest in their own scripting and robotics. Carlson Wagonlit Travel owns its technology. “We continue to invest in and develop the mid-office,” said CWT senior vice president for global marketing Nick Vournakis in November. “It’s an important foundational element to enable the whole global product suite and help drive data standardization.”

American Express Global Business Travel is the largest client of TRX Correx. GBT officials declined to comment about their plans, but said customers need not be concerned about any disruption in service. GBT’s long-term tech rebuild now is underway.

HRG is another big customer of Correx, for its operations in Europe. A company spokesperson offered no comment.

Additional info: Concur declined to comment on Chrome River, the sunsetting of Correx or GDSX pricing. Sources included more than two dozen industry professionals, such as consultants, travel buyers, travel management companies and tech providers.
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Travel Management Pros Sort Of Like The Social Enterprise

Social media can help with travel management, but so far it’s not for everybody.

According to Carlson Wagonlit Travel research released last week, using enterprise social networking to promote travel program compliance remains an “untapped” opportunity. Slightly more than one-third of 1,113 travel, meetings and events professionals surveyed last fall indicated that further promoting travel policy through social media was a high or very high priority.

social mediaLess than one in four of 87 U.S. corporate travel buyers The Company Dime polled in late summer 2014 indicated they participate in an internal social media program.

Five years ago, internal social networking was a hot new method for communicating travel program goals to travelers. Many described the social enterprise as a way to replace dated static surveys and emails. But whether social networks can be more effective than those tools depends a lot on company culture and how the employees prefer to be informed. This differs dramatically across sectors and companies.

In some cases, travel management professionals are turning to text messaging or mobile notifications for more dynamic and real-time policy communications. Goodman Networks tried using Microsoft’s Yammer for travel management, but ended up dropping it due to lack of use. Now, corporate travel director Karen Hatch is considering Concur’s risk management applications to manage texting because the company’s employees pay more attention to their mobile devices than desktops.

Social networking is more than email and to use it properly requires a lot more effort.

“The biggest problem is adoption,” said Riot Games global travel wizard Sean Parham. “Getting employees to join is a challenge. Getting them to interact is a challenge.”

Generating a return on investment is a challenge, too. Cornerstone Information Systems vice president Rock Blanco in 2013 pointed to several measurable areas, including “fan” growth, “influencer” presence, interactions and engagement. He later put together a package of related key performance indicators. Now, though, Blanco said he’s not sure “if anyone is really using them yet, probably because most still don’t get the whole social business impact just yet.”

Gartner in 2010 predicted that 20 percent of business users would replace email with social networking as their primary interpersonal communications vehicle. Last year, a Gartner analyst said most companies are struggling with enterprise social networks. Gartner isn’t the only researcher to downgrade its expectations for enterprise social networking.

Still, there are big proponents.

IBM global travel sourcing agency and online lead Shari Quackenbush indicated last month that “social business is extremely important” at the company. In its last iteration, IBM’s internal social network allowed users to see each other’s trip plans and even comment on them. They shared destination knowledge and property reviews. The site displayed the popularity of different preferred properties and most common choices for ground transportation by city. IBM plans to reinstall some social features that had to be removed amid its global conversion to the Orbitz for Business booking tool.

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