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It’s bad enough that hotel sourcing is so frustrating. What makes it worse is when some of the effort is wasted. Understanding why a corporate rate program isn’t as effective as it could be and figuring out what to do about it isn’t seasonal. It’s never-ending.
“We actually buy travel twice,” said Susan Savy, a global travel procurement manager at HP, speaking at last month’s Global Business Travel Association convention. “We buy it through the procurement process, while we’re negotiating through that long RFP season, and then at the point of sale at the time of booking. I need to achieve the same rate as I negotiated and that’s my challenge. And I believe that’s where I can find incremental savings. I need the negotiations to be worthwhile.”
Surrounding the problem is a cottage industry of support services. Its newest member is the Business Travel Program Index, a startup from serial entrepreneur Fernando Avila dedicated to scoring negotiated rate performance. Like some existing providers, the service also seeks to help clients identify what’s not working. Other new tools also are emerging.
Some corporate hotel program deficiencies have been around for a while. Better automation seems to be reducing improper or tardy rate loading into global distribution systems, but it still happens. Squatter rates also can be a headache. Ensuring agreed-upon amenities are included is another.
A familiar challenge, and probably the biggest, is travelers not booking at preferred properties (maybe for logical reasons).
Travel program compliance aside, much depends on availability. According to STR, July in the U.S. market had the “highest single occupancy of any month ever recorded.” The top 25 markets “were basically full.” Strong results are expected to continue.
At the same time, hotels are improving revenue management systems. They help inform property managers about when they can close out room rate categories and sell at higher prices. That sometimes leaves buyers without access to the negotiated rates they’ve worked hard to secure.
“Tactics such as minimum-stay restrictions and room category management are Revenue Management 101,” said industry vet Tom Botts.
Airlines have been doing it for years. Just look at all the different airfare types they sell. Hotels want to emulate that strategy.
Caroline Strachan, vice president of consulting at American Express Global Business Travel, explained the approach: “How can we take our equivalent of an airline seat — a hotel room with a bed in it — and differentiate as many categories as possible? How can we take the same product but get more revenue out of it?”
Fare Audit president and CEO Marty Morrison runs audits every day. He said about 10 percent of client bookings at preferred properties aren’t at negotiated rates because hotels don’t make them available for whatever reason.
Advito senior director and practice area leader Marwan Batrouni said his firm sees that number range from 7 percent to 20 percent. It varies widely by chain and region.
Hotels during peak periods reduce the amount of rooms available at corporate rates “even when the client is guaranteed the corporate rate on specific room types,” Advito wrote in its 2015 industry forecast.
Such guarantees are included in contracts as last room availability. It is one way corporate buyers have sought to ensure their travelers get rooms at the right rates. Many find it very important. Some insist on it.
But according to Advito, “hotels are finding ways around this, by manipulating their room type inventory based on demand. For example, standard room inventory may change by day of week.”
LRA is important to General Electric global commodity leader for travel and fleet Steve Sitto, but to a point. “Without the right analytics and transparency from your hotel partner, you could be contracting with hotels that have 1,000 rooms but only 5 percent of them in the standard category,” Sitto said. “You are pretty much out of luck.”
Cornell University School of Hotel Administration professor Dr. William Carroll agreed that knowing room allocation can make all the difference. “For a peak period, are those rooms already forecast to be committed or are they really committed?” he asked. “There’s a difference. That definition of what you really mean by LRA gets a little sketchy.”
TripBam president Steve Reynolds (who makes a living by finding cheaper hotel rates for corporate travel programs), took it step further, calling LRA “a myth.”
That’s not to say most hotels violate corporate agreements. “But there is a pretty decent percentage that don’t play by the rules,” Reynolds said. “Trying to determine who is and is not is extremely difficult.”
He pointed to one challenge that constantly irritates corporate buyers: property-level control that overrules chainwide motivations. “A property manager can decide that my new best available rate is $289 and I’m not offering any rates below that because I am at 80 percent occupancy,” Reynolds explained.
Botts added that “many revenue managers don’t understand that argument, we scratch their backs now and they’ll scratch ours later. That’s not in some revenue managers’ psyche.”
When Marriott International submits proposed pricing to a corporate buyer, “you can see the number of rooms that are available at your rate,” said global account director Gail Frazer during a GBTA conference session. “You get your percentage to total inventory.”
Clients cannot know with any precision how demand will impact availability into the future. They cannot know how aggressively properties will manage their inventory.
That’s why some companies may consider negotiating rates for more room types.
It’s also why ongoing program management is crucial.
Enter travel management companies, third-party hotel rate auditors and others that assess corporate hotel rate programs. They’ll check to see if negotiated rates were properly loaded, scan for squatters and check into availability.
Lanyon offers tools for both buyers and suppliers. “They keep both sides of the fence honest,” said senior product director Bruce Hyatt.
He described the firm’s latest product feature, Reverse Audit, as a “squatters report.” Lanyon built it based on demand from a few clients and plans to launch it this year.
Several buyers said they find value in Lanyon’s Rate Availability report to at least get a glimpse down the road. That includes Universal Music Group vice president of global travel Pamela Witherspoon.
“It gives me an opportunity to take my top cities, my top hotels and take a look at if my negotiated rate is available out into the future,” she said during the GBTA conference panel. “It’s pretty interesting, but I have to do something with it. That means I need to communicate with my hoteliers. But I’d love to see the technology advance so we’re not doing so much manual work at the end.”
Amex uses that tool, too. “You can do a constant forward-looking rate audit,” Strachan said. “We can look ahead to see if their $100 LRA rooms are available on a Tuesday night. If they are consistently blocking out that rate on a Tuesday night, you have the opportunity to go back to the hotel, or take them out of your program.”
Sabre’s Hotel RFP unit offers some similar auditing services, as well as rate loading and other related tools. Sabre general manager of business travel services Cassandra Rollins described a “PNR level audit” that checks every booking in agency queues before a traveler’s stay. It determines if the negotiated rate was used, and if not, automatically notifies the hotel and the agency queue. That could lead to a rebooking at the proper rate or at a different property.
“If you do it in the first week or month of the rate season you are going to get a huge bang for the buck” by identifying where corporate rates aren’t being offered, Rollins said. It can also be positioned as “a continuous process.”
She added that Sabre is looking to enhance tools by aggregating more data, creating better benchmarks and leveraging some of Sabre’s other systems.
“The common problem I’ve seen with travel buyers, even when they invest in the technology intending to monitor these things and do it themselves, is they’re really overwhelmed with the volume of the data,” Rollins added. “They’re really looking for expertise and help, either from their agency, from another firm or companies like ours.”
At TripBam, a new “real-time rate enforcement” feature is meant to ensure clients are getting the rates they’ve negotiated. To do so, the firm first loads client contract rates into its database. As the service checks client bookings, it will determine if they are at rates higher than contract rates. When the are, TripBam alerts the client’s TMC so it can take action with the hotel.
Avila’s Business Travel Program Index uses TMC- and self-booked hotel transaction data to compute a daily average based on amounts paid above negotiated rates, plus lost savings. The idea is to score rate utilization and boil down performance into digestible updates.
It highlights “movers” — the specific elements of rate usage and policy compliance that push the index up or down.
“It’s not a blackout, they gave you the right room type,” Avila played it out. “They should have given you the LRA rate. For whatever reason, they didn’t. Maybe the code’s not right, or the rate’s not loaded.”
He suggested data sources could include expense systems. That would help close the gap on off-channel bookings for accounts with low hotel booking attachment.
All these services can help buyers verify what their travelers can actually buy. Armed with that information, they can lean on their preferred hotels.
“Customers should definitely hold their suppliers accountable and vice versa,” said Marriott’s Frazer. When negotiated rates aren’t used, “you want to understand, is it the travel patterns you are auditing? Is it Tuesday night, one night, in peak season and in a high demand market? Is it over blackout periods? Is it a GDS/TMC rate loading access issue?”
A GBTA audience member pressed Frazer on whether Marriott provides accounts with historical data on how often rates were available and honored. She said the hotel company once a year audits properties in its system to be sure accounts access what they deserve. “We know there are markets where it’s a little out of whack because of the demand, but that’s really all chains trying to manage through that,” Frazer said. “It’s about communicating where there are swings and what we need to do to address that.”
How hotels manage their inventory can affect their relationships with buyers. Turning away corporate business at LRA rates can have consequences.
“The next time around, the corporation will say, ‘Wait a minute, I tried to shop you, but 50 out of 100 times you were sold out. I’m taking my business elsewhere,’ ” Botts said. “That’s the risk.”
GE’s Sitto shared a similar sentiment. “If you don’t produce in terms of inventory and make yourself available, you are not going to get booked,” he said. “If we have LRA and we have an agreement through a marketshare commitment, you need to be available. You want our business, you will have to take the good and the bad. You can’t be selective and say that you only want our business when you are slow.”
Additional info: A December 2013-January 2014 GBTA Foundation study sponsored by Best Western found that about three-quarters of 272 North American and European travel managers considered LRA important or very important when working with global hotel chains.
Advito also has services to help clients understand how often they’re getting access to negotiated rates. Its newest tool, currently in testing, examines a different aspect of hotel sourcing: dynamic pricing. Batrouni said the system will look at various channels — including brand.com sites and online travel agencies — to monitor “best available rates.” It’ll compare those to client negotiated rates and help determine whether a dynamic-price approach is worth it.
Several of Concur’s travel management company partners now are integrated with TripLink, but some have serious doubts about a major part of the program.
Concur last month announced that Adelman Travel Group, Cain Travel, Christopherson Business Travel, Frosch, Gant Travel and Travel Incorporated were live with TripLink. Concur named the providers in its announcement that Lufthansa next year will join the “direct” version of TripLink. In that scenario, the supplier’s loyalty program links with Concur user profiles so supplier websites can identify the traveler and offer his or her company’s rates.
In general, executives with the TMCs said they’re just starting to test this aspect of TripLink with limited numbers of clients. Doing away with comparison shopping remains a concern. Clients also worry that opening up to supplier.com bookings could undermine travel policy compliance. For the TMCs, there’s uncertainty about how to make money on supplier bookings.
The TMCs are on board with the TripIt-powered aspect of TripLink. It uses common email parsing techniques to import “open bookings.”
“To forward out-of-channel bookings to get them into the platform makes sense,” Christopherson Business Travel CEO Mike Cameron said during a recent Utah Business Travel Association event. “They’re occurring anyway, so it’s good for them to be included. The direct-connect version of TripLink would not be good for us. It would make it much more difficult to manage and service those bookings. It’s too early to tell exactly where that will go.”
“We do not promote open booking,” said Adelman Travel Group president and COO Steve Cline. “It’s still something that conceptually doesn’t fit into our model. However, if it fits into managing leakage, and bringing those individuals back into the program, then that’s where the considerations come into play.”
One concern is that integrating corporate programs with supplier websites will encourage leakage, but it’s hard to know. Cain Travel president Michael Cain suggested that if turning on TripLink opens the floodgates, it means TMCs were not doing good enough work in the first place.
“I don’t think it will change how clients enforce their travel policy,” said Cain. “Are we concerned we’ll see slippage? Certainly. And we’re working to offset that. Right now, the volume is relatively low with our beta customers. We also have customers who we offered it to who chose not to do it. There are lots of different views on it.”
At Travel Incorporated, executives said it was too early to say how successful the direct booking version would be. Client interest is a “mixed bag,” said senior vice president of business development Tony Peter. “Some are vehemently against it, others are utilizing it.”
“With supplier TripLink, it’s integrated into the process and seamless to book,” said Frosch vice president for Concur platform services and sales Steve Sedgwick. “It comes down to corporate culture. We’re neutral.”
In a supplier-direct scenario, the TMC’s value proposition changes. TMCs have several revenue streams, but a big one is transaction charges to clients for reservations booked through self-booking tools and agents. Another is incentive payments from GDSs. If travelers book on supplier sites, these income sources disappear.
“If there was a 50 percent shift immediately to TripLink, we would have a problem, no question,” said Cain. “Providing the service isn’t necessarily opening the door for that to happen. But what will that percentage be? We know it’s low today. What it will be tomorrow is the main factor in how painful this will be over time.”
These Are The New Leads
If it might be painful, why be one of the small number of TMCs actively supporting this program?
The TMC execs said they like their overall Concur relationship, including the referral program. Some highlighted untapped potential for new services, notably by leveraging Concur’s Compleat mid-office product.
“The only way you can outrun this is by growing so that if you do have attrition of your bookings because of new technology, you can overcome it,” said Patrick Linnihan, president of Gant Travel. “We think the way to make money is in new services and value.”
For example, Gant partnered with Roomer to protect clients using prepaid hotel rates. For “a small additional fee,” clients would get back 70 percent of the prepaid rate should they need to cancel. According to Linnihan, Gant’s TripLink connection brings off-channel prepaid hotel bookings into the protection program.
“If we can find a way to change the metric on which TMCs are compensated, you’ll see more willingness to engage in this discussion,” said Concur executive vice president for supplier and TMC services Mike Koetting during a panel discussion at the Global Business Travel Association convention last month.
On the same panel, AmTrav co-founder and president Craig Fichtelberg suggested the transaction pricing model and GDS incentives may be passé. “There are subscription models, management fees,” he said. “I think a management fee is a more viable option.”
Sedgwick separately said Frosch offers transaction fee or management fee programs, and hybrids. “Moving forward, that thought process will take center stage,” he said. “It won’t happen overnight.”
Salesforce has experimented with a subscription model. Senior manager for global travel and tech solutions Dorian Stonie made no mention of it during the GBTA panel discussion. He could not be reached for clarification before press time.
On the panel, Stonie described the company’s perspective on TripLink this way: “It’s not all or nothing. Technology is advancing, supplier relationships are advancing. We look at it, with TMCs, that this is a new opportunity. The true value of our most senior agents is not issuing $199 low-cost carrier tickets at a transaction fee.”
Short of new revenue sources, Concur-preferred TMCs may offset losses by adding volume. In this sense, Concur is a benefactor.
“Concur’s lead program has without question been beneficial to us,” said Cain.
“That’s one of the primary reasons we would want to be a preferred partner,” said Cameron. “We give them leads and they give us leads. So far we’re giving them more leads than they’re giving us. But they’re working hard on that and have just recently stepped up their game a bit.”
Years And Years
When asked, Salesforce’s Stonie declined to put a percentage on how much of his company travel is now “open booking.”
“It is not opening the floodgates,” he said. “The industry is changing. It will be a proof of concept. We’re working supplier by supplier with pilot programs, beta tests … it will still be a few years.”
As for how long it’s taking, Concur senior director of global travel Ralph Colunga (formerly of Salesforce) said, “We’re only three years into this. I’d say it’s moving rather rapidly.”
Koetting said 4,000 customers have bought TripLink. “We’re not giving this away,” he said.
Here again, a few of the TMC execs put the emphasis on email parsing. In other words, when most clients buy TripLink they’re buying it for TripIt Pro.
“Clients who purchase TripLink are getting TripIt Pro, which includes schedule changes and flight disruption information,” said Christopherson’s Cameron. “So we have a lot of clients buying TripLink so they can get TripIt Pro for all their travelers. They have TripLink, but they’re not really using it for the open booking side. We do have two or three clients that have purchased TripLink from us and are using it for the attachment purposes. We’re still sort of in the process of implementing and finding out how to use it.
“Travelers often book their hotels as part of a conference registration or by the person organizing the meeting,” Cameron added. “It makes sense to use TripLink to get those bookings into the managed travel platform. If the bookings can be made inside the GDS, we prefer that because of the ease of managing itinerary changes.”
Additional info: The Utah Business Travel Association covered travel expenses as part of The Company Dime’s participation in its event.
Google’s travel program has been closely watched for the better part of a decade. It helped vault “open booking” into industry vernacular. Capturing data when travelers book what and how they want — within some price guidelines — may be an attractive idea for some program managers at other organizations. But all these years later, very few big companies have followed. There are challenges, data collection chief among them. Google global travel manager Darragh Ormsby last month acknowledged that incomplete data is a weakness. To help matters, Google intends to import parsed data from travelers’ email confirmations.
Parsing is a key component of travel itinerary apps and other travel management support functions. To corral hotel conference rates and other bookings outside a company’s designated travel agency or online booking system, it’s critical. At Google, 72 percent of trips are booked outside preferred agency Carlson Wagonlit Travel.
Concur’s TripIt (and therefore TripLink), Sabre’s TripCase (and so TruTrip) and Carlson Wagonlit Travel’s WorldMate (and the CWT ToGo mobile app) are popular business travel itinerary aggregation products. They all use email parsing. So do other TMC apps, expense system providers and various other entities.
Not all parsers were created equal. Differences can relate to the information they extract from email confirmations and the number of sources they work with. Itinerary changes and cancellations may be an issue. Language support is another.
Grant Thornton director of travel and meetings Margaret Brady during last month’s Global Business Travel Association convention in Orlando said that while she’s “a believer in open booking,” she doesn’t think any services parse information sufficiently. For example, she pointed out that not all import dollar amounts of the transactions.
“There’s not one that does all of it,” said Cara Whitehill, senior vice president for corporate travel data aggregator Traxo.
Traxo had used WorldMate’s API, but no longer. “There are different things they do really well and we needed some things they weren’t doing,” Whitehill said. Traxo now uses “a variety of different sources” for parsing (which the company wouldn’t identify), “depending on what the particular source is and what data they can expose.” It also uses some proprietary technology.
“You can get a bunch of data in,” Whitehill continued. “That’s where a lot of folks start. They think, ‘I’ll build my own parser, it’s not that difficult.’ But then they get knee-deep into it. Maybe someone changed their email confirmation template. ‘Now what do we do?’ Or, you get this data in, you have to structure it, and ‘now what do I do with it?’ There’s a whole lot of complex logic that has to sit on top of the basic parsing piece.”
For that reason, Whitehill views the data aggregation as “the commodity side,” less complicated than normalizing data and making sense of it — for example, knowing when to link air, hotel and car bookings from disparate channels that are all part of the same trip. “That’s the unit most relevant to the TMC, booking tool, expense provider and the traveler as well,” she said.
Speaking at the GBTA convention, Google’s Ormsby provided few details on the firm’s parsing plans. He said a new database would compile information from emails, likening the idea to TripIt Pro: “Regardless of the booking channel you get a confirmation email which contains all the information you need. O&D, class of service, confirm numbers, all the good stuff you need for negotiations.”
Characterized by Ormsby as “the starting point,” Google’s current Trips database compiles manually entered data from bookings in the open market. He said there are 10 to 15 fields travelers must fill in, such as origin and destination, and price. This provides a “high level” view of the company’s travel spending.
Google currently gets the more detailed data only on the 28 percent of trips booked via the travel management company. That has made supplier negotiations “difficult,” Ormsby said, “but the airlines are starting to work with us on that. We produce a lot of our data and are building up trust.”
Google is a Concur Travel client. Five years ago, then travel manager Michael Tangney (now global process owner for travel and expense) said 4,000 of about 22,000 employees used the TripIt itinerary app. Concur acquired TripIt the next year and Google’s headcount since has more than doubled.
Google did not respond to requests for information about whether TripIt or the like already feed the Trips database, or what enhancements it is seeking.
Perhaps the company is looking to automate parsing of emails that hit the inbox. That would end the need for travelers to forward along those emails. TripIt syncs with Gmail this way.
That Google pioneered open booking hasn’t precluded it from using traditional travel management practices. Ormsby said the company encourages 21-day advance purchase bookings, advocates using CWT for complex trips (when incurring the transaction fee is “well worth it”) and measures CWT on things like response rates and satisfaction. It’s also adding “more justification or approvals than in the past” on travel, according to a July Wall Street Journal report that Google did not confirm.
Like a lot of other managed travel programs, Google also is applying price assurance. “We are constantly looking for new tech,” Ormsby said.
He said Google since February has used the FareIQ airfare tracker system from Yapta in the United States for bookings via CWT, and saved more than $50,000. Per-ticket savings have been as high as $765. During Google’s testing, FareIQ kicks in when finding savings of at least $100 for the same flight and same class of service. Ormsby said Google may lower that threshold.
Ormsby also has been pleased with FareIQ’s dashboard. “It has helped us figure out on which routes Googlers are making savings and started to inform us on some of the sourcing pieces we’ll be undertaking later this year,” he said.
It’s not too often that a new corporate booking tool comes out. A global tool that entered the U.S. market a year ago from Pass Consulting now counts one of the world’s largest financial services firms as a client.
Corporate customers may buy the Pass system in one of three categories. A basic version with little customization requires one week to install. Called Victor, it’s designed for German-speaking markets. A more advanced version offers functions like authorization and reporting, with a three-week implementation. The large company business version offers significant customization and back-end integration. There’s also a separate government version.
Pass describes the highly customizable version as “a modular set of services and functions completed by a very potent rules engine. Our travel framework paves the way for your individually tailored corporate booking solution, creating individual software at the price of a standard software solution.” Clients can “decide on the components you need” for the white-labeled booking tool.
Like established tools, the system offers standard trip planning, shopping and booking components. Optional add-ons include complex travel guidelines, unique file-finishing rules, individualized workflows, day-by-day contract optimization, travel arranger capabilities, custom approval processes and expense and HR integration. Content choices include Sabre (pending authorization for individual client installations), Amadeus, several low-cost carrier sources, rail companies and SilverRail. “Travelport (Apollo, Galileo, Worldspan) can be integrated upon request,” according to Pass.
Pass is charging between $1.50 and $3.50 per booking, depending on volume. Alternatively, clients can host the software themselves and/or “pay for the technology rather than for each individual booking.”
The software’s modular approach allows it to interface which different skins. As such, the look and feel become a lightweight and swappable element.
“We already have a certain number of skins,” said Pass Consulting CEO Michael Strauss. “We have it for German-speaking countries as Victor, we have it for the financial institution in their skin. Then we have it for a state [government] in Germany. It’s easy to change the skin, so there’s flexibility but not endless flexibility. If the client wants a totally different layout, we can do it but it takes longer.”
Industry consultants welcomed the new entrant, but noted the company faces an uphill climb.
“It’s good timing with the SAP-Concur consolidation,” said Travel Consulted’s Grant Caplan. “A lot of companies are starting to think about what else they can do.”
Will Tate of GoldSpring Consulting said his clients haven’t looked for a white-label solution. However, he said “the market does need a new online booking tool. The frustration people have had with service issues has created a real appetite. But it’s difficult because it’s a sticky application. And when it’s linked through to expense, there’s extra stickiness.”
Pass is a 34-year-old IT, software and consulting firm headquartered in Frankfurt. It built the online booking tool starting in 2009 with help from German TMC and Lufthansa City Center affiliate Giller Reisen. The system uses the same framework as a predecessor agent desktop product. Pass stands ready to develop a mobile version in response to client demand. The financial services customer hasn’t yet engaged on mobile due to internal policy changes, Strauss said.
Pass Consulting’s XML connectivity shares a common origin with the International Air Transport Association’s NDC program. Strauss said that means the booking tool can easily adapt NDC-compliant application programming interface. This would help solve the problem of online booking tools accessing ancillary content.
Additional info: The Company Dime confirmed the name of the financial services company on the condition that it was not disclosed in this article. It’s a former Concur Travel customer, according to Pass. Victor is derived from Virtual Corporate Travel Organizer. Pass has data centers in Miami and Aschaffenburg, Germany.
Delta’s been on a roll during the past few years, and now it’s pressing the advantage. The airline will compensate well-performing corporate accounts when on-time performance and completion factor are worse than both American’s and United’s after a full calendar year. Because Delta has been running a tight ship, it’s not a very risky move. Travel managers like it and they, too, have nothing to lose. Even so, this is just a start.
Tech developers and travel management companies commonly provide service level commitments. But with airlines, they’re between rare and nonexistent despite an age-old desire among clients. A sliding scale in which contract targets or discounts move along with performance on key routes would be well-received. Maybe Delta’s new guarantee moves the industry in that direction.
“When we talk about time is money, it’s all really true,” said Margaret Brady, Grant Thornton’s director of travel and meetings. “Delta raised the bar. They’ve done us all a favor, driving the market to actually measure and value the importance of operational performance.”
The initiative is drawing praise, but Delta’s motives aren’t altruistic. It is looking to build more goodwill in the corporate travel community in an effort to extract more share from customers. “We’ll be watching the return,” said vice president of global sales Bob Somers. “It’s hard to quantify it but we hope we’ll see increased performance.”
Perhaps it’s enough for Delta to keep the share it has and just make business travelers more aware of its strengths.
“It says a lot when an airline is saying they are the best in town and have been for the last four years and they have the courage to stand behind that claim,” said SAS travel operations director Richard Clowes. “That offers both fiscal reassurance and enhances the trust aspect, both of which help build long-term partnerships.”
Delta bases performance measurements on U.S. Department of Transportation data. Only “controllable” delays and cancellations count. That evens the playing field a bit by neutralizing weather, air traffic control and security delays.
It gets a bit muddy when considering delays airlines attribute to “late-arriving aircraft.” According to DOT, those “demonstrate the ripple effects of an earlier flight delay problem. Some carriers track the initial causes and use an internal code to identify the initial cause for downline late arriving aircraft. Other carriers do not track the downline effects of earlier delays and only record that the flight was late because of the previous flight’s late ‘turnaround.’ While data that identify the initial causes of downline delays are useful data, they are not critical.”
Maybe not. Delta’s been so far ahead lately that it wouldn’t matter how those delays are classified. But one could envision future scenarios where it might. In 2014 for all carriers measured by DOT, late-arriving aircraft accounted for 42 percent of domestic flight delays. That compared to the 30 percent classified as “air carrier” delays (i.e., controllable).
When Delta’s operational performance lags both United and American, algorithms kick in to determine account compensation. That’s based on volume and share, as well as an account’s performance against contractual targets. Accounts must be fulfilling at least 95 percent of their end of the bargain. Delta would provide compensation through UATP, though no one seems to think it will come to that.
If it does, windfalls for accounts “could range from a couple thousand dollars to a couple hundred thousand dollars,” according to Delta director of corporate sales development John Young.
Delta claims it’s the first airline to stand behind its performance with financial protection. Amid mass disruptions stemming from labor woes, United in 2000 compensated many corporate accounts with an extra rebate. Five years later, United gave bonus frequent flyer points to business travelers on key routes when delayed at least 30 minutes. Those examples were more make-goods than formal contracts.
Delta’s program is more involved, but still short of service-oriented airline contracting using route-specific data. Rather than basing compensation on performance in any given account’s specific markets, Delta is using domestic systemwide metrics.
“If you are on a flight that is terrible four out of five times but you are on an overall network that is better than the other guy, how does that help?” asked FlightStats vice president of business development Meara McLaughlin. She said other airlines “could trump the whole conversation by looking at actionable data — comparing on this route, or this time of day or from this airport.”
McLaughlin applauded Delta for bringing service into the dialogue. “It opens the box on the idea of creating dynamic supplier contracts,” she said. “You start to get opportunities where you say, ‘Not network-wide, but on this O&D pair and based on all other options available to me in that O&D pair, how did you do?’ This is something that has been talked about for a long time. Operational qualitative transparency is the antidote to commoditization.”
“Airlines have strong and weak operations and if you happen to be in one of those weaker operations, then of course your response is that this is skewing the reality in your market,” said Clowes. “That said, I’ll settle for this starting point.”
A Delta spokesperson said the new program “is a stake in the ground today,” and that the carrier is always looking for ways to better differentiate itself.
“It’s a bit gimmicky, but it’s also a brilliant move,” said PlaneBusiness Banter’s Holly Hegeman. “It’s an advantage they should talk about. Delta is so far ahead of everybody [in customer service metrics]. I can’t see any reason why Delta would fall apart.”
American and United declined to comment.
Additional info: Delta as of late July reported 75 days without a mainline cancellation. In 2014, it achieved a 100 percent completion factor on 95 days, compared to 10 for American and United combined. In the 12 months through May 2015 (the latest DOT stats available), Delta’s overall on-time performance was 85.2 percent. American and United both were about 9 percentage points back at 76.3 percent. In terms of controllable delays during May, Delta was at 4.1 percent, American 5.2 percent and United 7.5 percent. Delta in May cancelled 0.2 percent of its flights. United cancelled about 0.8 percent and American 1.4 percent.
Here’s DOT’s list of causes for “air carrier” delays and cancellations (controllable), which should not be considered complete: Aircraft cleaning, aircraft damage (except bird strikes, lightning/hail damage), airport curfew, awaiting the arrival of connecting passengers or crew, awaiting alcohol test, awaiting gate space, baggage loading, cabin servicing, cargo loading, catering, computer outage — carrier equipment, crew legality (pilot or attendant rest), damage by hazardous goods, engineering, inspection, flight paperwork, fueling, gate congestion, government forms not properly completed — INS, FAA, Agriculture, public health, etc., ground equipment out of service, hot brakes restriction, last-minute passenger, late mail from Post Office, late crew, lavatory servicing, maintenance, medical emergency, out-of-service aircraft, oversales, positive passenger baggage match, passenger services, potable water servicing, pre-flight check, ramp congestion — blocked by another aircraft under carrier’s control, ramp service, removal of unruly passenger, revised weight sheet, shortage of ramp equipment, slow boarding or seating, snow removal (when it is a carrier ramp service function), stowing carry-on baggage and weight and balance delays.
At a limo conference in Atlantic City last fall, a couple of entrepreneurs announced the ground transport platform to compete with Uber. Seconds later, a black car exec whispered, “We’re building one, too.” This week it was déjà vu as The Company Dime looked into announcements about two other similar initiatives. Evidence of a third turned up, then a fourth.
Shouldn’t the car service industry get its act together and focus on one system? Maybe not.
“It would be great if a highly fragmented industry like ours could come together and work to develop a common platform, but I don’t know if that’s a reality,” said Carey International president and CEO Gary Kessler. “So I think those companies on the supplier end, like Carey, have to decide how to position themselves and enable corporate clients to do business with us in the way they prefer.”
Corporate clients typically use travel management companies or online booking tools that partner downstream for scheduled ground bookings. GroundLink is a car network that offers its own apps, including on-demand services. “We’re on the roadmap to be integrated with Concur and that should be happening in the third quarter or early fourth quarter,” said GroundLink CEO Liz Carisone. “We also work with Deem and Groundspan, as well. Anyone working with a TMC normally goes through one of those platforms in order to book and maintain continuity of reservations.”
Driven by Uber, the on-demand era is shaking up a lot of that. The alternatives are multiplying.
Last week, Deem announced it’s building a cloud-based application including on-demand mobile services. Phase one, for advance mobile reservations on a standalone app, will go into testing with select operators by October. Participating operators include EmpireCLS, Flyte Tyme, Gem Limousine Worldwide, Music Express, North Point Transportation, Pure Luxury, Sterling Limousine, Universal Limousine and U.S. Sedan Service.
Officials with Carey and Dav El/BostonCoach said there was a good chance they also would partner with Deem.
Separately, Deem announced a non-exclusive collaboration with the National Limousine Association to bring the initiative to more members. Deem is a longtime tech provider to the scheduled chauffeured transportation industry, but the company was in some turmoil when Uber hit the scene. According to Deem founder and CEO Patrick Grady, NLA president Gary Buffo “came to my office in February to assess us and also take me to the carpet and say, ‘You have let this industry down. What are you going to do? Are you prepared to step up?’ ”
Deem is considering changing the model for how ground transport tech is funded. “We have accommodated corporate clients through less-than-world-class software that we acquired years ago,” said Grady. “It was best-in-class then, and the model was to give it away to corporations to feed the market, then charge the operator. It’s the opposite of the online booking tools who say, ‘We do policy, negotiated rates, preferred suppliers and you pay us a transaction fee.’ So some of the leading clients now say, ‘If you want to give us this crappy app, why would I pay? But if you offer analytics and itinerary management and it’s all integrated, I’d be open to that.’ So it has been a ‘freemium’ model but it may or may not remain that way.”
A rival offering launched this year by Bauer’s Intelligent Transportation (a San Francisco competitor of Buffo’s Pure Luxury) is making gains using an iPhone app. Called iCars, it has signed 10 Bay Area operators, 10 hotel partners and Limos.com with its 1,000-plus nationwide operators, according to LCT Magazine.
Bauer’s is working on partnerships with the various internal or back-office tech providers — systems like Fasttrak, Livery Coach and GroundWidgets — much like the CoNext project which launched last fall.
Another provider, Dashride, offers those internal applications as well as both scheduled and on-demand booking technology. “At this point we don’t integrate with other solutions, but the majority of our clients are leaving those existing platforms,” said co-founder Thomas Bachant. “A big part of that is the on-demand piece.” About a year old, Dashride serves more than 100 operators, mainly in New York. Its clients include corporate travel-focused Concord Limousine.
Still another initiative, called Luxury Chauffeurs of the World, remains in stealth mode but describes itself as “an alliance of the very best independent chauffeured transportation service companies in the world.”
The Inventory Challenge
All this technology is pretty complicated. Corporate market needs include negotiated rates and sometimes customized insurance programs. Such info must flow through to affiliates of the lead operator.
But the wider vision — for CoNext, Dashride, Deem, iCars and whomever else — is to aggregate supply. An on-demand ground transport platform has no chance to compete against Uber without enough participating drivers to enable pickups within minutes.
Asked about longer wait times in New York City because of far smaller inventories, Dashride’s Bachant said, “That’s true, but in some areas, maybe suburban areas, our clients can provide a quicker service than Uber.”
The Deem partnership with NLA could become the aggregated solution, but it has rankled some.
“I applaud them for attempting to do something but the NLA is a trade organization and their primary focus is supposed to be working on regulatory issues affecting chauffeured transportation owners and lobbying on our behalf,” said Dav El/BostonCoach CEO Scott Solombrino. “For some reason they have gone down path where they want to align themselves with one of many tech partners that are also members of the NLA. They shouldn’t be doing commercial business that is competitive with members.”
“We did a non-exclusive agreement with Deem so we could keep the doors open to other people in the industry,” said Buffo, the NLA president. “We’ve had zero proposals.”
Everyone agrees that they need to create a big bucket with lots of cars to service the client.
“If you want to compete, it’s not only about the tech,” said Solombrino. “We’re testing every day technology that puts us into the on-demand business. What we don’t have is the capacity to fulfill. The minute you can’t fulfill, you’re never getting the customer back again. NLA is not necessarily the catch-all. There are networks equal to NLA, but I think there’s hesitancy on what everyone thinks is the best platform to do it on. I don’t care as long as someone can show me that we can actively meet the supply requirements. Corporations tell us that as soon as we can match what Uber is doing, they’ll lock them out.”
Solombrino said he regularly speaks with other operators about collaborating.
“I don’t think there’s been a lot of movement towards larger, cooperative efforts yet,” said Carey’s Kessler. “This is the biggest challenge. What Uber has done is created a tremendous, tech-enabled marketplace — the most significant aggregation of supply we’ve ever seen. For this to work in the incumbent chauffeured transportation companies, there will have to be an effort to get our inventory into a basket. Right now, there’s no killer app out there so we want to easily connect to the customer’s channel of choice.
“When a company like Deem decides to make the type of move they’re making, we’re well-positioned,” Kessler continued. “Carey International and Deem are longstanding technology partners. As such, we certainly expect to be part of their new application and are working with the Deem team to support connectivity to our systems through our robust API.”
Uber declined to comment for this article.
Atlanta-based Travel Incorporated last month released a new reporting tool using responsive design and featuring self-configurable dashboards. The software is emblematic of the travel management company’s “build it” approach to technology.
Buying it may well be cheaper, but Travel Incorporated appreciates the flexibility in customizing proprietary solutions. It said clients do, too.
Across the industry, TMCs have varying perspectives on this, and each approach is integral to the value proposition. At American Express Global Business Travel, building versus buying a particular product or service depends on the desire for speed to market and flexibility. At Direct Travel, a goal to maximize partnerships means avoiding dependence on any particular one. Known for building its own tech, Egencia still picks its spots; parent Expedia has made no secret of its desire to use GDSs rather than try to replace them.
For Travel Incorporated, the “overriding” reason to build its own systems is to be responsive to clients.
“We’ve always seen a benefit in developing in-house whenever we could,” said CIO Linwood Hayes. “There are times when you buy. We have a nice assortment of creative developers for mobile, web and the database side. We’ve involved this in-house team as much as possible to really listen and understand the industry and the customers. We want to roll out their suggestions in a faster manner.”
“When we’re presented with a request from a client, we’re in control,” added senior vice president of business development Tony Peter. “Off-the-shelf solutions are often too restrictive.
Former Travel Incorporated employee Donna Campbell is global travel program manager at Georgia-based telecom company Arris, a current client of the TMC. She said Travel Incorporated’s philosophy “gives me the ability to ask for things that are more important to me than another client. And there’s not much additional cost to customize it for me. One size doesn’t fit all.”
The TMC doesn’t build everything. It’s multi-GDS, but mainly a Travelport Worldpan user. Its exclusive preferred booking tool is Concur Travel. In the mid-office, its longtime use of TRX’s Correx will soon end as it migrates along with many other Concur clients to the GDSX Compleat product.
But Travel Incorporated has built proprietary solutions for electronic itineraries, hotel direct billing, hotel adoption, duty of care, portals and scorecards.
The company’s clients helped shape the new reporting product through focus groups and usage studies during an 18-month process. Using the prior version, customers weren’t as “interactive” as officials thought they could be, said Peter.
Called Galaxy Evolution, the product offers domestic travel booking data as soon as 15 minutes after ticketing. Users can queue multiple reports, get notifications for scheduled reports and view recent ones or favorites. It uses HTML-5 to resize sensibly on a variety of devices. This responsive design represents the company’s mobile strategy, which is to avoid native, downloadable apps. “The challenges of keeping an app updated can frustrate travelers,” said Hayes.
Evolution sits on a platform that brings together related applications including performance scorecards, duty of care systems and corporate travel portals. Users can customize the appearance. It’s all “simple enough that extensive training was not necessary,” Hayes said.
Travelers access a personal travel portal.
Hayes and Peter acknowledged there are some uncompleted items on the client wish list. Although she is waiting for global data, Arris’ Campbell is impressed with the reporting product.
“It shows the cards and stacks on the front page without having to run a report,” she said. “I can customize my cards to show, for example, if I want total travel spend, or air spend, or top cities. It’s easy to change the timeframe. The default may be one thing but if I wanted to see what I did yesterday, I click a button to change it and get my preferred stats in seconds.”
Many members feel they left last week’s Global Business Travel Association convention in Orlando with unfinished business. GBTA said it did not receive enough votes in its annual election to seat new officers or decide on new bylaws. The announcement shocked some of the organization’s supporters. One called it an embarrassment. Another claimed incompetence. Many expressed disappointment. What’s going on?
The GBTA convention itself remains big, the organization has grown a lot and its leadership is controversial as ever. But the members didn’t vote.
“I’m sad and disappointed,” said Kevin Iwamoto, Lanyon Solutions vice president of industry strategy and a former president of the membership association. “This has never happened. It took everyone by surprise. It really concerns me when you have disgruntled members but then they fail to show up. ”
GBTA president and CEO Donna Kelliher in a July 31 member message informed those who were not in attendance for the group’s annual business meeting a week ago today that the association fell short of gathering at least 290 direct member votes. That figure represents 10 percent of the buyer-side membership, required for a quorum as per GBTA’s bylaws. Votes could have come in person or by proxy voting.
“For now, the previous board will remain in place, as previously constituted, until it can determine the association’s next steps,” Kelliher wrote. A spokesperson disputed a rumor that the board would remain for a year.
“These next steps will minimally include a ‘special meeting’ and a timely new election,” according to Kelliher. “The board plans to meet very shortly to consider these and related issues.”
Critics jumped on the early start time for the business meeting during which the in-person vote occurred. At 7:00 a.m., it was 30 minutes earlier than it has been in each of the past four years. “Quorum is not limited to voting during the annual meeting,” the GBTA spokesperson pointed out. “In addition to paper votes received during the annual meeting, the quorum numbers included both absentee ballots and those that opted at convention to vote electronically from 9 a.m. to 6 p.m. While the meeting time is something that GBTA will look into in future years, it really does not explain the absence of a quorum for this election.”
Some said they never received the relevant email communications. GBTA indicated it used the same firm, Election Services Corporation, to run the election as it had in 2013 (the most recent election with choices). GBTA does not reveal vote totals.
As for this year, some members are looking for an explanation other than apathy. That’s understandable considering the level of controversy surrounding the event going in. GBTA also said it held one of its strongest conventions, with 6,389 attendees, including 1,366 travel buyers.
Late on the evening before the conference opened, on July 24, Kelliher called for a “strong election turnout” and urged members to vote for changes to the organization’s bylaws. A special panel had unanimously agreed to the proposal, hoping to address the underlying issues in what Kelliher called the “divisive bylaw process” of 2013.
Among other changes, the 2015 proposal would remove term limits, give the board more power over changes to bylaws and create a new member class for travel consultants and travel buyers employed by allied members.
“These bylaw changes are proposed and necessary to guide our association’s governance into the future,” Kelliher wrote. She also indicating she was “perplexed by the platform statements and media comments from some of the candidates that are running for the board.” Kelliher critiqued a Business Travel News article published that same week. She essentially endorsed Jeremy Gardner, vice president of business services at Accent On Indianapolis. He’s running for vice president against NetApp travel manager Mark Ziegler, spokesperson for the 2013 movement that was designed in large part to remove the combative, longtime president of GBTA’s Allied Leadership Council, Dav El/BostonCoach CEO Scott Solombrino.
Corporate Travel Buyer Resources director and senior project manager Kelly Christner had been quoted in the BTN article. Christner is running against Best Western’s Billy Bos and Travel-On’s Dick Nabors for a single open allied member board director seat. She advocates enforcing term limits on appointed positions like the ALC head as well as elected seats. They’re in place currently on elected positions but this year’s bylaw change proposal would cut them altogether if it’s approved.
GBTA’s leaders argue that term limits hurt the group’s ability to get the most it can out of people who have the time and inclination to volunteer. It’s not as though there are dozens of candidates lining up. One counter is that the president’s job, in particular, doesn’t attract candidates because it’s too demanding.
“It’s a tough job,” Amgen travel buyer and former GBTA president Craig Banikowski explained to The Company Dime in June when taping for this podcast episode.
“The pool of candidates has decreased over the years,” Banikowski said. “Professionally, it’s difficult to get an agreement from your leadership that you can be absent from your job or your program is stable enough that you can do this. And personally it’s a big challenge. Many constituents don’t think about the politics involved, and the leadership skills needed to take that A-type board and move the association forward.”
Iwamoto agreed. “It’s such a time-consuming, second job — and purely voluntary.” he said. “You have to work for a company that’s extremely tolerant.”
Still, the conspiracy theorists are having a field day. Some claim GBTA’s leaders didn’t get the result they wanted last week, so they disqualified the vote on a technicality. There may be a motive there, related to term limits, but no one has produced evidence.
Prickly personalities and politics are normal in membership associations. The challenge for GBTA is what to do about these low levels of participation for voting and, at least for some key roles, volunteering.
“This creates a perception problem,” said one supplier volunteer who asked not to be named. “They have to figure out a way to get people to care more. There’s a lot of noise, but it says something when you’re looking at less than a 10 percent rate. Maybe the elections need to be different.”
Disclosure: The Company Dime strives for impartiality in all its work. The reader should know that as it relates to industry associations, The Company Dime in 2016 had a brief partnership with Institute for Supply Management. It worked with the American Society of Travel Agents beginning in 2017.