Monthly Archives: September 2015

2016 Price Forecast: Flat Airfares And More Hotel Hikes

[UPDATE, Nov. 24: Forecast data from American Express Global Business Travel is included.]

[UPDATE, Oct. 1: Information from NYU’s outlook on expected hotel rate increases is included.]

For 2016, corporate travel buyers should expect hotel rate growth in the low- to mid-single-digit percentages while airfares on average show little change. Those are the bottom-line conclusions forecast by BCD Travel’s Advito and, separately, Carlson Wagonlit Travel with the GBTA Foundation. As always, expectations vary by region and actual prices fluctuate under the influence of many factors.

Both Advito and CWT/GBTA based 2016 price projections on improving global economies. They also assumed oil prices would stay relatively flat at around $60 per barrel (Advito) or gradually increase during 2016 to $70 per barrel (CWT). CWT/GBTA also expect global business travel spending to rise by nearly 7 percent next year, following similar growth in 2015, with Asia/Pacific growing fastest at 9.4 percent and North America around 5.4 percent.

forecastOn airfares, as always oil prices are the key. The lower prices that have held this year mean higher airline profits, emboldening some carriers to add capacity. That in turn usually means lower fares. Higher oil would mean less capacity growth — possibly capacity cuts — and higher fares. Overall, CWT expects global fares to rise 0.5 percent next year, down from 2.2 percent it had predicted for this year.

For North America, both Advito and CWT/GBTA referenced Southwest’s faster-than-expected growth this year. “Traditional full-service airlines are growing more slowly,” according to Advito. “They’ll have to add capacity if they want to retain market share.” As a result, “fares won’t rise in most markets,” and could drop where competition is “most intense.”

According to the BCD Travel consultancy, routes between large business centers and secondary cities are competitive, applying downward pressure on prices. “On all other routes (approximately 70 percent of the U.S. domestic network), especially from hub airports to smaller cities, competition is falling away and therefore fares are rising fast,” Advito wrote. “Return coach fares in excess of $1,000 from Atlanta to cities like St. Louis and Austin are not unusual.”

Yon Abad, senior director of CWT Solutions Group in the Americas, speaking today during a webcast, said competition is growing in Seattle, Los Angeles and Chicago.

Overall, CWT expects airfares in the United States to inch up 0.5 percent, with demand softened by a weakened oil sector. In other sectors, “companies also are traveling smarter, which means they control their demand — the amount of travel — and are implementing technology and policy adjustments really focused on looking for the best fares,” Abad said.

Different story north or the border, where the CWT/GBTA report calls for a 5 percent decline in average airfares. Abad cited soft demand stemming from “a high dependency” on the downturned oil sector.

Both Advito and CWT/GBTA noted healthy competition on transatlantic services as carriers — U.S. and foreign — add capacity. “There are real bargains to be had on some transatlantic services,” Advito wrote. “Of course such fares come with restrictions, like 30-day advance booking. Even so, discounting at this level indicates weakness in the market, and should encourage buyers to seek better corporate deals.”

Growing transatlantic competition also “means the joint ventures are offering higher negotiated discounts,” Advito added. “But in return they expect corporate clients to drop rival joint ventures from their air programs.”

For the other side of the pond, Advito wrote that while European air travel demand is expected to grow, “supply and competition will grow even faster, especially on eastbound long-haul routes.” Overall, it projected the region’s airfares to remain flat or drop by a percentage point or two.

The CWT/GBTA report for the Europe/Middle East/Africa had a similar take, anticipating very little change in airfares. It projected some markets to be down a percentage point or two, with any market-specific increases not exceeding 1 percent. CWT Solutions Group EMEA senior director Geraldine Valenti discussed how low-cost carriers are “adapting their offer to corporate travel” by serving additional primary airports and offering business class services.

For hotel rates, CWT/GBTA expects a global increase of 2.5 percent, nearly in line with the 2.6 percent they had predicted for this year. In North America, CWT/GBTA and Advito both projected average rate increases in excess of 4 percent. As in recent years, the story in most major markets is generally strong demand and limited new supply pressuring rates upwards — notably excluding New York.

Much bigger hikes again are expected in and around San Francisco. Advito described that market as a “nightmare for corporate travel buyers” because of the strong local economy and tech companies relocating “from the South Bay into the city.” CWT projected a 9 percent increase in San Francisco hotel rates and 8 percent in Los Angeles, compared to 1 percent in New York.

NYU School of Professional Studies Tisch Center for Hospitality and Tourism expects a national corporate rate increase to average between 6.5 percent and 7.5 percent. “This is a larger increase than the approximately 6.25 percent for 2015, which was the largest increase since 2006,” according to the report, authored by NYU clinical professor Bjorn Hanson. According to NYU, some buyers are looking to offset rate hikes by replacing some higher-tier properties with those in the select service and limited service categories.

Abad said the “good news” is that the pipeline of new rooms across the United States will increase during 2016, especially in the upper midscale segment, which should relieve upward pricing pressure from 2017.

Both Advito and CWT/GBTA noted that Airbnb has in some cases helped minimize rate hikes (again, notably in New York). Advito also suggested that “fears about economic problems in the eurozone and China could make hotel companies less bullish about pricing, even in the strong U.S. market.”

Meanwhile, for car rental rates, both reports projected little if any change versus current year pricing. Both pointed to better fleet management by suppliers. However, Advito reported that some locations “are selling out more often” and corporate clients face “an expanding list of blackout dates” when rentals at negotiated rates are not available.

Advito also said demand for car rentals is up, but like with airlines, “not spectacularly.” It said rental firms have been disciplined in maintaining flat fleet sizes to match demand.

Given hyper competition between the three primary suppliers (Avis Budget, Hertz and Enterprise/National), large corporate clients may secure “flat or even lower rates, particularly if they are prepared to change suppliers.” Advito hypothesized that a Hertz strategy to insist on higher corporate rates “could tip the balance.” It also suggested that some companies have accepted “minor rate increases” to re-sign with their preferred providers rather than going through the request-for-proposals process.

Additional info: Both reports based projections (see tables below) on various macroeconomic and travel industry forecasts. In addition to oil at about $60 per barrel, Advito assumed that global economic growth on 2016 would improve to 3 percent from 2.5 percent this year. Advito’s data sources included BCD Travel client data, International Air Transport Association, Oxford Economics, International Monetary Fund, Economist Intelligence Unit, Eurostat, OANDA (for foreign currency exchange rates), Official Airline Guide, U.S. Energy Information Administration, and Smith Travel Research. The CWT/GBTA report based projections on CWT transaction data, a Rockport Analytics statistical model, Moody’s Analytics, IMF, IATA, OAG, STR and GBTA travel manager surveys. The Amex GBT forecast is based on proprietary data and information from STR, Center for Asia Pacific Aviation and Airline Weekly.

Full reports are available here from CWT/GBTA and here from Advito.

2016 Hotel Rate Projections (year-over-year changes)

RegionCWT/GBTAAdvitoAmex GBT*
North America+4.3%+4% to 6%+3.8% to 6%/ +4.2% to 6.3%
Europe+1% to +3%+1.7% to 3.3% / +1.8% to 3.5% **
Western Europe+0.7%
Eastern Europe+2.0%
Asia Pacific+3.0% +1.3% to 3.7% / +1.6% to 4%
Asia-2% to 0%
SW Pacific0% to +2%
Latin America+3.7%+4% to +6%+1.3% to 4.3% / +1% to 3.5%
Middle East & Africa+1.0%+1.7% to 3.3% / +1.8% to 3.5% **
Middle East-1% to +1%
Africa+1% to +2%
* Midrange hotels / upper range hotels
** Covers all EMEA

2016 Airfare Projections (year-over-year changes)

RegionCWT/GBTAAdvitoAmex GBT
Intercon - Business+1%+0.4% to +2.9%
Intercon - Economy-1%+0.7% to +2.7%
Regional – Business0%+0.4% to +2.4%
Regional – Economy2%-1.5% to +1.1%
Asia Intercon -Business 0%+0.6% to +2.6%
Asia Intercon - Economy -2%+1% to +2.7%
Asia Regional – Business0%0% to +2%
Asia Regional – Economy -2%+0.5% to +2%
SW Pacific Intercon - Business-3%
SW Pacific Intercon - Economy-1%
SW Pacific Regional – Business+2%
SW Pacific Regional – Economy0%
Western EUROPE+0.5%
Eastern EUROPE+0.1%
Europe Intercon - Business 0%+1% to +3%
Europe Intercon - Economy-1%-3% to 0%
Europe Regional – Business0%-1% to +2%
Europe Regional – Economy-2%-2% to +1%
Africa Intercon - Business-2%
Africa Intercon - Economy-5%
Africa Regional – Business-2%
Africa Regional – Economy-5%
Middle East Intercon - Business-3%+1% to +3%
Middle East Intercon - Economy-5%0% to +1%
Middle East Regional – Business0%+2% to +5%
Middle East Regional – Economy-1%+2% to +3%
Intercon - Business-2%-3% to 0%
Intercon - Economy-1%-4% to -1%
Regional – Business+3%-3.5% to -0.5%
Regional – Economy+1%-4% to -0.5%
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Podcast 3: Pam Massey, Patrice Simon, Miriam Moscovici

Join us as we talk to travel management professionals about business travel services, expense management and careers on The Company Dime’s podcast. Continue reading

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Amadeus, Air Canada Reconcile

[UPDATE, March 8, 2017: Amadeus-connected travel agencies in Canada and the United States now can “seamlessly access and book” Air Canada’s Preferred and Advance paid seats, according to the global distribution system operator. Agents within their standard workflow can use seat maps furnished by Amadeus to sell the paid seat options at the time of initial booking or after the ticket is issued.]

Amid handwringing over the Lufthansa distribution program, the significance of a new deal announced today between Amadeus and Air Canada could be lost. Along with the gradual growth in global distribution system participation by discount carriers in recent years and the systems’ significant efforts to add hotel content, any success by GDSs in drawing a renegade like Air Canada back into the fold looks like a major win.

Air Canada and Amadeus announced a multiyear agreement to provide agencies with access to “all” of the carrier’s fares, seat availability and merchandising content. Though there still is work to do, the deal is effective immediately and ends a 10-year full-content drought for Amadeus agencies. Air Canada had been distributing via Amadeus before this new deal, but not all products and services.

Now, Air Canada will work with Amadeus to make available everything it sells. In exchange, the airline secured more favorable pricing from the Spain-based distributor, meaning lower fees than before for each of its flight segments booked in an Amadeus GDS channel.

Air Canada global sales vice president Duncan Bureau

Air Canada global sales vice president Duncan Bureau

Since its subscribers will access all the carrier’s content through all Amadeus outlets — offline channels and online ones, including the e-Travel Management corporate booking tool — Amadeus appears to have a leg up on rivals in distributing Air Canada.

Travelport agencies can get at Air Canada’s full content, but must toggle over to the Agencia system connected to the carrier’s AC2U API. Sabre has no full-content deal in place.

“We’re in discussions with our friends at Sabre and we’re eager to get a deal done,” said Air Canada global sales vice president Duncan Bureau. A Sabre spokesperson did not reply to inquiries.

Jeffrey Verman, CEO at Toronto-area Uniglobe Plus Travel Group, is relieved. Though he said some agencies accept the Travelport Agencia system — it’s better than punching out to an Air Canada website — Verman views it as “a hybrid solution,” short of full content in GDSs “without any toggling games.”

“It’s been more than a decade of what has been something of a war, with the collateral fallout squarely falling on the travel agency community, which in turn has been forced to pass on the extra associated expenses either out of their own wallets or onto the consumer,” Verman told The Company Dime. He said that Air Canada during the past year “has gradually put basic content into the GDS. We still find discrepancies between channels, but we hope these discrepancies become fewer.”

Verman expects it to take some time before Amadeus offers all the agreed-upon content. Air Canada’s Corporate Rewards, Flight Passes and Promotion Codes “are unique programs and Air Canada has kept them outside of the GDSs with the exception of Travelport,” he noted. “The ball is more than ever in Amadeus’ court right now to actually deliver on this content.”

Bureau said that “today we have the vast majority of content in” Amadeus channels, and now will work with the distributor on the rest “so that they can consume and merchandize that inventory.”

To display its content to all Amadeus users, Air Canada will use the Amadeus Fare Families and Ancillary Services products. The parties will establish XML connectivity to integrate content. Air Canada uses Farelogix technology for merchandising across all channels.

“This deal is really about content and having the right economics,” Bureau said. “It is about merchandising and it is about consuming Air Canada content from an ancillary perspective. To really compete in the marketplace we need some flexibility that historically we did not have. The vast majority of growth is international, right into markets where Amadeus is very strong. Both organizations made some pretty big steps to remove those historic sacred cows, whether it was on content, flexibility or economics.”

He wouldn’t address economic arrangements between Amadeus and its agency customers, but Bureau said “the economics from an Air Canada perspective on a [GDS] segment basis is certainly much more attractive to us than it was historically.” The airline “is not contemplating” following Lufthansa with a GDS surcharge.

Balboa Travel is an Amadeus subscriber and welcomed the news. “We use the combination of an agent desktop web-aggregator and the direct connects over online providers, which is common in the industry,” according to COO John Cruse. “Having the content in Amadeus will remove the additional cost for Balboa Travel and therefore our clients by making fulfillment and servicing more efficient. I’m excited to see how Amadeus will merchandise the Air Canada Fare Families and how easy the distribution of ancillary services will be.”

Amadeus executives were not available today to provide additional information.

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Travel And Transport Invests In Control

Travel and Transport isn’t in the “mega” TMC category, but it’s big enough now for global aspirations beyond the Radius Travel network it has helped steer for more than 20 years. Investing in overseas markets is one way the Omaha, Neb.-based company is trying to control its future. So is building more proprietary systems, including an agent desktop and a business intelligence platform.

After years of exploring agent desktops available from GDS companies and others, Travel and Transport currently is developing its own. The project’s budget has been approved for this year and next. “If we use somebody else’s we get a cookie-cutter product with less flexibility,” said CIO Mike Kubasik. “If we build our own we can build it to client needs or our internal agent needs. We can do time and motion studies, and watch agents work.”

Travel and Transport executive vice president and chief information officer Mike Kubasik

Travel and Transport executive vice president and chief information officer Mike Kubasik

Today 65 percent of Travel and Transport client bookings are made online by travelers. For the other 35 percent, maybe the agent requires quick access to a rail booking interface or a traveler profile from a CRM database. Rather than punching out to the Internet to get at whatever they need, agents will find it on the desktop. Kubasik said the system would “span multiple GDSs,” meaning agents fluent in any GDS-specific environment — as well as those who aren’t — quickly can adapt to use the point-and-click, tile-based format.

The system should make agents more efficient and flatten the learning curve. Last year Travel and Transport hired 110 people. In 2013, it reopened its travel academy in partnership with Omaha’s Metropolitan Community College. The 25 program graduates hired so far are mostly travel counselors. Travel and Transport closed its previous careers institute in 2009 after 30 years.

The company will use the desktop software in combination with pre-existing desktops provided by GDS firms. “All of our agents are dual screen, so one screen will be our proprietary desktop with toolkit and the opposite screen will be Sabre Red or Travelport Smartpoint,” Kubasik explained. “By using API connectivity we are able to serve up immediate customer-specific information.”

Why build now? The cost will be a fraction of what it would have been 10 years ago. “The sophistication of APIs allow us to take information and present it in a much easier fashion,” Kubasik said. “We can incorporate third parties that much easier.”

Travel and Transport is also making a multi-million dollar investment to build from scratch a business intelligence platform including data aggregation, normalization and predictive analytics. Due out early next year after a beta, the system will be part of a separate subsidiary that sells to corporate clients but, for now, not other TMCs.

The company already spent $15 million to $20 million over the past 10 years on its pre- and post-trip reporting system. And it continues investing in its own mobile platform. “There are third parties out there with mobile solutions, said president and CEO Kevin O’Malley, “but we know more about our customers than anyone else and can help them in a way that is proprietary.”

The eTTek Dash mobile app can handle incoming itineraries in 1,300 different formats, from hundreds of suppliers and distributors, using WorldMate’s parsing technology. Data aggregator Traxo also could play a role. Travel and Transport brought in the firm to help deal with unstructured itinerary data in its leisure division, but Kubasik sees several potential uses in corporate travel. For example, regarding the Germany-based TMC in which Travel and Transport invested this year, it “could be a lot easier to use Traxo to assist with integration versus WorldMate [which] has a canned feature set.”

The app also offers click-to-call, trip sharing, alerts, FlightStats data, alternate flight options, hotel check-in via CheckMate and language translation from TripLingo. It incorporates third-party info on live airport wait times.

“Our direction on mobile now is less about bookings and more about following you on your trip,” Kubasik said.

As for the company’s global direction, the investment in Radius partner Derpart MfG Reisen in Germany is its first outside the United States. Travel and Transport is looking for more opportunities to partially or wholly own in key markets. “If we can solve more directly for customers in the top 10 markets, it’s the 80/20 rule: cover most of what is important for most customers,” O’Malley said. The TMC will continue to use Radius partners as well. Travel and Transport is one of three large Radius investors.

New York-based Altour recently joined the Radius network, whose North American affiliates also include Adelman, AdTrav, Montrose Travel, Vision Travel and World Travel Inc.

“Sometimes more than one U.S.-based Radius agency will go after the same potential account that has multinational needs and propose the Radius solution,” O’Malley said. Cross-Radius data aggregation is a “core” benefit afforded to clients no matter which U.S. partner they choose. But an agency’s own services and the way it integrates with Radius tools are points of differentiation.

Altour executive vice president and COO Barry Noskeau also cited the Radius data capabilities. “The consensus is that Radius is far ahead of everyone else in terms of quality of data and has a more sophisticated way of bringing that data together,” he said. “We see it as a big leap up.”

Meanwhile, Travel and Transport is watching for opportunities to acquire within the U.S. market. That might mean buying other TMCs, but there’s no urgency. It already has 1,200 employees (who own the company) spread across 43 states. In general, O’Malley expects more agency M&A activity in the United States. He cited “four to eight players looking at a lot of the same things we are.”

“We’ll be more strategic and focused on premium customers and market niches ­— where margins might be good or better, or where they are driving a lot of premium revenue to suppliers ­— as opposed to just going after transactions,” he said.

O’Malley said 70 percent to 75 percent of the agency’s revenue comes from clients. Twenty years ago, 80 percent came from suppliers.

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Did Your Firm Enroll In The Airbnb Business Program? Are You Sure?

Airbnb last month announced that “business demand” surged and more than 1,000 companies had “formally” made it “part of their corporate travel programs.” The statement garnered press about corporate executives clamoring for the service, but it overreached.

After our queries, Airbnb deleted the word “formally” from its announcement. [UPDATE, Sept. 21: Oddly, Airbnb has since reinserted the word.] It is unusual for a large business to edit a press statement after the fact, but who cares?

Like Uber and TripIt before it, the Airbnb business program is gaining its enterprise foothold through employees. Any employees. They don’t need to be in travel management, security, technology or legal. In many organizations, formal program adoption requires a team of people from those departments and others.


Image: Thinkstock

“We believe that the over 1,000 companies who have completed a booking with Airbnb for Business are using the product suite for its intended use of offering administrators at companies large and small more visibility into where their employees are staying with Airbnb, financial reporting and central billing,” according to an Airbnb press official.

Asked about usage, the official added that “we also reach out to the thousands of accounts which have signed up but have yet to complete a booking to understand how we can better support them with their business travel needs.”

Airbnb also indicated it soon would alter the sign-up process “to best onboard travelers versus travel managers.” The program’s terms indicate that the client is required to “provide Airbnb with the name and contact details of a company billing contact (only applicable for centralizing billing such as via invoice) and a company manager.”

Just how formally to treat Airbnb in company policies is a hot topic. Of more than three dozen travel managers contacted since May, most indicated their company policies are “silent” on Airbnb. A few said theirs prohibit it. In addition to a general desire to stay out of competitive, regulatory and tax controversies, there are legal and service concerns. Companies perceive greater risks to data, equipment and personal well-being than are found in a typical business hotel. The property owner may be unknown to the client. Processes and policies related to what happens when something goes wrong are unclear. Services may be limited. Prepayment is required. Cancellation policies vary. Invoices don’t break out pricing by day.

Of course, some number of the companies that have signed up don’t have corporate travel programs with which to formally integrate. Google does, though it’s quite different from the norm. Quoted testimonials in the press release came from a budget director at Airbnb’s ad agency, an admin from a former vendor and a human resources head for a European tech company with a few hundred employees. A fifth was the controller and chief administrative officer at Box, which described itself as similar to Airbnb and “looking forward to trying out the product.”

You know you’re a “unicorn” when you can get a corporate endorsement and they hadn’t even tried it yet.

Still, It’s For Real

It’s debatable whether Airbnb has demonstrated widespread business program adoption in companies that manage travel. But many thousands of businesspeople certainly are checking out the main service. Corporate officials are thinking a lot about related safety and security issues. They wonder about the service’s impact on hotel economics and pricing. They acknowledge its potential to help road warriors find a place to stay in otherwise sold-out cities or for extended stays.

Airbnb business development lead Marc McCabe in July at the Global Business Travel Association convention presented details from a study by Carlson Wagonlit Travel on two shared clients. It found Airbnb properties cost clients 37 percent less per night than traditional hotels, and stays on average were twice as long.

As it seeks to service the managed business travel market, Airbnb is learning.

Reporting in the business travel program appears to have a hole in that users may decline to have activity included in the employer dashboard. “For users that pay using a corporate or a personal credit card, and that have consented to their travel information being shared with you, Airbnb shall provide company with a reporting dashboard showing all bookings purchased by users in the preceding calendar month,” according to the program’s legal terms. In welcome emails, users are told that when ready to book, they should “select the checkbox that reads ‘Let your company know this is a business trip.’ ”

All that sounds great for employees concerned about privacy. However, it fails to support solid risk management practices and likely means spending data would be incomplete. (The press statement, on the other hand, said the system tracks “every employee’s activity.” But who’s counting?)

The Airbnb official clarified: For enrollees who are part of a business program “we mark the business trip checkbox by default to optimize for catching corporate bookings.”

It’s not airtight, but for those not concerned about endorsing Airbnb, the program seems to improve on data transparency and accuracy compared with not enrolling. Reports include the date of bookings, prices, names of users, locations, dates of stay, names of guests who joined the user and trip status (booked, active or canceled). Managers can view trip locations on a map. The data can feed travel risk management firm International SOS.

The Airbnb business program offers centralized billing on a card or by invoice. This can be handy for small companies. Some bigger ones find it difficult to map expenses to business units in such a setup.

The company is experimenting with daily rate and trip rate alerts, notifying travel managers when employees book over the average daily rate or a set total trip price.

Airbnb has expanded its “business-friendly” properties program beyond San Francisco and into Chicago.

Meanwhile, Airbnb’s growing supply also is helping hold down overall hotel rates, particularly in New York and other large markets, according to BCD Travel’s Advito.

“While Airbnb has made clear progress on booking, management and reporting for business travel, it hasn’t fully addressed companies’ concerns about traveler safety and security,” the firm noted in a recent report. “A list of accommodations that meet certain standards would go beyond just ratings and reviews. Business-approved properties with a commitment to safety, which also offer business travelers value like more efficient check-in/out, could also help. Airbnb’s commitment to gaining ground in the corporate market is clear, and business travelers will continue to try its accommodations.”

STR Inc. announced last month that it found Airbnb’s presence and rates across New York “make the short-term rental company a formidable competitor to the market’s hotel industry.” According to STR, the added supply represents a “material addition to the New York City hotel room inventory.”

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Pro, Tzell Mobilize With ARC App

[UPDATE, Feb. 3, 2017: ARC discontinued this initiative in late 2015.]

Using technology from ARC, Protravel International and Tzell Travel Group are joining the ranks of business travel agencies offering mobile apps. The ProTrip and tZapp apps are downloadable from the Android and iOS stores but not yet out of client beta.

According to a spokesperson for the two agencies’ parent company, Travel Leaders Group, the apps do not exclusively use technology from ARC’s standard Better My Trip app.

Conceived two years ago and released in the fourth quarter of 2014, the ARC app will soon include content from Air Canada. The airline is expected by year-end to become the first to offer ancillary products like preferred seats, advance seat selection, meals, trip protection and lounge passes to agency-ticketed passengers using ARC’s app. ARC and Air Canada said the program will begin with a particular travel management company, which they did not identify.

mobile-app“The whole industry is moving towards mobile and ARC wanted to do something in the mobile space,” said Arun Gupta, ARC’s director of product management and strategy. “We wanted to give travel agencies a means to stay engaged with travelers at all times post ticketing.”

Better My Trip offers itinerary management, FlightStats alerts, destination offers, restaurant info from Yelp, ground transportation from CarTrawler, weather and airport info and one-touch calls to “your travel agent.”

Itineraries synchronize with agency data using FlightStats via a GDS or mid-office system. That’s supplemented by proprietary email parsing technology and WorldMate “as a backup,” said Gupta.

TMCs can earn commissions on purchases made through the app. They also may eventually have some control over which suppliers are available. “Some of them have said, ‘I have a great rate with Hertz and instead of showing all suppliers I want Hertz,’ ” said Gupta. “It’s something we’re open to. However, we want to offer that level of customization in the second round — not to begin with.”

As with Carlson Wagonlit Travel’s app, which enables hotel bookings, commissions from sales through the ARC app help fund its development. How TMCs and ARC share those commissions may determine what TMCs pay for the app technology.

Park ‘N Fly and SuperShuttle are examples of suppliers that pay a commission. What about airlines?

“Yes that’s come up even with Air Canada,” said Gupta. “A TMC may say, ‘If we sell 50,000 options a year through the app, what’s our commission?’ We don’t want to get into that part. It’s between TMCs and airlines. We provide the common platform.”

ARC’s service offers a web portal for agencies and airlines to view activity.

TMCs and corporate clients have lots of options these days for finding an app provider. There are independent, custom providers. Sabre’s TripCase works with agencies and corporations. Sabre this week said it counts “more than 40 airlines and more than 100,000 travel agents” as users of the TripCase messaging platform, which enables targeted merchandizing and service-based communications.

Concur in July announced TripIt for TMCs, offering custom branding alongside the itinerary elements that TMCs book. Flight alerts may prompt TripIt Pro users to call their TMC. Clients include Adelman Travel, Christopherson Business Travel, FCm Travel Solutions, Frosch, Travel Incorporated and World Travel Service.

Travelport in July announced it bought Mobile Travel Technologies, which makes apps for travel companies including BCD Travel.

ARC last week indicated its plan was to announce the first white-label clients for Better My Trip by early October. An ARC press official declined to comment on whether those would be Protravel and Tzell.

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AA-Delta Interlining Impact: Small But Not Insignificant

American and Delta failed to renew their agreement on interlining, a longtime practice enabling a single ticket for flights on multiple, unaligned airlines and associated baggage transfers. It also allows a carrier to reaccommodate a competitor’s disrupted passengers. Corporate travel repercussions from the AA-Delta interline gap will be limited, but in some cases may cause inconvenience and added cost.

When travelers book a negotiated rate (or any other private fare), it’s probably not an interlined ticket in the first place. Most corporate contracts disallow that because the other airline would know the private price paid to the contracted carrier. Still, there’s plenty of business travel that doesn’t use negotiated fares. Even those organizations with discounts often use published prices. According to auditing firm Topaz International, its clients in 2014 used negotiated discounts on 57 percent to 74 percent of domestic segments, depending on air volume. For international, the range was 28 percent to 57 percent.

Image: Reuters/Francois Lenoir

Image: Reuters/Francois Lenoir

In cases where there is no negotiated fare, travelers usually can combine segments on multiple non-partner carriers into a single ticket. It could be a complex international journey not served by one carrier and its partners, or maybe a simple trip out on one airline but back on another. In corporate travel, these examples are uncommon but do happen.

“If you think about what causes someone to book two carriers on one ticket, it’s to get somewhere. They do it because they have to,” said Egencia vice president of supplier relations Chris Vukelich. “These airlines canceling their agreement will have an impact on people’s ability to get to especially smaller places. The traveler will have to pick up their bag and re-check it. For some, it will eliminate the ability to even do the trip. It’s a huge inconvenience for a not insignificant number of people.”

When there’s no interline agreement, two separate tickets are required. “That’s two transaction fees,” Vukelich pointed out. “If they change the trip, that’s two change fees.”

In cases of irregular operations, airlines always try to reaccommodate on their own flights but that’s not always possible. And that’s when travelers may really need interlining. Now, if it came to it, displaced Delta passengers can’t get to where they’re going on American — and vice versa — unless they buy another ticket.

Delta argues that with its superior operational performance of late, it reaccommodates way more AA passengers than the reverse, and couldn’t extract what it felt were appropriate terms. According to PlaneBusiness Banter, “For years, the agreement between the big major airlines has been more or less a routine slam dunk of sorts. The agreement comes up for renewal, the parties involved sign, and life goes on the way it had previously. But not this year. This year, Delta apparently decided to ask for more money from the other two major carriers if they wanted to continue to interline. Apparently, United ponied up. American did not.”

There are other reasons why the common practice is not ubiquitous: competition and technology.

Because such arrangements are voluntary, an airline can pick and choose with whom it will interline. Virgin America has agreements with 35 international carriers to feed traffic back and forth at their U.S. gateways. It wants to interline with U.S. carriers, too, but has been rebuffed.

“We have requested from all major domestic carriers to sign an interline agreement for two reasons: one, to enable smoother recovery from irregular operations; and two, to enable the business travelers with complex itineraries to include Virgin America,” said senior vice president of planning and sales John Macleod during a Chicago Business Travel Association event Tuesday. “We have been turned down by every single airline in the United States because they are not interested for fear that we would get a leg that they maybe are entitled to. It’s a competitive issue for us.”

United Airlines vice president of sales in the Americas John Slater appeared on the same panel. “We don’t interline with every air carrier around the world,” Slater responded. “There are commercial considerations that are taken into account. There’s always a balance of trade. What carriers charge each other to carry each other’s passengers is a major consideration.”

During a separate interview, Advito vice president Bob Brindley said, “The mainline carriers don’t want to be seen as providing a benefit to one of their competitors. Interlining is a holdover of the regulated environment where it was necessary to have an integrated air system. And now it’s definitely less necessary” and no longer as common.

Instead, the big airlines favor their alliance partners. Delta in 2013 ended deals with Turkish Airlines, Qatar Airways, Kuwait Airways and Aerosvit Airlines “to focus on maximizing the benefits of its global network and airline partnerships.” Here is Delta’s current list of interline partners.

American a few years ago cancelled its interline deal with Emirates. It shares codes and interlines with Etihad Airways and Oneworld partner Qatar, Emirates’ chief rivals. AA and JetBlue began interlining in 2010 and stopped four years later. AA still has more than 100 interline agreements, including nine in North America.

Emirates has interline arrangements with plenty of other airlines, including Delta and United. “Interlining is key for us,” said Matthias Schmid, the carrier’s vice president of sales in the United States, where the airline has 10 gateways. Without it, there is “more pressure on our local sales force because we have to fill capacity with locally sourced passengers. We are interested in interlining with partners in the United States but in markets where it makes sense.”

Southwest doesn’t cooperate with anyone, partly due to technological limitations.

“The reservations platform that Southwest Airlines sits on at the moment doesn’t allow for it easily,” said managing director of customer strategy and development Ryan Green. “There are challenges in not having airline partners when things go awry. We deal with that today. If we need to buy a ticket on someone else, we’ll just walk over to that counter and buy a ticket.”

Green said the upcoming migration to the Amadeus reservations platform would make interlining easier, should Southwest decide pursue the idea.

Additional info: The Chicago Business Travel Association covered travel expenses as part of The Company Dime’s participation in its event.

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Concur’s Risk Service Is ‘Open’ But Hasn’t Attracted Key TRM Providers

As some Concur clients test the new version of its Messenger iOS app, released last month, Concur’s self-described “open” approach to integrating with travel risk management firms already includes five providers, but not some of the bigger names. In the making since Concur two years ago acquired messaging firm conTgo, the app is the mobile companion to Concur’s Messaging service.

It’s not meant to be a well-rounded TRM offering. ConTgo co-founder and Concur senior director of strategy and product marketing Johnny Thorsen likened the service to an online booking tool. An OBT is a technology layer supported by the client company’s choice of travel management company. Messaging app clients similarly can “bring your own provider” for TRM services. “We stay outside the assistance provider area completely as we don’t have those skills or expertise available internally in Concur,” Thorsen said.

Image: Thinkstock

Image: Thinkstock

The assistance providers signed up to support customers thus far are Falck, Healix (and U.S. subsidiary HX Global), Dynamiq, Paris-based Anticip and Malaysian firm AAI.

“We have no restrictions,” Thorsen said. “It’s up to you, Mr. Assistance Provider, to get ready for a new open world.”

Better-known TRM providers Anvil Group and iJet said they are not now working to integrate with Concur’s service. International SOS clients “can leverage an existing number of different tools and systems” for distributing info and advice, according to executive vice president Tim Daniel, but he declined to comment specifically on Concur.

“We don’t currently work with Concur for their app, although it’s not uncommon for our clients to contract with more than one provider offering similar solutions in the realm of information and intelligence for use in TRM,” according to Anvil Group managing director Matthew Judge. “We will always consider client requests to integrate with existing resources to ensure they receive the greatest value possible from their investments. I suspect, however, that we haven’t been approached by any existing client asking us to adopt the Concur product because our systems already deliver all the features offered by their app, plus many more.”

Theresa Thomas, iJet vice president of travel partnerships, said the company does not have a relationship with Concur today. But she said “a key tenet” of the company’s strategy is to provide “global intelligence and response capabilities” to TMCs and others. “Why would iJet consider powering what sometimes may feel a little like a competitor’s product?” Thomas asked. “Not every company is going to choose you every time.”

In Concur materials, the company noted that partners Dynamiq and HX Global “can support any medical and security services” and “can both replace iJet, ISOS, Axa or any other provider.”

Thorsen said Concur has made clear that Anvil, International SOS and iJet are welcome to connect. He added that customers and prospects are asking that content from those three be brought into the Concur platform. “The whole idea of the BYOP strategy is to provide customers with an independent technology layer which allows them to change assistance provider without having to change the technology solution,” Thorsen said. “The corporate market is responding positively.”

Acknowledging that TRM providers might offer their own mobile apps, Thorsen said a Concur API enables connections to Concur’s app, “if that results in a better service and solution for the customer.”


Clients determine how to configure the app with provider contact info, perhaps varying by the country a traveler is in. When a traveler hits the button to be connected, the app knows where to direct the call.

Like other risk apps, Concur Messaging provides location intel and information on disruptions and security risks. According to Concur, that info comes from Riskline. Clients listed on Riskline’s website include Dynamiq and American Express Global Business Travel provider Charter Solutions.

Concur Messaging allows for “one-way and two-way communication,” via text, email or in-app messaging. Managers can track and send messages to members of defined employee groups. They can view employee locations on a map.

Users of the Concur Request pre-trip approval tool also would see employees’ travel intentions. “The moment a request is made and approved, we show that as a virtual trip,” Thorsen said. “Now a security officer can see where people are planning to be even before bookings are made.”

Some other risk management providers offer GPS tracking as an option, but “we’re not going there” at Concur, said Thorsen. “I’ve yet to run into a customer who says they want forced tracking.”

Concur pulls in location information in three ways. One is the collection of travel itinerary data through various means. That covers bookings generated within Concur Travel and travel management companies using Concur’s Compleat mid-office product. “We are not 100 percent there, but we are pretty close to having an automatic data capture kicking in for any booking inside the Concur product universe,” Thorsen said.

The system also captures bookings made through TripLink (including TripIt, which can scan email inboxes of Outlook, Gmail and Yahoo mail users).

“We still believe that the jury is out on TripLink, and in where it will play,” said Michael Cain of Cain Travel, a Concur preferred TMC partner. “It will definitely play well in messaging and security and duty of care. When you talk about 20 percent outside your travel program and no ability to track, companies will begin to see that as a liability. We see TripLink as a feeder of info into Messaging. This endeavor is an expensive one for us, as we went in with Concur’s full tech stack. We will need Compleat at the core.”

A second means of data collection uses “assumed” locations. When employees aren’t traveling, it’s inferred they are at their usual places of work. Thorsen acknowledged that such assumptions “of course are not enough.”

Third, like some other providers, Concur added voluntary employee “check-ins.” That’s helpful not only when traveling to other cities and countries, but also locally around town.

Because check-ins require employees to do something, isn’t that a gap? If you are a security executive, “yes it is,” Thorsen acknowledged. “But if you are an HR person, no it’s not.” The app is built to handle more active tracking should clients demand it. Thorsen envisions the industry settling on a “middle ground.” Clients would use “consent-driven temporary tracking” for employees traveling to high-risk locations that would be switched off upon their return.

Even if they don’t use Concur Travel or a TMC on Concur Compleat, Concur Expense clients can make use of the messaging tool. Most employees at such companies already have system profiles that synch with HR data.

ConTgo had previously worked only with booking data. “Coming into Concur, the plan was to move away from that dependency,” he said. “Other ways are more reliable and easier.”

The Global Business Travel Association in May published research on risk communications after surveying about 250 travel and security managers. Two-thirds said their organizations can’t locate travelers who don’t book via the designated agency or online booking tool. Those who can were asked how. “Four out of five indicate travelers must submit trip details when booking outside of an OBT or TMC,” according to the report. “Two out of five say travelers submit trip details using a third-party application such as TripIt or TripCase.”

GBTA also found that 79 percent of respondents consider email among the three most important channels for communicating with travelers facing disruptions or emergencies. Live voice phone calls followed (63 percent), then automated SMS (50 percent) and manual SMS (39 percent). Mobile app messaging (36 percent) ranked ahead of only automated voice calls.

Thorsen said Concur’s Messaging app uses SMS messaging as “a built-in back-up for communications.” Even those Concur users not running the mobile app would get SMS messages when warranted, “like we’ve always done.”

The app is free for users of Concur’s full Messaging service. Thorsen said pricing for that service is based on a monthly minimum fee covering certain numbers of unique itineraries and messages. Beyond that, additional per-booking and per-message fees apply.

Customers can choose one of three tiers based on geographical extent. The “entry-level” tier, for example, covers one country, includes “generic” risk content from Riskline and supports data only from Concur. The highest tier provides global coverage, brings in data from multiple TMCs and GDSs, and incorporates risk content provided by an assistance provider of choice.

After it completes testing, Concur expects to widen iOS availability early next quarter. An Android version is in testing. The app currently is English only, though the administrator interface handles multiple languages, with more coming.

Additional info: The GBTA research included responses from North American travel managers, security personnel and HR professionals involved in travel risk management. Fifty-five percent said they use their security/assistance firm’s tool to track travelers. About one-third use their TMC’s tracking tool. To communicate with travelers, 60 percent said they use TMC systems, followed by third-party traveler tracking systems (41 percent), mass notification systems (35 percent), HR systems (24 percent) and internally developed tracking systems (18 percent). 

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Hertz Backs Off

[UPDATE, Feb. 13, 2017: Hertz chief revenue officer Jeff Foland will leave the company on Feb. 28. The move will follow new CEO Kathryn Marinello’s plans for “structural changes in North America to facilitate her direct interaction with senior managers and to fast-track decision-making to accelerate performance improvement,” according to a Hertz financial filing. Marinello last month replaced John Tague as the company’s president and CEO. Foland and Tague worked together at United Airlines before they joined Hertz a few years ago.]

The world’s largest airport vehicle rental firm is focusing on the basics. It’s cutting costs, reorganizing its sales force and moving off an aggressive pursuit of growth. For Hertz, profitability and improving what some perceive as lagging service is where it’s at. That means playing hardball with some corporate buyers, and sometimes sacrificing business.

Many now in Hertz’s executive ranks worked with new CEO John Tague and chief revenue officer Jeff Foland at United Airlines as the airline industry learned similar lessons. Airlines and car rental, of course, are very different animals.

Hertz president and CEO John Tague

Hertz president and CEO John Tague

At first, when new management came in, GoldSpring Consulting’s Bill Knepper saw Hertz “being less competitive in the corporate arena. I have since seen them become somewhat more competitive but not aggressive. I believe Enterprise and Avis Budget Group see this as an opportunity to take chunks of Hertz’s corporate business.”

Advito has seen the same behavior recently at Hertz. New management “wants to boost revenue and has attempted to raise prices in recent bids. So far, it’s been unsuccessful,” according to the travel management consultancy’s 2016 forecast. “Hertz is starting to walk away from business if it can’t get an increase.”

Advito suggested that the Hertz hard line on corporate sales “could tip the balance” and move the industry toward higher pricing. “Rental companies want to improve their margins, and strong resale prices for rental vehicles won’t offset poor rate yields forever,” according to the forecast. “Supply-demand dynamics are moving in their favor, so something will give sooner rather than later. We think it will be sooner, although this market has a history of defying pricing logic.”

For now, Advito is projecting a 2 percent to 4 percent increase in 2016 car rental pricing for smaller companies. Larger ones may see “flat or even lower rates, particularly if they are prepared to change suppliers.”

Abrams Consulting has observed Hertz’s declining market share for U.S. on-airport operations. “It’s about the bottom line,” said Neil Abrams. “It’s easy to get market share. It’s not easy to make money.”

During an August conference call, CFO Tom Kennedy said Hertz reorganized the sales force last quarter. That meant a decentralized reporting structure. The intent is to create “accountability” and improve asset management and customer service.

Tague also mentioned “value-based selling to the corporate market” and a greater focus on ancillary sales. The latter played an increasingly prominent role during his tenure at United.

Hertz referenced headcount reductions in recent financial reports but did not quantify them. Sources said the cuts have hit the corporate sales force hard, but the company wouldn’t comment. “We don’t release headcount reduction information when it is related to the restructuring of sales regions,” according to a spokesperson.

The spokesperson provided no details about the corporate sales strategy. Hertz will “continue to look for ways we can create meaningful differentiation that provides business travelers speed, ease and value,” the spokesperson wrote by email.

“Getting back to basics certainly means servicing corporate and leisure customers,” said analyst Chris Agnew of MKM Partners. “I can only imagine that what they are doing around corporate sales isn’t cutting to the bone to where they can’t serve clients.”

Overall, Hertz is looking to cut an annualized $300 million in expenses. About $80 million came out during the first half of this year. Some came out of sales and marketing through “disciplined return on investment practices.” Kennedy said Hertz also cut from “special events” and “non-value added kind of sponsorships and things.”

The company’s normally big booth was conspicuously absent from this year’s Global Business Travel Association Convention. Because Hertz’s focus is on renewing its fleet and improving customer service, “we didn’t have something to display or exhibit this year that would be worth the expense,” according to the spokesperson.

Sobering Up

Moving ahead, Kennedy said the 1,500 people in Hertz’s back office is “double what it should be,” as is call center staff. He also said the company thinks it can halve the $400 million it spends on IT.

Hertz has been getting past a messy bit of accounting and refleeting challenges. Tague in August acknowledged an unsatisfactory second quarter but sees better days ahead.

“We must first simply rent cars better than anybody else,” he said.

Hertz is retrenching in a few other areas beyond corporate sales. It shuttered the standalone U.S. car-sharing business. It’s closing 200 off-airport locations (about 5 percent of its total), with plans to “rigorously review” the rest every quarter. The company also is looking to spin off its equipment rental business.

“The new management team’s priority is to focus on top 50 airports, which is where you make the most money — commercial and leisure,” Agnew said.

Tague appears to be taking a more measured, analytical approach than predecessor Mark Frissora. Frissora stepped aside in September 2014 amid poor financial performance.

“It could very possibly be true that Hertz is not being as aggressive, and that may not be a bad thing,” said Abrams. “Tague is taking a more sober approach to the business than Frissora did. Frissora was aggressive.”

That approach led to Hertz’s 2012 acquisition of Dollar Thrifty. Tague said that company had “participated across all the segments including business travelers, particularly those that were not operating under corporate contracts.” But Hertz went too far in “repurposing [Dollar Thrifty] more as a weekend leisure brand than was appropriate.” Now, Hertz needs to restore Dollar Thrifty’s “value-brand proposition.”

Changes among senior commercial execs create what Tague described as “a strengthened team, which provides a good mix of new and existing talent.”

Executive vice president for global sales Bob Stuart is a notable Hertz veteran still onboard.

Otherwise, Tague is getting the band back together. The former United president joined the car rental company in November. In January he hired former United EVP Jeff Foland as chief revenue officer. Since then, they’ve loaded Hertz with several more United alumni. These include Alexandria Marren, EVP for North American rental car operations; Dave Myrick, SVP of North America sales; Jim Mueller, SVP for international sales, marketing and revenue management; Bill Byrne, vice president of inbound sales; Charles Vuono; vice president of revenue management; and Tony Bedalov vice president of customer care and contact centers.

Hertz expects to detail its overall restructuring strategies in November.

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Keep An Eye On APIs, Travel Buyers Advised

CIO Magazine announced Aug. 1 that Marriott International earned a “CIO100” award for its application programming interface platform, created in 2014. Marriott senior director for B2B e-commerce Geoff Heuchling earlier that week gave corporate travel professionals an idea of why APIs matter to them. He made them sound pretty huge.

APIsEnabling new ways to integrate internal applications, distribute data externally, service customers and interact with partners, the API program is all about flexibility and speed to market. It uses modern systems communication protocols to pull data out of Marriott’s reservations, pricing and rewards systems. Heuchling called those “inflexible and hard to work with.” In the traditional environment, which includes the venerable Marsha reservations system, he said it can take up to a year to release new services. Speaking at the Global Business Travel Association convention in Orlando, Heuchling continued …

What if some developer wanted to develop a new product to replace the airport shuttle experience? They are expensive and the service is not great. What if someone came to us for guest reservations data to pair that with up-to-date information from the airport on arrivals and departures, then maybe Uber and our hotel could arrange a driver, and send a message to the customer: “Peter is at Door 3 in a Honda Accord, etc.” Would this lead a hotel to get rid of the 24/7 service? Would the service be less expensive? I don’t know, maybe.

But in the past, “maybe” would probably stop us from finding out. We would have had to spend a lot of time and money investigating the business case. That prevents a lot of good ideas from happening.

With APIs, the change from meticulous planning to experimentation is a major cultural shift, and one we have to make to keep pace with what’s going on in the digital world.

This example was hypothetical, but Heuchling gave a real-world one too. This spring the company unveiled an app for Apple’s Watch after just eight weeks of development thanks to its APIs.

A Hilton press official indicated that the company considers its API program “the unifying link between our guest-facing and back-end systems – ensuring the streamlined flow of data no matter the device.” The platform enabled Hilton’s release of digital check-in with room selection and its digital key program.

The InterContinental Hotels Group API is helping the company cut down on time needed to spool up a new affiliate. Whereas in the past it could onboard such a partner once per quarter, its API program cut the required time to less than one day. That’s according to Ryan Hudgins, IHG manager for performance marketing in affiliate and digital media, speaking last fall during a Tnooz webinar.

An IHG media official declined to provide more details. The company uses Intel’s Mashery to manage its APIs, as does Choice Hotels. On its website, Mashery also lists Lufthansa as a client. Separately, British Airways announced its API program in July.

Hyatt and Starwood did not respond to requests for comment.

Also leveraging APIs, CheckMate has signed a number of smaller hotel chains and large travel management companies for its mobile service enabling text, email or app-based messaging about the lodging experience. Available services include room status updates, express check-in and service requests. Participating TMCs include Adelman, BCD Travel, Corporate Travel Management, Travel Incorporated and Travel and Transport. Concur, TripCase and TripIt are among CheckMate’s other partners.

Marriott last month announced it had processed more than 2.7 million mobile check-ins, for which it credited its API-based mobile developments. IHG’s Hudgins said what the company had accomplished as of last fall was just “scratching the surface.” Marriott’s Heuchling in July suggested the same.

The platform released last year also is facilitating Marriott’s connectivity to Concur’s TripLink program. “Many” more interfaces are coming, Heuchling said. The ease with which APIs enable connectivity to new distributors is something travel managers should watch.

For travel management, Heuchling said, “I don’t think the impact will be really big at first.” But the possibilities are enticing.

“We’ll see some fantastic new stuff,” he said. “I don’t think anyone in this room really likes the annual [RFP] process except the people who make money on it. Imagine some kid in a garage figures out how to get our API for business travel pricing, and for Hilton and Starwood. This kid comes to you and says I have this new tool without you paying an arm and a leg. No complex code. The industry could really rally around this.”

He warned that buyers need to consider the kid’s intentions.

“One area where travel managers need to be vigilant is privacy,” said Heuchling. “A lot of these new products will try to make money off the data they collect. But they forget or don’t know how important data security is at the corporate level. The standards are so much higher than they are for individuals.”

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Sabre’s Silence On Security ‘Incident’ Isn’t Unusual, But It’s Still Making Travel Managers Nervous

[UPDATE, Dec. 2: Sabre announced that the investigation concluded, “and our review found no loss of traveler data, including no unauthorized access to or acquisition of sensitive protected information, such as payment card data or personally identifiable information.”]

Some travel management pros are concerned about a lack of new information on Sabre’s recent security incident. A Bloomberg report more than three weeks ago said the company had suffered a breach at the hands of hackers linked to China. Experts said the silence isn’t unusual.

Sabre is investigating an “incident” involving a “small number” of servers managed by an unnamed third-party provider. Sabre this week indicated it remains unaware that the incident has compromised personally identifiable information. That the investigation remains underway is the reason more information has not come to light, officials said. Sabre experiences “cyber-security incidents” like any tech firm, they noted.

Image: Reuters/Kacper Pempel

Image: Reuters/Kacper Pempel

“Sabre’s initial statement is the standard form of an initial statement one would expect at an early stage of a cyber-incident’s investigation,” according to University of Victoria associate professor of electrical and computer engineering Stephen Neville. “They know which initial computers were compromised and what was likely on these third-party systems, but they would still have a fair amount of detailed work to do to ensure that the incident was solely contained to these identified machines. Investigating incidents isn’t a canned systematic process but can vary considerably in the time and effort required.”

University of New Haven assistant professor of computer science Frank Breitinger said the investigation could be completed next week or not for years.

“The intent of a breach is either to get the PII or company secrets,” Breitinger wrote in an email. “Due to the fact that Sabre processes reservations of airlines and hotels, my assumption is that the intention was to get PII information. In other words, if it was a successful breach, I am almost sure that PII information was leaked.”

Clearly the term “breach,” which Sabre did not “confirm” as per the Bloomberg report, has worrisome implications. The article also said American Airlines was “hacked,” while at the same time indicating that American was investigating whether it was. The report referenced “plundered information,” although neither AA nor Sabre has acknowledged anything of the sort.

The lack of clarity is keeping some travel managers in suspense.

“I don’t think it’s okay that Sabre hasn’t talked about it at all,” said one buyer with a global firm who did not grant permission to be quoted by name. Another asked, “Which part was hacked? Was any credit card info leaked?”

“If a breach impacted any personally identifiable information, they would have had to send out legal notice,” said Travel and Transport CIO Mike Kubasik. “At this point it would not appear that this is a material breach. However, Sabre is still investigating the series of events and some of these breaches can be complex in nature and take time to do a formal forensics investigation. Based on the fact that Sabre has not notified any individuals (which would be a legal requirement), we can speculate that sensitive or personal information has not been compromised.”

According to cyber risk and data breach management firm ID Experts, a data breach — as opposed to a security event or incident — “meets specific legal definitions as per state and federal breach laws. Data breaches require notification to the affected individuals, regulatory agencies and sometimes credit reporting agencies and the media. Only a small percentage of privacy or security incidents escalate into data breaches.”

Forty-seven U.S. states have data breach disclosure laws. Sen. Richard Blumenthal of Connecticut has introduced disclosure legislation at the federal level.

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Experts: Don’t Forget The Employee’s Role In Travel Risk Management

Orlando — One message corporate travel risk experts conveyed at the Global Business Travel Association convention in July was that travel risk management is a team effort. It’s well-known that travel managers often collaborate with HR, security and legal on TRM. Senior management support is obviously crucial. According to TRM pioneers Erin Wilk of Bank of America and Shelby LeMaire from iRobot, a group that often plays an under-appreciated role is the employees themselves.

Bank of America SVP for global corporate security and global travel safety program manager Erin Wilk

Bank of America SVP for global corporate security and global travel safety program manager Erin Wilk

Wilk is senior vice president for global corporate security and global travel safety program manager at Bank of America, and a member of GBTA’s risk committee. In a presentation here, she added two key legal principles of travel risk management to the commonly discussed duty of care: duty of loyalty and standard of care. The former is about the employee’s responsibilities to the employer, including following policy. The latter recognizes that an employer can be held accountable in court if its prevention programs and other TRM measures are not comparable to those of firms in similar industries or of similar size.

Wilk said the bank has “really embraced” the concept that the employee shares in the responsibility for TRM.

“Business travel is not a vacation,” said Wilk. “When employees treat a business trip like a vacation and choose to make risky decisions or to go into risky areas you told them not to go into — or perhaps you didn’t tell them — it will cost you. It has happened to us and if it hasn’t happened to you, it will.”

She presented a slide listing key considerations before, during and after a trip.

Erin’s TRM Considerations

✓ Up-to-date profiles
✓ Traveler tracking
✓ Travel security policy
✓ Compliance enforcement procedure
✓ Medical, security and/or visa advice
✓ En-route communications
✓ Medical or security response teams
✓ Integration between risk management providers and insurance programs
✓ Routine review of destination risk assessments
✓ Process to debrief travelers
✓ Process to test and revise travel security policy

Preparing, educating and training travelers is vital. The bank has an in-house destination risk-rating system; companies also can acquire such intel from specialist firms, Wilk noted. Where the bank has focused recently, she said, is after the trip. “Our travelers are our best eyes and ears,” said Wilk. “We’ve spent the last two years building a formal traveler debriefing program. If you miss the opportunity to dive into the human intelligence that exists in your organization, you miss a critical piece.”

Some requirements at iRobot, which sells military equipment and sends travelers to Afghanistan and Iraq, are pretty strict. This includes “no side trips without consent of manager.”

The company requires employees to book through the travel management company; to “read, accept and comply with TRM program information and directives;” and to keep their travel profiles and health histories up to date.

“We have travelers who may not do the right thing,” said LeMaire, the company’s corporate travel manager. “It’s not because they choose not to. In many cases, it’s because they’re unaware. We need to be educating and training. As employees comply with the program, your risk as a corporation diminishes.”

Wilk added that “employees choose to do the right thing because they understand why.”

Though many constituents are involved in mature TRM programs like these, getting started can be a lonely task. Both LeMaire and Wilk built their programs from scratch.

“The point is that the responsibility for TRM is shared,” said Wilk. “Yes the firm has a legal obligation, yes the employee has a stake, but as you look internally at how risk mitigation happens, it’s not the job of one person. It does sometimes begin with one person.”

As is so often discussed, demonstrating the ROI of a program can get senior management attention and resources. It’s easier said than done.

“There are elements to a very strong TRM program that will cost you,” said Wilk. “You will need a third-party supplier for medical or security. If you don’t track your travelers, you’re missing the boat. There’s also an incredible amount of value I put on pre-trip intelligence coming from subject-matter experts. And your insurance is a portion of the product, too.”

Wilk estimated that firms with under 500 travelers can expect to pay about $25,000 annually for a “decent” TRM program. For enterprises up to 2,500 travelers, it ranges around $35,000 to $50,000. For up to 10,000 travelers, costs would likely be $50,000 to $75,000, and bigger companies could go as high as half a million dollars a year.

One possible “return” is protecting, healing or saving people. Minimizing impacts to productivity as per Carlson Wagonlit Travel’s stress index or Scott Gillespie’s traveler friction commentary represents a significant benefit. Same for reducing impacts to corporate reputation and job retention. These are hard to value monetarily.

And then there are unknowns.

“The potential expenses are catastrophic,” said LeMaire. “A significant travel incident is a threat to business continuity, strength and business growth.”

“While duty of care and duty of loyalty have some stake in the game, there’s also now an accepted concept that just because your firm doesn’t have a program, or doesn’t understand the risks, or didn’t make the right decision, it no longer means in court that you the employer won’t be found at fault,” said Wilk. “More times than not, the employer is found at fault.”

Calling this “standard of care,” she cited the work of attorney Donald C. Dowling of K&L Gates LLP. Dowling told The Company Dime that while “we all agree the employer has a duty of care under the law and morally, the legal issue is if you have an employee injured overseas, can they sue you? In the U.S. they cannot sue even if an employer is grossly negligent. It’s all handled through the Workers’ Compensation system, which is ‘no fault.’ Outside the U.S., whether you have a TRM or not, a smart plaintiff’s lawyer will claim you should have also provided this other protection.”

The idea is not only to mitigate incidents through prevention and operations, but also to minimize damages from claims that there is a gap versus a standard of like companies.

Still, LeMaire said “most important for me was the desire to simply do the right thing. If an unfortunate event occurs and you’re asked, ‘What did you do to help protect your employees,’ I feel that type of question deserves a good answer.”

“You cannot put a price on the moral obligation,” said Wilk.

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Booking Lufthansa Partner Codeshare Flights Has Consequences

As Lufthansa’s 16 euro fee for booking through global distribution channels apparently takes effect, some will seek a “loophole” by using partner codes. However, doing so can cause problems that call into question what the airline industry calls metal neutrality.

Code shares within an airline joint venture provide many more travel options than a single carrier can with its own airplanes. Loyalty program point accrual is (usually) reciprocal. Contracting with multiple partners is meant to be easier than negotiating one-off deals around the globe. Airline joint venture partners share revenues and costs and say they don’t care on whose metal customers fly.

But customers may care. There are limitations, ranging from irritating to distressing. A Lufthansa executive acknowledged some of them last month, essentially admitting that reality falls short of the supposed seamlessness of airline alliances.

codeshareLufthansa Group director of marketing, distribution and sales programs for the Americas Larry Ryan’s comments came during a webcast hosted last month by the Association of Corporate Travel Executives. He was addressing the notion of avoiding the fee by booking with United’s code on Lufthansa flights to and from the United States.

“I’d be very careful about drawing that blanket conclusion,” said Ryan. When it comes to code shares, he said, there are “some technical issues” related to airline ticketing requirements and there is “a lot of room for interpretation.”

He also cited “operational issues” where services provided by the operating and marketing carriers don’t align. Those include separate policies on such things as special meal requests and pet transport. The more relevant example for most business travelers is class of service. Ryan explained that Lufthansa this year introduced a premium economy product, but “because premium economy is not necessarily a product offered by all our codeshare partners, you may not even find the booking classes applicable to premium economy within the codeshare flight display. As a result, you would not be able to book premium economy if you book the codeshare, and we run into an issue.”

Ryan claimed that “the vast majority” of corporate travelers have “either an economy or a business-class long-haul travel policy, so that’s not a big concern for those. But for those looking for premium economy, that’s a concern.” (United does offer a premium economy class. So does Air Canada, on some international routes.)

Other sources pointed to more potential problems.

Knowing where to check in can be confusing. Getting loyalty program credit for flights on partners isn’t always automatic. Getting the same frequent flyer benefits from one partner airline to the next is sometimes impossible. Disparate booking classes, seat assignment rules and upgrade programs also can be annoying. Service gaps sometimes apparent when plans change can be unnerving.

Advito’s Bob Brindley provided an example. Say a traveler purchases a Chicago-Kiev ticket on United but flies Lufthansa. If the traveler needs to revise plans en route, he or she probably must contact United. Lufthansa’s local personnel in Kiev may be of no help. In a pinch, the traveler might have to purchase a full-fare Lufthansa ticket just to get back, and sort out the accounting mess later.

Casto Travel president Marc Casto noted other disparities.

“They are not equal in any capacity, particularly for anyone with an automated upgrade program, like United and pretty much everyone else these days,” he said. “Frequent flyers are not treated the same even though the airlines are supposed to be completely neutral in terms of their membership programs. They are absolutely not.”

A U.S. airline sales executive agreed. “You do not get the same functionality,” the executive said, requesting anonymity. “You can get close to it, and the gap has improved over the years, but it’s still not absolute.”

On the regulatory front, the U.S. Department of Transportation continues examining code shares to police “unfair and deceptive practices.” Its latest set of proposed air passenger protections (pushed back until at least April 2016) reinforces requirements that ticket sellers make clear when flights are sold by one carrier but operated by another.

DOT has fined various airlines and travel agents under pre-existing codeshare disclosure rules. The latest proposals don’t touch on disclosing policy discrepancies among codeshare partners.

In general, Lufthansa’s Ryan seemed to put the onus on travel agencies. “Ticketing experts within TMCs are aware [of operational issues with code shares] and can determine whether any of these would even be an issue for customer A versus customer B,” he said. “Code shares weren’t invented yesterday.”

That’s no consolation for the traveler stuck in Kiev.

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