Monthly Archives: September 2016

In Beta, Concur And United Aim To Solve For Unused TripLink Tickets

[CORRECTION, Sept. 30, 2016: An earlier version of this article suggested travel agents could use United’s website to access client waiver funds in association with TripLink bookings. United has not built such a solution, but is considering it.]

One of the issues tripping up Concur’s TripLink in beta with United Airlines and several customers is how to capture the value of unused tickets. When travelers cancel or change a booking made on United’s website using their TripLink account, sometimes there is residual value to be used. At the moment there’s no way for that credit to be added to the client’s existing store, typically maintained by the travel management company partner. It’s an important component of travel management services for corporate clients, and Concur and United are working up a solution.

Begun this summer with “several” clients, the beta with United “identified a few integration enhancement opportunities,” according to a statement attributed to Concur SVP of supplier services Charlie Sultan. “Unused tickets is one of the opportunities for which United and Concur have created a solution that will likely benefit all airlines working with TripLink.” American Airlines and United partner Lufthansa are among those to have announced participation plans.

“United will provide travel managers of the beta customers with a report of unused ticket residual values,” the Concur statement continued. “For the first time ever, these travel managers will have a comprehensive view of United Airlines unused ticket residual values across all distribution channels. In addition, Concur’s TripLink roadmap includes functionality that will give TripLink participating TMCs access to the ticket status and residual value.”

The plan is welcome news for clients including Cathy Sharpe. Speaking last week at the Business Meetings Travel and Technology Expo in New York, the director of strategic sourcing for global T&E at Illinois Tool Works described the unused ticket issue as “one of the gaps” in the United pilot.

Concur-United

Image: Thinkstock

“If someone issues a ticket and then they go to exchange it, they can do that on the airline website but if there is residual value, that is not coming back through Concur yet and the agency has no visibility into it,” she said. “This is an important piece that the agency manages for us.”

Sharpe said her company has a standing monthly balance of more or less $300,000 in unused ticket value. “We get good use of that” through agreements with the airlines, she said. “It’s huge value as GBT is exchanging and transitioning those tickets so we can reuse them.” ITW uses American Express Global Business Travel.

Visibility is a big theme related to TripLink for its initial users, for savings and also duty of care. Riot Games global travel wizard Sean Parham used the word to describe his firm’s rationale for soon joining the United pilot. He said the company spends about $14 million on air travel, but 30 percent of that is booked outside the preferred channel managed by Adelman Travel.

United managing director for sales and distribution Amos Khim said the unused ticket issue is one that is preventing “unequivocal support” for the TripLink program. Another is agent service for TripLink-booked records.

Sharpe said she would like to see GBT have access to TripLink bookings so its agents can help her travelers with changes or complex bookings. “They’re not being handled by the TMC now,” she said. “We have not worked with GBT to do any servicing of those bookings; they’re not prepared right now to do that. We’re not looking at this as a replacement of the TMC. The TMC does a lot of valuable things for us.”

“Absolutely,” Parham agreed. “I want to see TMCs be able to support those bookings and help us analyze opportunities but at the same time I feel like if the TMC steps up and can show greater value, we may see fewer bookings go to TripLink.”

American Express Global Business Travel vice president of digital traveler Evan Konwiser echoed Parham’s comments. “My job is to make TripLink completely unnecessary and obsolete,” said Konwiser at BMTTE. “My job is to make the TMC channel so good that travelers have no need or desire to go anywhere else. That being said, we’re not going to be delusional here. We know there are gaps in the quality of many of these elements for a whole lot of good reasons and some bad reasons. So to the degree that clients need or see value in partners delivering other parts of the ecosystem, our job is to be customer-centric and support our clients.”

Asked specifically whether Amex GBT has a company policy about supporting TripLink, Konwiser said no.

GBT plans to acquire KDS, which in 2013 flirted with the “open booking” concept. Konwiser last week said, “Nothing in the context of KDS has anything to do with open booking.”

United’s Khim said it’s taking time to assess industry priorities because he often gets mixed messages on the needs. This may be partly because some TMCs are embracing TripLink (while acknowledging uncertainties) and others are rejecting it.

To access records, Khim said, agents can use United’s website by entering the passenger name and record locator. However, he said some agencies have concerns about the hit to agent productivity.

“It’s not in a travel agent’s standard workflow,” Khim said. “An agent is accustomed to more tools and capabilities in their GDS screen or desktop.” He noted travelers can call United at no charge, and many business travelers have “priority desk” access as part of the airline’s Premier program.

Another lesson learned in the beta was that participating corporate travelers found it cumbersome to have to declare on the website that they were traveling for business. There was an easy fix; United made “business” the default choice for TripLink-connected loyalty program members.

A Necessary ‘Stopgap’

As she has before, Sharpe last week said the reason she’s testing TripLink is that existing booking tools powered by global distribution systems are failing to deliver complete content. Airlines, hotels and car rental companies, she said, are “being commoditized” by GDSs. “The resources suppliers are putting into their websites to drive business are important,” Sharpe continued. “The GDSs need to do something if they will remain relevant.”

She said about one in five company bookings are going outside those systems. TripLink is “a stopgap,” she said.

“It’s not for everybody,” said Parham. He repeated some of his concerns about travelers not emailing itineraries and inaccurate parsing when they do. The vast majority of supplier bookings covered by TripLink still require the email parsing component. A few suppliers, like United, are building the sorts of direct connections that offer seamless synchronization. “I’ve been pressuring Delta as well,” said Parham.

“We’re getting bookings and it seems to be working,” said Khim.

Would United partner with other companies to expand the concept, say different expense software providers?

“Concur is the one that has offered the most end-to-end support for authentication and reporting that other partners don’t have,” Khim said. “However, we get requests from customers who may not be Concur customers who want us to tie into some of their systems, as well. We have our eyes open. Being able to verify someone is an employee of a certain company is important to United, to ensure the company is not letting its discounts go out to random people. Airlines now are putting more time into solving that.”

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Getting Past The Travel Agent Workforce Crunch

Adoption of online booking technology means corporate agencies can grow without a commensurate increase in headcount. But when new travel agents are needed, especially as the retirement bubble looms, how do they find them and what competencies are they looking for?

For young people considering their careers, travel isn’t as glamorous as it used to be. There are fewer perks. Many can work remotely, and that flexibility helps an employer manage its workforce, but pay is below average. At the same time, agents today need a broader range of skills than their predecessors. And it’s not just agents. TMCs are thinking differently about account management, IT and software development personnel.

For years, agencies relied on referrals from within the industry and recruiting from competitors. Some, big and small, still do. They fill spots because they know someone who knows someone. Others don’t like to do it that way anymore.

“The average age is increasing within TMCs,” said Christian Dahl, BCD Travel senior vice president of talent management and global human resources. “It’s the usual suspects when we recruit. The same people who used to work for us come full circle — Amex, CWT and back to us. We need to break that circle.”

travel agent trainingThe Company Dime spoke with executives at more than a dozen corporate travel management companies. They face a workforce crunch now, or expect to soon. Each has a different approach to the challenge.

Some TMCs look for new agents fresh out of school or from other industries. They want recruits to have business savvy and a service orientation. It’s not just about building relationships, though that’s always helpful. A love for travel is nice to have, but it’s not always a pre-requisite. Same for industry knowledge. To keep pace, incoming agents should multitask in multiple channels and work efficiently. They must learn complex and ever-changing industry pricing and supplier contracts. Transactions not flowing through self-service technology typically are the trickier ones.

“The skill set is changing pretty dramatically,” said Casto Travel president and CEO Marc Casto. “We are asking them to know more — new solutions, new tools.”

Casto said he sees “ample opportunity” to find corporate agents, but needs to “look further afield.” Like Gant Travel and others, Casto is using offshore services.

Hire Ed

In the United States, some TMCs say they have healthy internship programs with local colleges. Others don’t find much interest.

FCM Travel Solutions USA president Billy McDonough said the industry needs to better promote careers. That’s why FCM raises awareness at universities. It draws interns from several, including Northeastern University.

While it’s true that some travel agent schools shut their doors during the past 15 years, there are dedicated collegiate programs today.

Dormant for more than a decade, Travel and Transport’s Travel Academy reopened a few years ago in conjunction with Omaha’s Metropolitan Community College. The agency had closed the program because it became harder to fill seats, but that meant trouble finding good agents as the company hit a growth spurt.

Travel and Transport vice president of human resources Jim Winterscheid said there was a perception issue. Maybe people thought “the Internet killed traditional travel agencies,” he said. “There was probably a lack of understanding from the general public that we were a growing company. We thought it was on us to prepare the next generation of agents.”

Now, Travel and Transport hires about 80 percent of those who earn an associate degree through the program. They are more “well-rounded” candidates, Winterscheid said. That’s because they must meet requirements of the degree rather than only the TMC’s training.

Between MCC grads and interns on one side and retiring personnel on the other, Travel and Transport’s average employee age in the past three years dropped by about two years to 47.5.

Ovation Travel Group in 2014 opened Ovation Academy in partnership with New York’s Monroe College. It includes classroom and online coursework and apprenticeships with veteran agents. Ovation EVP Michael Steiner said there’s “a lot of heavy lifting to get qualified travel consultants,” but it’s an essential task. About 25 students go through each 10-week class. Roughly half end up staying at Ovation long term.

Amadeus in 2014 brought Amadeus Training Services to North America. It partnered with Seneca College’s Tourism and Travel Services in Toronto. Students get trained in Amadeus reservations technology. American Express, Carlson Wagonlit Travel and Vision 2000 Travel Group are among those that have placed grads.

In 2015, Amadeus began a similar program with Embry-Riddle Aeronautical University. This year it added Miami Dade College. It also works with Canadian Tourism and Hospitality Institute and Atlantic Cape Community College.

Amadeus North America COO Vic Pynn said agents today must be more fully versed in all types of transactions. That includes refunds, exchanges and cancellations brought on by flight disruptions. “It is a lot easier to sell a service for disruption that involves humans rather than only technology,” he said.

At BCD Travel, Dahl said dealing with the talent crunch has been a priority for several years. Existing employees go through training to build up “their confident self,” he explained. The idea is to add competencies as the industry evolves, based on specific roles. The training centers on service excellence, negotiation skills, interpersonal relations and “managerial courage.”

Finding new employees means reaching into other service industries. “Then we’ll train them on the agent specifics,” Dahl said.

Other TMC execs shared that sentiment. McDonough said that while FCM sometimes gets agents from other TMCs, “I personally prefer to take raw talent and train them our way.”

Egencia, too, has changed its recruiting profile. “It’s folks who have worked in customer service-related fields – not necessarily travel,” said senior director of customer service Phoebe Schultz. “In the past it was always travel.”

As such, travel’s ins and outs now are more of a focus in Egencia’s training than in the past. The first pilot of the TMC’s new training program is ongoing.

American Express Global Business Travel wants “problem solvers,” but also those with “deep travel industry experience,” said vice president of talent management Danielle McMahan. She said GBT also likes to develop some new workers. That includes returning veterans and their spouses, and the older crowd looking for more flexible, part-time work as they near retirement.

To address channel shifts and client demand for personalized service, GBT vice president of global service and delivery Stuart McReynolds said the company essentially is “in the process of rehiring our current staff.”

The channel shift, McReynolds said, isn’t just about online versus offline. There are new technologies and other ways to communicate. “Travelers are moving from digital to non-digital as they move throughout their trip,” he said. “The way we organize our talent amid that shift is more important.”

Execs also discussed the need to keep younger workers engaged and incentivized in a dynamic, fun environment. “People entering the workforce now have different needs and wants than workers years ago,” Steiner said. “With that you need a different approach to ongoing training and overall culture.”

AmTrav thinks of its agent development plan like a professional baseball team’s farm system. Using sites like Careerbuilder and Craigslist, it hires recruits to work at sibling company cheapair.com. These people likely have no travel industry experience. They get trained on the company’s self-built, universal agent desktop. “Once they learn the booking tool, that covers a lot,” said president Craig Fichtelberg. “We skim the best off the top and promote them to the AmTrav Corporate Travel team.”

These workers show a propensity to provide a high level of customer support and understand corporate travel policies and cultures. “We have been surprised to see how quickly they can make the jump,” Fichtelberg said. “We discovered a lot of these young people are more savvy than people think in terms of understanding travel.”

The next step is moving to AmTrav’s “all-star team.” That’s where agents serve accounts with VIP, international and other complex needs. Perhaps they move into an account management role.

About Those Green Screens

AmTrav built its platform so agents need not use cryptic GDS languages. Others are starting to move in that direction and training new agents on newer desktop systems like Sabre Red and Travelport Smartpoint. Some haven’t moved that way at all. Most view familiarity with old-school green screens as foundational, and often easier. It appears that at most TMCs, it’ll be the case for at least a while longer.

Casto said his TMC about two weeks ago implemented Sabre Profiles companywide. “It is the first step for training on something that is not cryptic,” he said. “We’ll need more well-rounded people, flexible in both, but we’ll still be in a transition phase for at least another five years.”

At Christopherson Business Travel, there’s preliminary planning underway to train new hires on point-and-click agent tools. “We are taking baby steps towards hiring millennials to use intuitive interfaces,” said CEO Mike Cameron. “It’s not a problem yet. We haven’t had to do it.”

Sharing a common observation, Balboa Travel senior vice president Stephen Thomas-Schulere said agents are “creatures of habit.” Balboa’s agents still use native GDS commands, but those are augmented with newer tech. Internal training helps agents stay current on GDS updates, Thomas-Schulere said, but they also learn how to apply new tools that can improve the reservations process. Ninety-eight percent of Balboa’s agents work virtually.

Some TMCs, of course, built their own agent tools. Egencia’s Shultz acknowledged that “we have been a bit challenged to get folks who have years and years of back-end GDS experience to use our tool.” She said that’s something addressed by the new training program.

BCD’s big focus is on the TripSource app. That means positioning agents to walk travelers through the technology. “There are some interesting developments on multi-channel interaction,” Dahl said. He cited webcams and chats. “That is a different skill set for the agent at the other end than the typical green screen.”

Beyond Agents

New agents aren’t the only kind of employee TMCs need.

Casto said account management “probably is the hardest area to fill.” He said account managers need “all the skills of a frontline agent and the etiquette and personality of a front line sales person. It is a curious blend of personality types as well as knowledge and skill set that is in short supply.”

Amex GBT has been “talking a lot” about the role of the client manager, McMahan said. “Is it someone who is in support of servicing the client or are they on the sales side in terms of helping the client realize more value from our product suite? We are in the midst of that debate, really defining what that profile and future skill set is. That will enable us to analyze our current workforce and who we need to train for that future role and maybe move around some things within the organizational structure.”

Execs from a few TMCs said it’s no longer the case that account managers always come through the agent ranks. Effective ones today must understand economics, clients’ procurement focus and negotiations. They are expected to act as consultants. Some TMC training takes that into account.

“It’s the main reason for our Management Associate Program,” Dahl said. “We bring in people who understand business, studied business and know the dynamics of business negotiations, and more easily transition them into an account management role.”

At Ovation, there’s a growing effort to bring in people from clients’ industries — law, fashion, finance, professional services. Steiner said that’s for account management, business intelligence and business development. “We train them in travel management and they can bring expertise from specific industries that are important to our clients,” he said.

IT and software development are other areas where some TMCs have big needs. It’s a function of how much tech they build themselves and how much they must integrate. A growing number are providing business intelligence, data visualization, portals and apps. All corporate TMCs must have personnel to support online booking tools. All must address data security.

CBT is paying big fees to recruiters to find developers, including user interface/experience specialists. “We don’t get referrals for those folks like we get for agents from people we know in the industry,” Cameron said. “It’s super competitive and very expensive. The complexion of our team definitely has changed to be much more tech-oriented. We are doing more testing with clients, agents and internal support people than we have ever done.”

Egencia also needs those kinds of people to develop its tech. Being in a tech hotbed like Seattle makes that tough. That also goes for Casto and its neighbors in Silicon Valley.

GBT uses “sophisticated strategic workforce planning analytics to understand where are populations of talent,” said McMahan. It found one in Phoenix, where the company opened a new tech center.

“We have a hybrid model in terms of bringing in full-time people and contract labor to help us fill gaps,” she said. While travel is in a war for tech talent like any other sector, “the pace at which we are building may be different. We have had to scale up pretty quickly to play catch up with other industries.”

Additional info: Among other agent training programs, Travel Leaders Group for more than three years has supported Travel Leaders of Tomorrow. It’s a virtual program that expected to educate more than 175 participants this year.

AllStar Travel Group in 2014 created the ATG Business Travel Academy but it’s not currently operating.

The American Society of Travel Agents offers the “Becoming a Travel Agent” online course and handbook, and a list of U.S. travel schools.

Travelport runs the Travelport Academy and has sponsored some local education efforts. Along with several other travel companies, it also participates in the Global Travel & Tourism Partnership, an industry effort to develop careers. A Sabre official said the company partners with agencies on training.

The Association of Corporate Travel Executives’ Around The World “immersion” program is a six-week course sponsored by BCD Travel. It’s for travel pros and, through a fellowship, select university students. Fellowship recipients are expected to accept a short-term employment contract with the program’s sponsor. BCD Travel since 2012 has aligned its Management Associate Program with ACTE. Of 12 people it put through, 10 are still with BCD.

The U.S. Bureau of Labor Statistics in December estimated that overall travel agency employment between 2014 and 2024 will decline by 12 percent, or 8,700 positions. That compares to 7 percent growth for all occupations. The median annual wage for travel agents in May 2015 was $35,660.

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CWT, GBT Commit To Third-Party Tool Support But Also Proprietary Plans

New York — Buying a corporate booking tool isn’t at the top of the to-do list for Carlson Wagonlit Travel. As rival American Express Global Business Travel works to close by year-end its acquisition of KDS, CWT will leverage its CWT To Go mobile app.

Speaking here last week at the Business Meetings Travel and Tech Expo, CWT CEO Kurt Ekert all but ruled out buying a booking tool. “Even if you build a better mousetrap, it’s very difficult to unseat the incumbent and there are very thin, if any, economics in that part of the industry,” said Ekert. “So rather than trying to fight an uphill battle to displace established players, we’ll work with them as appropriate. We’re going to focus on areas where we can win.”

Ekert said there are around 100 corporate booking tools in the world. “They have been chosen by corporate travel managers because they offer a good service,” he added. “Whether we like it or not, interfacing with those booking tools in a manner that meets the needs of travelers and procurement folks is critically important.”

CWT during “the next 12 to 18 months” will deliver “a fundamentally different consumer experience” via the mobile app, said Ekert.

Kurt Ekert

CWT CEO Kurt Ekert

“You’ll see that be expanded and potentially even move in a bit to the desktop environment,” he said. “It will be probably not as functionally heavy as a traditional corporate booking tool, but it will be much more consumer-oriented.”

CWT To Go uses technology from WorldMate, which CWT bought in 2012. Officials have said they’re funding the app’s ongoing development by maximizing hotel commission revenue. This approach makes less sense for larger clients that either collect commissions themselves or use non-commissionable, negotiated rates. However, the CWT app does make negotiated rates available to users.

From their long history of cooperation, CWT and KDS have a lot of mutual clients, mainly in Europe. While some sources in travel management seem certain that joint clients won’t be KDS users for long, CWT itself has not gone there.

“The KDS ownership change does not impact CWT clients or the current working relationship we have with KDS,” according to a press statement. Ekert suggested CWT would treat KDS like any other booking tool.

Asked about other TMCs that distribute KDS, American Express Global Business Travel vice president of digital traveler Evan Konwiser said they should be happy their “relatively small” tech partner is now owned by a corporate entity that will invest in it.

“The horsepower has increased dramatically,” Konwiser said during the BMTTE conference. “We’re committed to operating KDS as an independent entity. We want them to continue their innovation. We want to retain their talent. It would be very silly of us to spend money on a technology company and make it operate only in the GBT fabric.”

Still, expect the GBT version to get the best bells and whistles.

Konwiser said the acquisition is about “providing more seamless, end-to-end content, pricing and servicing. And it’s about access to an incredible team to help drive our innovation agenda and our product agenda.” Nevertheless, he said, “We’re still focused on choice and our clients having access to all the booking tools. We support pretty much everyone today because of our global reach. We intend to continue to do that. No tool will be right for every company in every market, and our partners are really important to us. It’s not about becoming an Egencia model with one integrated product.”

Konwiser continued: “TMCs like to complain a lot. ‘We can’t control the booking tool. We can’t influence them. We’re getting in line, just like you are. You go call them, maybe they’ll listen to you.’ This is the refrain all the time, even from very large clients. We have to put our money where our mouth is.”

What about the expense management portion of the KDS suite? “It’s not something I will talk about,” he said. “It’s not part of our work right now, meaning we’re focused on the travel piece, not the expense piece.” Konwiser admitted he doesn’t know whether the expense software would even be maintained.

Several KDS travel clients said they are in “wait-and-see” mode on the acquisition. On the condition of anonymity, one said, “given that a significant number of KDS accounts use TMCs other than Amex, I think they’ll have to proceed with caution.”

Speaking during The Company Dime’s first Teleconference last month, World Travel Inc. president Dee Runyan was in full eye-rolling mode. “I have seen this movie,” she said. “I think they’ll struggle to maintain productive commercial relationships with non-GBT TMCs.”

Like other TMC sources, Runyan said her company is not likely to recommend a booking tool owned by a large competitor. She also cast doubt on the potential for innovation, saying a “flourishing tool needs the entire market kicking the tires.” For a GBT-owned tool, she said, GBT priorities would obviously top the list.

WestRock corporate travel manager Karen Hatch held out hope for a positive impact. Also speaking on the Teleconference, she said GBT could make KDS a more serious choice in the United States, where online booking tools have been flagging. “There are so many better tools in the leisure market,” Hatch said.

Terms of the KDS deal have not been disclosed. KDS posted losses in three of the past five years, including a $673,082 loss for the year ending March 2016. Revenues that calendar year were up 14 percent to about $23 million. The company had around 100 employees when it issued its latest annual report a few months ago.

Disclosure: BMTTE contracted The Company Dime to provide content for last week’s conference.

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Explainer: ‘Smart Contracts’ On The Blockchain

In the real world, contracts are a necessary evil. They require too many eyes and are full of unintelligible language. They can leave too much room for interpretation. Some are designed ideally to never be used, in the legal sense.

Let’s say your company commits volume to a supplier in exchange for a discounted rate. You need to review your firm’s performance. Adjustments may be made. Administrative cost is apparent. Or say your online booking tool goes down. It’s a bad outage, and you have a service-level agreement in which compensation is due. What happens? Probably lots of back-and-forth. Maybe some compensation.

Now picture both of these scenarios, but the rules of the agreements are digitally programmed. When conditions are met, they are recorded instantly. Payment happens in real time. It’s transparent to involved parties and leaves an airtight audit trail.

That’s the promise of a “smart contract,” running on a blockchain database like the one that powers digital currency Bitcoin.

smart contract

Image: Thinkstock

“Smart contracts are stored and executed on the blockchain and are recorded in computer language rather than legalese, ” said Travel Tech Consulting’s Norm Rose. “They’re set up in the blockchain in a way that triggers certain actions based on agreement.”

Blockchain is a type of distributed ledger. Usage and payment are recorded openly (to those with permission) and permanently.

A corporate traveler checks out of his or her room after a night’s stay. Payment is transferred immediately and the account of volume delivered by the client to the hotelier increases by one room night. Perhaps the client has then crossed a threshold, and the next traveler’s rate would be a tad lower, rewarding loyalty.

Speaking of loyalty, this is the technology that some imagine will run frequent user programs in the future. Same for identification at the airport.

The potential is big, but also rather far off.

Thinking about the lodging example, recall that hotel technology is still a giant, stinking mess. Even a single chain may use multiple property management systems.

AirPlus managing director and chairman Patrick Diemer this spring said that his company “looked at the blockchain development quite thoroughly, and we think in the short and midterm it will have zero effect on business travel. The applications where I believe it will have the most benefit are outside business travel — for instance, registries for real estate.”

According to Rose, “I don’t think we’ll see real blockchain usage, in general, for three to five years. As financial intuitions implement blockchain, travel will come along as a byproduct.”

A June Cognizant paper on blockchain smart contracts in manufacturing indicated that the IT and consulting firm expects “the pace of blockchain’s disruptive innovation to accelerate in the next 18 to 24 months.”

IBM, banks and others are investing in it.

“If and when it does become mainstream, blockchain technology could change the back end of the travel process — how things are paid — though probably less around airlines, which have established settlement,” said Rose. “It won’t affect the day-to-day life of a corporate travel manager or travel management company. But it could change things in terms of transparency between suppliers and intermediaries. It could shorten payment times and enable loyalty to be used as an overall form of payment. It could also reduce fraud.

“It’s something to keep your eye on,” he concluded.

Related Resources

Fast Company: What Are Smart Contracts? Cryptocurrency’s Killer App

Bits on blocks: A Gentle Introduction To Smart Contracts

PWC: Blockchain and smart contract automation: How smart contracts automate digital business

The Economist: Not-so-clever contracts

Video from consultancy ChainThat:

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Unused Tickets Still Require (Micro) Management

Back in the day, business travelers used physical airline tickets. This helped, though did not ensure, that when non-refundable tickets went unused, credits would be applied to other trips. Then tickets went electronic, and they were more often forgotten. Managing unused ticket credits remains a pain in the a$$. And that’s company cash. So when an employee leaves the firm, one buyer suggested, taking airline credits with them is tantamount to theft.

Even short of that, the numbers aren’t inconsequential. “Mid-to-large scale organizations can easily write off $10,000 each month in unused air credit,” according to FCM. “Corporations that track and reapply unused tickets typically save between 5 percent and 7 percent on travel spend,” according to BCD Travel affiliate Acendas.

Christopherson Business Travel found that during the 90-day period ending in August, 7.6 percent of clients’ total unused tickets had value. Most were fully unused, while some were partially used tickets and some were already-exchanged tickets with residual value. “It is a big deal,” said CBT president Mike Cameron. “A lot of money is lost.”

Credits typically are available for up to a year after the original ticket was issued.

unused ticketsTravel management companies and automation providers help organizations recover this otherwise lost money. Any competent TMC reports on available credits and their proximity to expiration. Credits are applied less airline fees. Airlines under certain circumstances will allow name changes, say when an employee dies or leaves the company. Some carriers have become more flexible and established processes to help with that. It’s a common component of preferred relationships.

At a basic level, how to treat unused non-refundable tickets also should be addressed in travel policies. Here’s a simple example from the policy of Miami-based wireless services provider Brightstar Corporation.

If a trip is cancelled after the ticket has been issued, any resultant flight credits are the property of [the] company and should be used for future business-related travel. Personal use of airline credits paid for by [the] company is strictly prohibited.

Brightstar global travel manager Miriam Abujasen wished that was all she needed. Such policies require enforcement, which takes work.

“There’s still money left on the table,” Abujasen said. “You have to kind of micromanage it. There is automation. You can hire a third party. But at the end of the day, it’s about accountability on the traveler.”

Brown University’s policy specifically states it “is the responsibility of the traveler to track unused airline tickets for future business use.”

Abujasen said that in a prior role at a bigger company with more resources, all the automation she could obtain didn’t stop “that same guy” from appearing over and over on the list.

Multinational information and analytics company Relx Group enlists its TMC, BCD Travel, to manage the process.

“We try to use as many unused non-refundables as possible,” said Relx global travel director Jim Sisco. “Up to 90 days prior to expiration, we try to use it for the same traveler. Within 90 days, we try to use it for the business unit (to be fair). Inside 30 days, the ticket can be used for anyone.” For the same traveler, he noted, the process is fully automated.

UCB Inc. senior sourcing specialist Anna Kershaw said the multinational biopharmaceutical firm is working to better utilize negotiated benefits for name changes on international tickets. “The ticket holder can make changes directly with the carrier,” she said. “We have implemented a way to have travel counselors be trained to highlight those tickets that are held in the credit bank as unused by someone who has left the company, and move those up as higher priority to be reapplied.”

In addition to monthly TMC reporting, multinational logistics and manufacturing company Optimas OE Solutions highlights available credits for travelers using the online booking tool, said global indirect purchasing manager Mabel Garcia.

Providers like MagnaTech also feed information to the traveler’s profile so agents, too, can see it.

Boring, Essential

Cornerstone Information Systems CEO Mat Orrego called unused ticket management “a vital part of any buyer’s program.” The company has found that 5 percent of total tickets go unused.

“Unglamorous product that it is,” said MagnaTech CEO Jacques Thibault of his company’s related offering, “if we took it off our menu of services I think we would receive death threats.” MagnaTech recently enabled travel agency clients to automatically calculate the value of partial credits.

Because of its importance to clients, suppliers are continually tweaking and updating their services for this process.

AmTrav co-founder and president Craig Fichtelberg said clients are happy with a recent modification in which available credits are displayed at the front end of the online shopping process rather than on the purchase page. This allows travelers to consider credits before choosing an airline.

An Egencia official said the company’s booking tool does the same.

Amadeus released functionality in the summer of 2015 to speed up reissues of unused or partially used tickets because it had been taking an average of 28 minutes for agents to complete the task.

FCM this year introduced programmable email alerts to travelers and the ability to track non-GDS tickets. Carlson Wagonlit Travel last year included unused ticket info in its business intelligence suite. American Express Global Business Travel in Canada last year automated the name-change process with local airlines. It allows clients to create rules about when credits should be reassigned.

Miami-based Forest Travel, which targets small and medium enterprises, a year ago released a dedicated service for unused tickets. For a $50 per-ticket fee on agent bookings only, “We allow clients to have flexibility on cancellations,” according to corporate travel director Carmen Stinson. “They don’t have to deal with airline fees and managing credit.” Stinson said Forest’s clients typically don’t have enough volume to warrant much in the way of waivers and favors from airlines. So the agency relies on its carrier relationships to help out. “On average,” she said, “a company has 10 percent to 20 percent of unused tickets to salvage.”

Additional info: The BTN Group and Altour last year identified unused ticket management as a “frustrating booking issue” for about one in ten of 150 buyers polled. A December Global Business Travel Association survey of 103 travel managers found that 97 percent value name-change waivers for tickets and ticket credits as part of airline agreements. About three in five said those are included in their contracts.

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The Company Dime, Festive Road Partner On New Monthly Virtual Business Travel Event

The Company Dime and business travel engagement consultancy Festive Road are delighted to announce a media partnership to co-produce our new Teleconference series.

The relationship will see Festive Road partners Caroline Strachan and Paul Tilstone providing insights and content ideas to The Company Dime co-founders Jay Campbell and David Jonas for this new, monthly live and recorded format. In addition, Festive Road partners and their associates will act as subject matter experts, guest presenters and inquisitors throughout the series. Each episode includes an analysis of the news, feature discussions and industry pitches. You can listen to the beta episode on airline distribution here.

Festive Road“We have admired Paul’s and Caroline’s work in the industry for many years and our companies share the same spirit,” said The Company Dime co-founder Jay Campbell. “We are both straight-talking, independent and hungry for answers. This is a great example of a very special transatlantic relationship.”

Paul Tilstone, managing partner of Festive Road, agreed: “The word respect and David Jonas and Jay Campbell go hand in hand. We look forward to bringing the best of both of our work together for an exciting series and providing some in-the-thick-of-it perspectives to the magical work that business travel professionals do.”

Here’s more info on the monthly Teleconference.

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Six Reasons Concur Wants Hipmunk

Concur last week agreed to buy consumer travel search company Hipmunk. This will help it “deliver consumer-grade products to corporate customers,” according to Concur. Beyond that, the firm’s execs are saying very little. Here’s some educated speculation.

Hipmunk wasn’t going far in the consumer space. For months it has been talking to potential strategic investors — including well-known travel distribution companies. According to reports, Hipmunk’s latest round of investment was at a reduced valuation. The consumer search space is just too competitive.

Concur has said it would maintain the consumer presence, but that’s not why it’s buying the company. We hereby present the top six reasons sources said Concur agreed to buy Hipmunk.

1. Talent

Face it, booking with Concur’s online booking tool is no fun. “Crummy” is the word a supportive Concur partner used. Another described as “bricked” the new user interface Concur mandated early last year.

Concur president Elena Donio at a client conference in New York on June 1 talked about the importance of user feedback. “We’re listening,” she said, for both “little things that aren’t quite right” and “big rocks we want to move together.” Concur VP of user experience Robb Nielsen said the company had conducted more than 600 usability tests in the prior year. Concur revealed additional booking interface updates that same day.

Assuming they stick around, Hipmunk’s designers and developers seemingly can only help additional iterations. Perhaps the Hipmunk people will help Concur restart innovation after it took a back seat last year. Innovation in the expense management company’s travel services traditionally does come from acquisitions.

Skift, which reported the Concur-Hipmunk news first, indicated that Hipmunk has more than 50 employees. They’re not necessarily expected to help with reliability and uptime. Concur’s 2015 infrastructure issues appear to have slowed to a more sporadic frequency, based on regular monitoring of its status site.

2. TripMunk

This may be the most impactful possible use of Hipmunk’s technology and people. While potentially game-changing, the supplier-direct aspect of Concur’s TripLink program has faults. It requires travel management company participation, but even partner TMCs aren’t confident in how it will play out. More than four years in, it lacks key suppliers. Some corporate travel managers worry that it opens the door to fragmented data and processes. Others have said it doesn’t work.

chipmunk

“No comment.”

The most legitimate complaint among buyers may be that when using TripLink on a supplier site, there’s no comparison shopping. Enter Hipmunk. The company’s technology is designed to search supplier sites and then send users to them for booking. Seems like there’s no reason they could not arrive there with their login info pre-populated, allowing them to book corporate rates. The more you think about it, the more obvious this becomes. Like everything about TripLink, though, this is easier said than done.

AmTrav CEO Jeff Klee said he thought the Hipmunk deal is a great move for Concur, for some of the reasons listed here. He’s also one of the few industry leaders outside Concur who believes in TripLink. “I’m in the minority,” he said. “I’m bullish on TripLink. It speaks to a more general issue in the industry. As a long-term play, I think it’s viable. And it’s definitely possible to put a user interface like Hipmunk’s on top of it.”

Because it’s corporate rather than consumer travel, perhaps Concur can even urge the likes of Delta back into the Hipmunk fold. Of course, the airline also would have to show interest in TripLink, which it hasn’t. Delta didn’t comment on the Concur acquisition.

3. Price Checks

As a variation on No. 2, Travel Tech Consulting president Norm Rose suggested the move could help address a common pain point for travel managers: travelers who think they can find better rates outside the approved channels.

“I’m speculating,” Rose said. “But it would be interesting if they could integrate that meta search activity into the online booking tool, like a price check or benchmark of the best price. That would be valuable for Concur travel customers so they shut off that concern.”

Atmosphere Research’s Henry Harteveldt came up with the same possibility. He also put No. 2 and No. 3 together in a vision that allows travel managers to set preferences. A customized Hipmunk search window could, for example, suppress non-preferred suppliers. One way or another, he said, Hipmunk’s engineers are likely to improve trip planning for Concur’s users.

4. Chatbots

Concur’s statement called Hipmunk “a leader in the cutting-edge space of artificial intelligence-powered travel search and travel bots.”

Its Hello Chat for Facebook Messenger and Skype is imperfect, according to some who have tried it. But as we have written here and there, natural-language search and chatbots are really hot.

Evature has been thinking that for years. It was Concur’s first partner in natural language search. Evature CEO Barry Volinskey wasn’t immediately sure what to make of the Hipmunk announcement last week, a few hours after learning about it.

“Conversational commerce could be really useful,” said Harteveldt, who Concur briefed on the announcement and quoted in its press release. “However, that places enormous strain on back-end systems.”

5. Calendars

Developers have been trying to integrate e-calendars with corporate travel booking for many years. Concur has become more serious of late, partnering with Microsoft.

Hipmunk has a lighter integration going, where it makes suggestions about booking travel based on Gmail calendar events.

6. Hype

Concur is really good at sales and marketing. With additional competition in all of its key sectors and a calendar year full of conferences, it always needs something to promote.

Hipmunk calls to mind consumer travel innovation, and that’s a cool-sounding thing to talk about.

Additional info: Sources included about a dozen corporate travel tech executives and consultants. Concur has not offered an executive interview in response to requests sent since Sept. 13.

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Offsetting Trends To Keep 2017 Airfares About Flat In North America

U.S. airfares have been falling this year, just as they did last year. According to three forecasts published by travel management companies, that will change in 2017, but not by much. In North America, a combination of drivers likely will keep pricing stable.

The demand outlook is uncertain. Low-cost carriers are expanding domestic U.S. and transatlantic services. Fuel prices still are relatively low. These factors apply downward pressure on airfares.

However, crude oil prices have crept up this year and are expected to rebound further next year. Big U.S. carriers aren’t adding much new capacity. Some airlines say close-in corporate demand is fine. These indicators suggest rising prices.

The net result in North America, according to forecasts by BCD Travel’s Advito and Travel and Transport, is little to no change for expected 2017 corporate airfares. A Carlson Wagonlit Travel/Global Business Travel Association forecast issued in July called for a 3.7 percent increase.

Noting that load factors in the United Sates are above 80 percent, CWT Solutions Group Americas senior director Yon Abad said carriers “are in a very good position” to push pricing. Despite “a lot of competition,” he said during GBTA’s summer conference in Denver, “I think we can trust the U.S. airlines will find a way to increase fares next year.”

airfares

Image: Thinkstock

As always, capacity is a primary consideration. Advito noted that American, Delta and United “have scaled back planned capacity growth for the rest of 2016 in a bid to maintain or grow average fares.”

After rising 5.7 percent in the first half of this year, Delta’s capacity growth will slow to 2.5 percent in the second. Its transatlantic capacity for winter 2016-2017 will be down for a second consecutive year. It cited demand impacts from violence in Paris, Brussels, Nice, Istanbul and Munich.

Southwest said it plans to increase 2017 capacity by less than 4 percent overall (2 percent on domestic U.S. routes). That’s down from this year.

“The modest domestic growth is encouraging for industry load factor and unit revenue,” according to Cowen analysts. “We expect load factors to improve and yields should follow. Southwest has historically been considered the U.S. domestic price-setter, so if fares improve for Southwest, they should improve for the industry.”

Fuel is another key element. Jon Gray of Rockport Analytics said he’s expecting oil prices to increase by about $10 per barrel next year. “That should help give a bit of rise to airfares in 2017,” he said during the GBTA conference.

The U.S. Energy Information Administration anticipates about the same for crude oil. As of Sept. 7, its estimate for 2016 Brent crude is an average of $43 a barrel, rising to $52 in 2017. By the fourth quarter of next year, EIA predicted, the average price will hit $58 a barrel.

Advito’s forecast assumes an average 2017 oil price of $50 a barrel.

Planning for higher fuel prices “is the healthiest way for us to run the business and plan the business going forward,” said Delta CFO Paul Jacobsen during a Cowen conference last week. “It leads to cost discipline and more capacity discipline internally.”

Fare Foils

Demand uncertainty, especially from business travelers, is a bit of a drag on airline outlooks. In a Sept. 9 financial filing discussing an expected third-quarter unit revenue decline as steep as 7.5 percent, United Airlines wrote that performance “is primarily impacted by demand growth not keeping pace with capacity growth, soft close-in yields, competitive actions and travel reductions in the energy sector.”

The degree and duration of the uncertainty this year is somewhat tied to the presidential election, according to Advito:

“This November’s election is uniquely unpredictable. If Donald Trump wins, businesses will likely put investment on hold as they await more detail on his policies. This will inevitably temporarily weaken business travel demand. Inbound travel could also be hit by this uncertainty around Trump’s foreign policy. On the other hand, if Hillary Clinton wins, the period of uncertainty is expected to be much shorter, and the risks to demand lower.”

More clear is the deeper penetration of low-cost carriers. Though Southwest is slowing growth in the domestic U.S. market, Spirit Airlines isn’t. The carrier expects full-year 2016 capacity to be up more than 20 percent. “The Big Three are paying close attention to the threat posed by this rapid expansion and fighting back on two fronts,” according to Advito. That’s by upgrading from older regional jets to newer, bigger planes and offering bare-bones basic fares.

Spirit has raised fares a few times this year, according to JP Morgan analysts. “While Spirit’s domestic footprint may appear diminutive, its pricing impact is disproportionately material given it publishes some of the most problematic fares in many of the nation’s largest markets,” they wrote in a Sept. 2 research note.

There’s also been an influx of low-fare competition across the Atlantic.

Norwegian Air Service, for example, already flies 37 nonstop routes between the United States and Europe. That’s more than any other European carrier. New Paris services started this summer. Four routes to Barcelona start June 2017.

“Low-cost, long-haul services have tripled across the Atlantic since 2014 and with only a current 3.3 percent share, there is clearly room for more,” according to OAG. “WestJet’s ambitious launch of six Canadian destinations to London Gatwick appears to be delivering better than expected load factors. Reykjavik is now firmly established as a low-cost hub for both Icelandair and Wow.”

It’s not just low-cost carriers. OAG noted more transatlantic flights by Aer Lingus, Airberlin, SAS and TAP Air Portugal.

“There is too much capacity in virtually every [intercontinental] market,” according to Advito. “In some intercontinental markets, like Africa, the Middle East and Southwest Pacific, capacity growth will ensure that business fares do not rise at all.”

Given macroeconomic sluggishness in Europe, all of the new supply across the Atlantic poses a particular challenge to U.S. carriers.

“We see continued weakness in the transatlantic — capacity-driven and to some extent demand-driven in terms of some of the economic uncertainties,” said AA chief integration officer Bev Goulet yesterday during a Morgan Stanley conference. She also pointed to excess capacity and therefore revenue weakness on Pacific routes. Goulet contrasted those challenges with domestic, close-in demand, which unlike United’s, is looking “pretty good” for AA.

Mixed messages from the market don’t make travel budgeting easy for corporate buyers. As always, expectations vary by market.

“Overall, upward and downward pricing pressures are likely to cancel each other out,” Advito concluded. “Airlines are expected to test the market with fare hikes to see what customers will accept, and they’ll become less generous with ‘waivers and favors.’ If oil prices start moving upwards again, as they did earlier in 2016, carriers should be able to withdraw aircraft much faster than in the past and fares could quickly rise.”

Additional info: Advito for North America predicted 1 percent average increases for intercontinental and regional business fares. It expects intercontinental economy fares to drop back 1 percent and regional economy fares to show no change. For all four fare types, Advito tracked lower average prices in every month between October 2015 and June 2016.

Travel and Transport Partner Solutions Group projected base fares overall to rise about 1 percent in North America.

According to the CWT/GBTA forecast, 2017 corporate fares will increase 3.7 percent in the United States. Specific projections for domestic, continental and intercontinental business and economy fares all are within two-tenths of a percentage point. By market, it expects the largest fare increases in Boston (4.9 percent) and San Jose (3.8 percent). The only market where it expects a drop is Washington (down 1.3 percent). The predicted global average increase is 2.5 percent.

Southwest’s average one-way fare during the first half of 2016 was about $153, down 3 percent year over year. JetBlue’s was near $158, down about 8 percent.

According to Topaz International, the average cost of clients’ domestic passenger name records during the first eight months of this year was $469. That was down from $497 in the same period last year. For international PNRs, the $3,471 average was well below last year’s $4,043.

In a sampling of 13 U.S. business-oriented routes, ARC data showed the average July ticket price (including taxes and fees) dropped in every one. There were double-digit percentage reductions versus last year for Washington Dulles-Los Angeles International; LAX-New York (JFK, LaGuardia and Newark); LAX-San Francisco; Chicago O’Hare-LAX; O’Hare-New York; O’Hare-Boston; and Boston-Washington National. Twelve of the 13 routes also showed lower average prices in March, April, May and June.

According to the U.S. Bureau of Labor Statistics’ Consumer Price Index, airfares were down 4.7 percent in June and 4.6 percent in July. CPI also charted reductions in four of the five previous months.

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Direct Airline Distribution Hasn’t Grown

Airline distribution generates more than its fair share of controversy. Battles over financial flows, technology and content often underlie potential disruption to the status quo. Yet so far, it’s all talk. The split between airline direct and indirect volumes has barely changed. In corporate travel, the indirect global distribution system/travel management company channel remains dominant.

American Airlines managing director for distribution and data commercialization Cory Garner said the carrier’s direct/indirect ratio has been “stable dating back almost 20 years.” Garner and corporate travel veterans spoke last week on The Company Dime Teleconference.

Cory Garner

Cory Garner, American Airlines managing director for distribution and data commercialization

Airlines Reporting Corporation president and CEO Mike Premo said the ratio of directly booked roundtrips at U.S. points of sale “has stayed remarkably flat” at about 57 percent for the past 30 months. Including one-ways, travel agencies booked a rising portion in that time, to 41 percent from 38 percent. This ARC data is from three large U.S. carriers representing half of ARC’s ticketing activity.

On the revenue side, a small majority, 52 percent, comes from indirect sources (excluding ancillary sales). That reinforces the longstanding truth that travel agents serving business travelers deliver premiums to airlines.

“Airlines have reached a very important level of scale on direct ticketing,” Premo said. “We would expect airlines to continue to pursue strategies to take advantage of the efficiencies and additional revenue opportunities. That said, we also see agencies serving high-value customers, and those carriers that pursue strategies to work well with agency processes will be the likeliest winners.”

Part of the reason why the status quo prevails is the byzantine financial model in corporate travel. World Travel Inc. president Dee Runyan also highlighted issues of consistency and “speed of innovation” across the distribution chain’s various nodes.

Around the edges, initiatives like Lufthansa’s GDS fee and Concur’s TripLink challenge industry conventions.

Dee Runyan

World Travel Inc. president Dee Runyan

Describing the difference between AA’s Direct Connect and TripLink, Garner said: “Direct Connect is a GDS alternative and not a distribution channel alternative. Direct Connect can replace the GDS but does not displace the TMC. TripLink is a completely different distribution channel.”

He said when AA signed on for TripLink this summer, the airline hadn’t heard overwhelming demand from corporate customers. “But there definitely was enough to get us interested,” Garner said. “For corporate clients that want that option — book through the supplier — this opens up a new channel for them to come directly to aa.com, get access to their corporate discounts and have that information sent back to Concur for expense management purposes.”

Runyan said some of her company’s customers use TripLink, but mostly for hotel bookings. More than interest in direct connection functionality, she said, customers want to be sure they capture things like conference hotel stays typically booked outside GDSs.

For WestRock corporate travel manager Karen Hatch, anything that pulls travelers out of preferred managed travel processes is a nuisance. That includes fares or rates that travelers only can find in direct channels. “As a buyer, it is up to me to find the balance,” she said. “We have to find cost savings and have to trust you not to undermine us when we offer a fare in our online booking tool.”

Hatch pines for the days “when we don’t have our business travelers questioning the integrity of what we offer through the online booking tool.”

Turning NDC Talk Into Action

Though tickets are booked as much as ever through indirect channels, new airline pricing and product options nowadays first come to the carriers’ own websites, leading to content divergence.

“We are all in search of that content,” said Runyan. “GDSs provide huge chunks of it. I don’t see that changing in the short- to mid-term. Historically every five years the airlines and GDSs got into an argument over financials but then it became an argument about technology, which is when it really did turn. We have to keep up with what the key suppliers are innovating.”

While online booking and global distribution providers are making strides here, some hope the International Air Transport Association’s New Distribution Capability will address this as well.

Karen Hatch

WestRock corporate travel manager Karen Hatch

Hatch said she is “worn out” by all the talk about NDC. “I know it’s looming out there,” she said. “But I would like to see practical usage and what the real idea looks like.”

That’s what Garner wants. AA is an NDC proponent and Garner has been directly involved in building the standard. He challenged buyers to get involved: “You don’t get what you don’t ask for.”

The corporate travel community isn’t apathetic, Garner said, but it should recognize its voice. IATA’s travel manager advisory groups are great for getting ideas out in the open, but he said dialogue shouldn’t stop there.

“You can do more than just learn about it, you can effect it,” said Garner. The standard constructed thus far “is very nice, and allows us to do things we haven’t done before. I can’t say that it truly reflects all the desires of the corporate buyer, but it should.” For example, buyers might want to negotiate a bundle of products and services specific to their companies, or perhaps just for senior execs. “You can do that,” Garner said, “if you have an NDC-empowered channel.”

IATA and NDC’s airline supporters “could probably do a better job pounding the pavement and making sure we are getting out to all our important markets.”

NDC already is in more use than many realize. “It does about 15 percent of my U.S. point of sale travel agency volume,” Garner explained. “That makes it my second-largest source of volume behind Sabre. And on top of that I have implemented NDC connections with Sabre and Amadeus to distribute paid seats. So even a Sabre or Amadeus record might be NDC-enhanced in some form or fashion.”

Mike Premo

ARC president and CEO Mike Premo

He added that AA content displayed on “just about every online travel agency in the U.S. today” comes in via the carrier’s NDC “pipe.”

Runyan is all for standards if they are widely adopted. “We spent the last two weeks as an industry not able to access domestic routes of Chinese airlines because of a breakdown there between the hosting service versus the GDSs,” she said. “There wasn’t a plan B from those carriers to offer content to non-Chinese agencies, so we were all scrambling for a workaround. While we are all very supportive of the idea of NDC, and consistency and standards in communication protocols, it needs to be a whole industry solution. There are still very important component pieces … there is servicing, exception handling and being there to support the premium traveler.”

Premo agreed that those elements must be addressed. “I see greater and greater divergence between what you can do on an airline website and what you can do in indirect channels, and that bothers me,” he said. “It ought to bother everyone in the ecosystem a lot more than it does. Things like NDC should get a hard look from people on how it will work. Clearly the financial incentive models out there today do act as a bit of a break on that, but I think content divergence will create enough friction that somehow we’ll solve that challenge. Access to this content will be coming. People should be encouraged by Cory saying, ‘We want you involved.’ ”

Additional info: According to an IATA survey, 86 of 179 responding airlines intend to adopt NDC. Garner said that includes 15 of the 20 largest carriers. Delta apparently isn’t among them. The airline never has said it’s involved in NDC development. Asked about it again this week, a Delta official said, “We are always evaluating new opportunities and eager for innovations that provide improved customer experience.”

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Sabre Builds ‘Revenue Maximization Tools,’ Wins Over Flight Centre

[UPDATE, Feb. 8, 2017: Sabre CFO Rick Simonson on Feb. 7 told investors that the Flight Centre contract would add $80 million in incremental revenue for a total run rate of $100 million expected during 2018.]

Sabre expects meaningful share gains starting next year from a new contract with a big Asia/Pacific travel agency. It appears to be Flight Centre. To win the company’s sizable Australia and New Zealand business, Sabre purpose-built new agent desktop functionality that it also will offer to other users.

Industry media and analysts reported that Flight Centre won’t renew its Travelport deal for the region, opting instead for Sabre.

“We understand that Sabre is more aggressively investing in expanding the feature functionality of the Sabre Red platform in order to meet the requirements of a large prospective customer,” according to an Aug. 3 note from Bernstein analysts. “Sabre has won that deal, which we understand is Flight Centre in Asia/Pacific, currently a customer of Travelport.” As a result, Bernstein analysts aren’t overly concerned about Sabre’s revenue headwinds from macroeconomic factors and airline capacity cuts.

Flight Centre

Image: Thinkstock

Sabre Red Workspace is the company’s agent desktop software. Flight Centre for years has been using Travelport’s equivalent. Just over a year ago, Flight Centre renewed its Travelport deal. A Flight Centre spokesperson would not comment on the switch to Sabre. The company already has been using Sabre in the United States.

Sabre has been talking up the latest advancements for Sabre Red. This summer it quoted Flight Centre’s U.S. senior vice president for IT in a related press release. Among several new functions, Sabre Red now integrates “revenue maximization tools, including unique indicators that alert the travel consultants about opportunities to increase sales and commissions while offering differentiated options that cater to the traveler’s preferences.” Sabre referred to agent alerts on potential commissions and mark-ups as “quiet indicators.”

These enhancements appear designed to support the mark-ups for which Flight Centre is infamous.

In an Aug. 25 note, Evercore analysts said Sabre in next year’s second half will enjoy a big market share jump “after converting a very large travel agency in Asia/Pacific.” They estimated the gain would be 4 percentage points in the region and 1 percentage point globally.

These are huge numbers in the GDS business. The three major players battle over more than a billion annual travel segments, for which they’re paid by suppliers. Their subscribing travel agencies deliver that demand. For subscribers, content and functionality drive decisions on which systems to use. Familiarity is a key factor, making conversions like Flight Centre’s rare. Incentive payoffs also play a big role.

Sabre CFO Richard Simonson during an Oppenheimer conference last month said “accelerated” capital spending is “related to a new win with one of the leading travel companies in the world that will go into Sabre Red 3.0 and be used across the whole community. It will turn into a significant marketshare gain and booking share gain in 2017. It could add approaching 5 points of marketshare in Asia/Pacific. Globally it can add a point of marketshare.”

Simonson noted that the Sabre Red 3.0 roll-out is “on track.” The company has said it will run “a limited pilot” later this year and start upgrades in “early 2017.”

A Sabre official said the company would not comment further.

‘Material’ Or Not, A Loss For Travelport

In financial documents last year, Travelport listed Flight Centre as one of its largest business travel agency customers. “We believe we have the largest share of bookings in Australia,” it wrote. Sabre’s win will be Travelport’s loss.

Travelport CEO Gordon Wilson last month dodged an equities analyst’s question on Flight Centre. “It wouldn’t be correct to talk about the specifics of any individual agreement especially if it’s not anything that’s material that we would disclose through the materiality requirement,” he said. “But in the overall context of our business, there are always going to be wins and losses. The balance of our business is positive.”

A Travelport spokesperson later last month said the company still wouldn’t comment.

Flight Centre in the United Kingdom recently converted to Amadeus, according to people familiar with the change. Amadeus declined to comment. “We have multiyear agreements with multiple GDSs,” according to the Flight Centre official.

Some sources figured the loss of large chunks of business from a key customer is material.

Travelport lists on the New York Stock Exchange. According to the NYSE listing agreement, companies should “ensure timely disclosure of information that may affect security values or influence investment decisions, and in which shareholders, the public and the Exchange have a warrantable interest. … Unfavorable news should be reported as promptly and candidly as favorable news.”

Securities attorney Laura Anthony in a November 2015 post discussed materiality. She pointed to adjustments to NYSE disclosure rules and proposed guidance from the Financial Accounting Standards Board. Anthony cited a U.S. Supreme Court ruling deeming information as material “if there exists a substantial likelihood that it would have been viewed by the reasonable investor as having significantly altered the total mix of information available to the public.”

“Despite this standard, the concept remains fact-driven and difficult to apply,” according to Anthony. “Materiality,” she wrote, “is a highly subjective standard.”

If not “material,” losing that business still hurts. Travel Trends estimated Travelport would lose more than AUD100 million (US$75.3 million) in annual revenue. According to its annual report, Travelport in 2015 generated $460 million in revenue through its Travel Commerce Platform (GDS) in Asia/Pacific, up 15 percent year over year. The company’s total revenue in 2015 was $2.22 billion.

Additional info: Flight Centre for the year ending June 2016 reported total transaction value of AUD19.3 billion (US$14.3 billion). About one-third is generated by corporate travel brands like FCM. In Australia, TTV in fiscal year 2016 surpassed AUD10 billion (US$7.4 billion) for the first time. In New Zealand, it topped AUD1 billion (US$742 million) for the first time. In the United States, it hit AUD3 billion (US$2.2 billion).

For the quarter ending June 2016, Sabre claimed a 36.7 percent share of global GDS air bookings. It strengthened its Asia/Pacific position last year when it fully acquired Asia-based GDS Abacus. This summer Sabre explained how it arranged the Asia/Pacific business across 29 markets.

Amadeus claimed a 43.8 percent global share in the second quarter. Travelport doesn’t publicly state its global share. During last month’s call with analysts, Wilson said, “We’ve held our own this quarter with stable share.” He added that the company grew share in France, Germany, Russia, Spain, Latin America and Africa’s “five largest growth countries.” For Asia/Pacific, Wilson noted accelerated sales and revenue growth, with big jumps in India, Hong Kong and South Korea.

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Teleconference 2: Hotel Buying

Hotel Buying
Oct. 13, 2016

Thanks to all our attendees and speakers! The recording from this event may be purchased here or gifted here for $10. Here are the accompanying slides.

On Teleconference 2, The Company Dime and expert guests examined the dynamics of the ongoing 2017 hotel rate negotiating season. ABC Global Services CEO Eric Altschul, Hilton executive director for business travel sales Maria Chevalier, Festive Road associate Lora Ellis, Anthem travel and events director Cindy Heston and HRS VP of the Americas Suzanne Neufang provided their insights.

tcd-teleconference-featuredSpeakers discussed virtual payment as a “path to the future,” but part of a journey that is only just beginning. They talked about the need for a simpler hotel RFP process. They said that while buyers have more data than ever, hotels are experimenting with more sophisticated revenue management techniques. Dynamic pricing, according to one, is gaining trust.

The call also got into the effect of book-direct programs, new hotel booking platforms and the potential impact of supplier consolidation, plus duty of care relative to chains versus independent hotels.

Find information on other upcoming Teleconference episodes and download previous ones here.

 

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Teleconference 3: Online Booking Tools

Online Booking Tools
Nov. 10, 2016

Thanks to all our attendees and speakers! This event’s recording may be purchased here or gifted here for $15.

Highlights of Teleconference 3 included Jay Campbell’s observations of the US Airways v. Sabre trial and Upside chairman Jay Walker taking questions about his business travel proposition for small and medium enterprises.

Microsoft global travel and venue group lead Eric Bailey, Dart Container travel services manager Cheryl Benjamin, Deem chief commercial officer Tony D’Astolfo and Travelport group vice president Scott Hyden discussed the productivity and monetization challenges for corporate booking tools.

Find information on other upcoming Teleconference episodes and download previous recordings here.

More On Teleconference 3:

Corporate self-booking tools get no respect. Some of that may be deserved. With greater investment in consumer systems, corporate applications look relatively clunky. They can be slow. They might lack content.

teleconference-logo-webThat there are legitimate reasons for much of that doesn’t always ease the communications and marketing burden for corporate travel professionals.

Perhaps there is reason for hope. It seems like activity in the segment is on the rise. American Express Global Business Travel is acquiring KDS. Amadeus is relaunching its offering. Sabre is revamping its approach with GetThere. Deem is new again. There are some new entrants.

On mobile, these companies and others have an opportunity to literally rewrite their purpose.

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Teleconference 4: Cost Vs. Comfort

Cost Vs. Comfort
Dec. 8 at 12 pm EST

Thanks to all our attendees and speakers! This event’s recording may be purchased here or gifted here for $10.

During Teleconference 4, Nvidia senior global travel manager Karoline Mayr, tClara managing partner Scott Gillespie and Carlson Wagonlit Travel Solutions Group vice president Christophe Renard discussed how to balance cost and comfort in business travel.

Other highlights included David Jonas reporting on the emergence of Basic Economy fares and DUFL co-founder and CMO Andrea Graziani taking questions about her company’s clothes laundering and delivery service.

Find information on other upcoming Teleconference episodes and download previous recordings here.

More On Teleconference 4:

In travel management, ’twas ever thus: “Yes we can save 20 percent, but we’ll have to fly in economy.”

teleconference-logo-webDuring the past decade, procurement put a laser focus on spending. But at what cost?

Given the emerging appreciation for wellness and productivity, corporations are assessing the potentially negative impact of their frugality. What are the limits of self-service? How far is too far for traveler centricity? What are suppliers doing to improve the experience?

This content is protected by copyright. Link sharing is encouraged but duplication and redistribution without permission is illegal.