Monthly Archives: January 2017

Hilton Ends Test Of Seven-Day Cancellation Rates

For those who found Hilton’s restrictive “flexible” rates problematic, there’s some good news. A Hilton official confirmed the hotel company ended a test of those rates. But don’t be surprised if you see them again.

Like Basic Economy airfares, these kinds of hotel rates aren’t suited for corporate travel. Some program managers would rather not include them in booking channels at all. Others may feel compelled to show travelers they aren’t missing any prices found on the Internet and to show senior management they at least consider cheaper options.

Hilton in the fall floated a few new rates including “Semi-Flex” prices. Cancellations on those had to be at least seven days in advance to avoid a penalty fee. According to an October 2016 report by Business Travel News, Hilton ran the test to gauge customer reaction and identify “technical challenges.”

Hilton rates

At least on the buyer side, one challenge was an inability to block the test rates from displays in certain booking tools. Because those rates might show at the top of lowest-rate searches, some program managers used pop-up messaging. Informing travelers about restrictions and related corporate policies, especially at the point of sale, is important.

“These rates are great for the consumer market but not something easily managed on the corporate side since most business travelers cancel closer in to the travel date,” according to one travel manager speaking on the condition of anonymity. “Schedules change frequently. I have tried to navigate my travelers away from certain brands” that offer highly restrictive rates.

The Hilton test started at a few Hilton and Hampton Inn-branded hotels and, according to sources, expanded to another 40 or so more.

“We are always testing new initiatives and programs to see what works best for all of our guests and owners,” according to the Hilton official. “At this time, we have collected the data we need from this trial of flexible rates and have ended it to evaluate the results.” Asked for additional information about the test, the official provided no details.

Hilton has tested stricter cancellation policies before. Like other big chains, about two years ago it went from same-day to 24-hour cancel periods on many rate types. In March 2016, CEO Chris Nassetta told analysts “there are things we can do to extend that timeframe.”

Advito senior director Marwan Batrouni in December said hoteliers are focused on extending cancellation policies to help better manage inventory.

“It is important for clients to have same-day cancellation,” Batrouni said. “We have pushed back and been successful in going from 48 hours to 24, or 24 to same day.”

Before the latest test concluded, last week showed the discounted pricing. For a midweek night in mid-March at the Hampton Inn in Boynton Beach, Fla., the standard rate was $219, the standard HHonors rate was $212, Semi-Flex was $210 and HHonors Semi-Flex was $203.


Hotels Consider More Cancellation Policy Tweaks

Hilton Swinging For The Fences?

Sources: Hilton Stops Dickering Around With Reduced Commissions

2017 U.S. Corporate Hotel Rates: Small Increases, Some Happy Surprises

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Strategy Evolved, HRG Rolls Out Native Apps

The last big travel management company to hold out on delivering an owned mobile app, Hogg Robinson Group this month is deploying on Android and iOS. The TMC will maintain other mobile initiatives, including a Nordic region app co-branded with Amadeus and collaboration with Sabre’s TripCase. For clients in the United Kingdom, HRG also is about to launch a responsive web version of its HRG Online self-booking tool.

HRG’s top tech exec, Bill Brindle, six years ago observed discord in the marketplace over mobile apps versus mobile-enabled (responsive) websites. BlackBerry was still a viable platform at the time. Others like HP and Microsoft joined Apple and Google on a list that made the notion of developing an app for each platform intimidating at least. The field has since narrowed to a point where most developers focus on only Android and iOS for downloadable apps. Signaling a change in his view, Brindle last year said corporate IT leaders now are more accepting of downloaded apps. He noted the growing appreciation for the ways native apps can interact with device controls such as the camera.

Acknowledging the shift in strategy, HRG group technology director Nigel Meyer last week said, “We never felt behind the game.”

Apple will celebrate the iPhone’s tenth birthday this June. The app store is its junior by about a year. Their impact is still new. Also relatively new are apps from two of HRG’s key rivals, American Express Global Business Travel and BCD Travel. Those are built by Travelport Digital (formerly MTT), a subsidiary of the longtime GDS provider to HRG.

HRG Worldwide group technology director Nigel Meyer

Travelport is a “great company,” Meyer said. “There are some times when it pays to work with a partner, but in this case we’re trying to say, ‘Where can we add real value, uniqueness or innovation?’ We didn’t want it to be a ‘me too’ kind of similar product to others that are in the market. Those solutions are good, but we wanted that creativity and complete control over design and construction.”

After trying a few app ideas in the ecosystem’s early days, Carlson Wagonlit Travel now also takes a proprietary approach to its corporate travel app.

Of course, TMCs need to worry about more apps than just those from their direct competitors. Some of the largest clients of these TMCs have endorsed no particular app, or are using one from another tech provider such as Concur. Itinerary-based, agency-agnostic apps also offer related services.

Meyer called HRG’s initiative “an opportunity for us to underpin our future strategy with a direct relationship with the end user.” That’s what everyone’s after.

The first version includes basics like itinerary sync and notifications, but also something not everyone offers — in-app chatting with agents. The service is designed as an alternative to calling for emergency assistance. It communicates with a desktop portal used by HRG’s 24-hour emergency team.

Meyer said he expects the option to be rolled out to standard agent services “in pockets” since “we have had a couple of clients say they want to take it further.” Web chats generate a similar fee as phone calls, he said.

HRG is sharing mobile development resources with its Fraedom expense management division. Fraedom published a new app in December.

HRG spent about nine months building the travel app, which is available in English to HRG clients globally. They need to enable the app so travelers can sign in when it’s downloaded using their HRG i-Suite portal credentials. Meyer said additional languages will be made available during the first half of this year. The company also is considering whether to add email parsing functionality.


Variety, Practicality Mark Newest Travel Management Company App Features

TMC Apps: ‘Table Stakes’ For Clients

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Travel And Transport Downgrades KDS Partnership

In recent years, KDS talked a lot about the importance of partnerships with travel management companies. Then American Express Global Business Travel announced it would acquire the travel and expense tech firm. Some assumed right away that those TMC relationships would suffer. They were right.

Travel and Transport was once a key KDS partner. “Our relationship has changed substantially,” according to EVP and CIO Mike Kubasik. “A number of people we worked with at KDS including Dean Forbes have left the company or have taken new posts at Amex or other companies. We are still evaluating the direction we will take with the product, but as far as helping KDS become U.S.-market ready, we will no longer invest time and resources into that initiative.”

Kubasik said he did not feel well-informed about “how Amex will manage the product, what the vision is and how exclusivity will work. We are watching to see how the dust settles post acquisition, so we can make better-informed decisions.”

According to a statement attributed to Evan Konwiser, VP digital traveler at American Express Global Business Travel, “KDS continues to be operated independently from GBT and still supports other TMC customers as before. As of now, TMC support in the U.S. remains the same as before the acquisition.”

Image: Thinkstock

Travel Tech Consulting’s Norm Rose wasn’t surprised that other TMCs see it differently. “There are examples of shared platforms,” said Rose, but GBT’s strategy to own the technology “makes partner relationships difficult.”

Kubasik said Travel and Transport expects to support KDS for mutual clients in France. Generally, he said, Concur, GetThere, Deem and nuTravel remain go-to tools.

Travel and Transport’s work with Amadeus Cytric also is underway. “We feel Cytric has a lot of U.S. potential with global reach that is funded by a large company and is doing innovative things, specifically with the user experience and user interface, calendar and search algorithms,” he said.

Other TMCs also are going in different directions.

According to Campbell Resources CEO Bill Campbell, “we are no longer associated with the KDS product.” Campbell did not offer details on timing or rationale.

KDS in the past also named Fox World Travel as a partner. “Fox is currently in wait-and-see mode and we are not actively selling the product at this time,” according to Fox CIO Beth Marino.

According to a statement emailed Wednesday by CWT EVP and chief strategy and commerce officer Patrick Andersen, “Consistent with our previous messaging, where a customer chooses KDS, we continue to work constructively with KDS to support the client and their program.” Supporting clients when they ask clearly is different from having a “joint innovation roadmap.” CWT owned part of KDS before the GBT deal.

Before the acquisition, World Travel Inc. collaborated with KDS on a few marketing initiatives. Those included a party at last year’s Global Business Travel Association convention about a month before Amex GBT announced the KDS deal.

World Travel this week declined to comment. Speaking during The Company Dime’s Teleconference in September, World Travel Inc. president Dee Runyan said she thought KDS would “struggle to maintain productive commercial relationships with non-GBT TMCs.”

Executive Travel’s partnership with KDS dissolved well before the GBT acquisition. “We were not able to find any other traction within the U.S. market to give us confidence to move forward,” according to chairman and CEO Steve Glenn.


KDS Adds To North American Client Base With Global Organization Education First

New American Express GBT CEO Doug Anderson Declines Comment On Report Of KDS Acquisition

U.S. Market Challenges KDS

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Variety, Practicality Mark Newest Travel Management Company App Features

[UPDATE, April 6, 2017: World Travel Inc. last month enabled fingerprint ID for logins and an option for users to remain signed in even as they switch to other apps.]

Like other travel management companies, World Travel Inc. enabled email parsing and off-channel booking data capture in its mobile experience. Technology from Traxo powers itinerary data aggregation in the WorldMobile app as part of a deal announced in October. Some think of it as an obligatory function; the TMC sees more differentiation in other capabilities. There’s notable value, a company exec argued, in recent app enhancements on seemingly mundane functions like profile editing and airline check-in.

That not all the big TMC apps offer certain functions deemed useful to World Travel’s clients illustrates part of the promise in TMCs taking control of their mobile environments. Just about everyone syncs itineraries and has touch-to-call buttons. Beyond some of the basics in the first crop of TMC apps, though, a measure of diversity is emerging. This is good for clients and their employees.

“Every client will be different and it’s all about what the end users want, what the TMCs want and what the corporate clients want,” said Carole Moreira, head of business development in North America for app developer mTrip. “Clients ask for flexibility and personalization — their image and branding. It’s different to build for a fashion designer versus a bank.” Companies have different concerns about data privacy and storage, she added.

Pennsylvania-based World Travel Inc. in 2012 was one of the first TMCs to build an app. This was at a time when the native app-versus-mobile web argument remained robust. It’s still an argument, but apps have won for now. Most large TMCs nowadays have a native app experience on Android and iOS. It’s not too late to get in the game. Recent additions include apps from American Express Global Business Travel, HRG and Ovation Corporate Travel.

World Travel worked on its behind-the-scenes technology during the past few years. It established PCI compliance, joined the EU-US Privacy Shield, enhanced its telephony, built a centralized profile database and generally improved systems integration. It leveraged the customization capabilities in Concur’s GDSX mid-office tool.

TMC appsFor its app, the plumbing work paid off in December. World Travel Inc. EVP of business development Kevin Martin said the ability to edit one’s own profile — and have it sync properly with TMC, GDS and online booking tool profiles — isn’t sexy new technology, but it’s important to travelers.

“You walk into the Intercontinental, the front desk attendee asks if you have an IHG number,” Martin explained. “If yes, you can easily look it up in the app, but even better, if no, you can sign up and enter it into your profile on the spot. If you spoke to an agent and they updated it in the GDS, that syncs back to the app.”

Another form of integration that TMCs have struggled with is airline check-in. Just how seamless one can make it is a challenge as the many different airlines have differing levels of willingness and capability to offer an API. World Travel took a step back, making it less ideal but functional.

“If you’re on our mobile app within 24 hours before the flight, it tells you that you can check in,” said Martin. “It does send you to the right site, but instead of carrying that confirmation number and embedding it, all it does is copy your confirmation number and suggest you paste it on this page. Flawless.”

According to Moreira, integration is one of the biggest challenges for mobile development. She said it’s especially difficult in leisure travel, where much of the existing software is outdated. “TMCs have either nothing or something that is reasonably good, and then it’s more about the resistance of providers who might have a mobile product and they push their own,” she said. “So the client has to convince them of integration. If the TMC has an IT team that is good with integration, they will make it work. Pushing itineraries into the system is the first challenge. If they can find a way to do that, they will find a way to do the rest.”

There are real technology and security issues, Moreira added, but another challenge relates to mindset. “Some are more old school than others,” she said. “We have seen that evolve.”

Martin said certain functions enabled by integration are underappreciated by some in the industry, but not travelers.

On the other hand, while it gets a lot of attention since it’s related to the radioactive “open booking” topic, Martin does not expect the email parsing capability to get much adoption.

New features in the latest versions of some other TMC apps also are decidedly practical.

Carlson Wagonlit Travel is doubling down on corporate with its mobile app strategy, and new features reflect that. Updated this month, CWT To Go now offers “business justifications for travelers who exceed their rate cap,” according to the iTunes store. Users can choose “from several explanations” to help companies “better understand booking behavior.”

The app now also displays hotel loyalty program numbers during the booking process and passes these details to booked properties. CWT To Go since 2015 has allowed users to edit their profiles and that information synchronizes with TMC, GDS and OBT profiles.

FCM’s Sam app on iOS also allows some profile editing that syncs with the other profiles in the tech stack. Users may “edit basic address information and add in additional email addresses,” according to John Morhous, chief strategy officer for Flight Centre’s corporate brands in the Americas. “We can add more profile elements as needed, but so far customers haven’t really asked for any more.”

Further to that, World Travel’s Martin said his company’s app can “allow all elements of the profile to be edited. However, based on client feedback, we chose to only allow traveler preferences and traveler-defined fields such as loyalty numbers, passport number, known traveler number, additional email, phone number, emergency contact info, king size/double beds, window/aisle, smoking, etc. Companies do not want travelers overriding any internal HR info such as general ledger codes, employee ID numbers, approvers — even the way their name appears in their profile.”

One issue is with authentication. Easy access to profiles is a risk. TMCs can’t control how well travelers secure access to their phones, but they can establish rules around app login. FCM this month added the option to save the Sam app login password. Martin said World Travel is struggling with that.

By default, WorldMobile users are logged out after 15 minutes of inactivity. But users have said that’s not long enough. “We’re balancing that,” said Martin, noting that the company is considering user-defined logout intervals. “We have a few ideas, with touch ID, etc. We want to make it faster.”

BCD Travel’s TripSource enables editing of profile fields as defined by clients, according to a spokesperson. Users also “can add new payment information to their profile so that hotel and ancillary bookings are possible,” the official noted. BCD last month added in-app hotel bookings in select markets, as well as company-specific policies and other info for users of the enterprise version.

An Egencia official declined to comment on whether the company’s app offers profile editing. According to a client of the TMC, it does not and travelers must use the website. Created even before World Travel’s app, the Egencia app recently got faster and had some bugs fixed.

The American Express Global Business Travel app does not allow for profile editing today, according to a spokesperson. GBT will introduce the capability after rolling out a new global profile solution.

“We will also expand the use of additional channels, including web and mobile, to collect additional traveler preference data that is not normally collected today by the GDS/OBT profiles but allows us to deliver high-quality service such as proactive traveler care,” according to the official.

One of the first providers of a TMC app, Travel and Transport does not currently offer mobile profile editing. EVP and CIO Mike Kubasik said the firm is using single sign-on functionality with supported online booking tools, where users can edit profiles. With that, it’s building a profile editing solution that will integrate with “mobile, portal, agent desktop, GDS and OBT,” he said. Kubasik credited Sabre’s latest profiles product for easing development.

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DOD Piloting New Defense Travel System, Asking For Travel Management Company Capabilities

The U.S. Department of Defense spends billions on travel every year. Its policies have grown unwieldy. The Defense Travel System has been widely derided. Travel payment processes are rife with errors. Projects now underway aim to fix a lot of that.

DOD since June has been running a limited pilot of the newest version of DTS. It coincides with travel policy simplification. Together, the two initiatives are supposed to save hundreds of millions. Meanwhile, a DOD human resources office is running a request for information to help guide the department’s future travel management company solicitations.

Issued Jan. 6, that RFI is meant to support the Defense Travel Management Office in determining “the capabilities of contractors and innovations in the management of travel management companies in order to tailor acquisition approaches and formulate requirements in the future competition of TMC contracts.”

Responses are due Jan. 26. Interested vendors listed thus far include Alamo Travel Group, Kuwait-based Alshamel Travel, BCD Travel and CI Azumano Travel.

The RFI lists various travel management services: reservations, authorizations, fulfillment, reporting, support for federal travel rules and so on. Because DOD’s business is a tough one, it also needs “transportation of human remains.”

The request contemplates a “management service fee contract in lieu of point-of-sale transaction based contract.” It also asks for “the maximum number of transactions that the vendor can efficiently manage per month and per year.” Those include DTS transactions.

Defense travel

The Department of Health and Human Services on behalf of DTMO on Jan. 22 posted several notices of intent to extend existing travel management services contracts with incumbents CW Government Travel (also known as CWTSato) and Omega World Travel. It is doing so “to provide time to recompete” DOD’s travel requirements “on a full and open basis to the entire vendor community.”

According to DOD’s Inspector General, the department in fiscal 2014 spent $6.5 billion on travel, including $4.7 billion through DTS. In December 2016, the U.S. Digital Service in a report to Congress said DOD “currently” spends $8.7 billion on travel annually, with DTS accounting for $3.5 billion. The report indicated that the DTS per-transaction fee is about $10.

Calling In The SWAT Team

DOD in 2014 conducted a separate RFI for DTS modernization. Though it started a pilot, DOD hasn’t identified the provider. Press officials gave no update. Listed interested parties included CI Azumano, IBM and nuTravel; other familiar players may have been represented by consultants.

An October 2016 article on DOD’s website indicated DTS would transition “from the existing DOD contractor-developed system to a commercial, cloud-based system” used by Fortune 500 companies. In its Congressional report, USDS indicated that the new SaaS travel tool — in testing among “basic travelers” — and the “streamlined” travel policy “both are still being refined.”

According to the Obama White House, the new DTS system in pilot “has greatly improved usability, simplified travel policies, and has the potential for large cost saving potential.”

There’s much work to do. The USDS report to Congress indicated that the pre-existing system — which handles more than 25,000 transactions and 100,000 unique users every day — “provides a poor user experience and limited reporting capability.” It noted that DOD is “following an industry best practice” by testing the new system before all development work is completed. This allows DOD to consider “real-world usage.”

An offshoot of USDS, the Defense Digital Service is helping with the DTS pilot. The report indicated that DDS “assisted DOD and its DTS contractor in identifying a commercial vendor that could meet its requirements without requiring expensive customization.” Many U.S. government agencies use the second-generation E-Gov Travel Service furnished separately by Concur and CWTSato; there is no indication that DOD will.

DDS director Chris Lynch during the Defense One Tech Summit in Washington last June said his “SWAT” team all came from the private sector. “We want to modernize [DTS] and make it enjoyable to use,” Lynch said. “I myself have been a victim of the current system, being left in places without tickets back. Our plan is to pilot a cloud-­based, multi-­tenant SaaS solution” commonly found in corporate travel programs.

Policy First

DOD in its Winter 2017 Dispatch acknowledged “it is no secret” that “complex rules and regulations” are costly and frustrating.

“Digital services are only as good as their underlying policy,” according to USDS. It said many current DTS challenges stem from the complexity in the 1,600-page Joint Travel Regulations.

For example, DOD requires “pre-obligation” of funds for travel based on estimated trip cost. USDS noted that most commercial travel systems cannot easily handle that. As such, USDS said DOD would change requirements to avoid system customization.

Another example is that JTR has precluded “the integration of industry-standard features like restricted fares.” DOD last year changed the JTR “to simplify and streamline the process for using restricted fares.” Even so, DTS doesn’t have the automation to accommodate unassisted bookings of such fares.

These changes are part of a larger effort to overhaul JTR. The project started in 2011 and, according to DOD, should wrap up by October.

Revisions include simplifying and standardizing categories of travel, types of travelers and allowances. As a result, travelers and travel approvers “will have a better understanding of what allowances are permitted for the types of travel being performed, without the need to differentiate between minor nuances that can complicate what is authorized.” To reflect current industryspeak, the term “travel management company” will replace “commercial travel office” throughout the regulations.

DOD this month again expanded its Integrated Lodging Program Pilot to include more sites.

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New International Tax Framework Demands Solid Travel Booking, Activity Data

New York — Corporate travel departments are always pointing to service, savings and safety as reasons for travel management policies and practices. Here’s another: fiscal self-preservation.

Aiming to reduce transnational tax avoidance, more than 100 jurisdictions around the globe last year adopted plans to update international tax rules. Governed by the Organisation for Economic Co-operation and Development, the effort is called the Base Erosion and Profit Shifting project (BEPS). It provides the basis for more than 2,000 new bilateral tax treaties and will be implemented “swiftly,” according to OECD.

The upshot for business travel is that midsize and large corporations need to better track their frequent international travelers to avoid unexpected tax liabilities or, worse, severe disruption to travelers’ professional and personal lives. That’s because the new regulatory regime lowers the threshold for tax liability in participating jurisdictions. Travel activities that in the past did not trigger government attempts at assigning permanent establishment or levying payroll and income taxes may soon do so, according to recent publications by tax experts at Deloitte, EY, KPMG and PricewaterhouseCoopers.

Speaking last week at a Forum for Expatriate Management event here, KPMG tax partner Jill Hemphill advised mobility and human resources professionals to work with travel departments to mitigate potential liabilities. The concepts are familiar to relocation professionals who deal with all the ins and outs of managing expatriates. Transient travel, however, has its own complexities.


Image: Thinkstock

“These changes are going to put business travelers higher on the agenda,” said Hemphill, formerly tax counsel at General Electric. If they don’t, she warned, harrowing employee experiences might. Those come in the form of travelers being stopped at borders. “It pops up somewhat unexpectedly,” she said. “Some places are scarier than others to be detained.”

Hemphill shared an anecdote about a co-worker at one of her previous companies who refused to participate in the relevant corporate programs. “He said, ‘I don’t want to play this game. I don’t want to share data. I don’t want to comply with policy.’ In such a case, are you willing to stop travel?” Hemphill asked her audience. “It wasn’t stopped, and continued over a number of years.”

The worker was not in tax compliance with the Western European nation to which he was traveling. That country “had communication protocols in place to the point where they could freeze personal bank accounts — and that’s exactly what they did,” said Hemphill. “They froze his personal bank accounts over far less than $10,000 in tax liability. Once that process started, there was only so much we could do. The employee asked the company to save him. But they were his personal bank accounts, and it was a personal liability.”

Duty of care applies here, she said, but sometimes getting the employees to understand that is challenging.

Balancing Burdens

Hemphill said one of the first tasks is determining who should be part of a BEPS response project. Unlike for expats, where many companies have an established structure and there is a long planning horizon, business travelers are “all over the place,” Hemphill said.

“Everything involves a lot of stakeholders, but this really pulls in everyone in a meaningful way, and it’s hard to carve off responsibilities,” she said. “My [previous] organization tried to manage by consensus and did okay, and got to a certain level. But then to get to that next level of compliance and really take it across a big group of people, someone had to lead it. In my mind, it’d probably be rare for global travel to lead it. But they are certainly a good partner and source of information. There could be a number of asks of that organization: ‘Could you add this data element?’ ‘Could you feed it to us on a more frequent basis?’ ‘Can we add these approvals?’ ”

Companies need to decide who to track. Hemphill said she typically considers three groups of travelers: customer-facing, executives and other. Customer-facing travelers are likely to trigger taxation; executives raise a reputational risk and “to the extent that they do trigger, the dollars are higher.”

In some cases, it may be appropriate to start with a particular division, or travelers to and from a particular country, or all corporate cardholders as opposed to the general population.

When an audience member said, “We do it all,” Hemphill replied, “That’s not the norm. Not a lot of companies have achieved that yet.” It may not be appropriate for every company. Hemphill said there’s no “absolute right or wrong. It’s about striking that balance of collecting enough info without over-burdening your organization.”

Companies need to figure out where they’re getting the information that could be required for an audit — which varies by country and changes often.

“The travel partner is key in [gathering] those details,” said Hemphill. “Some companies will take that further and build in various levels of approvals. Maybe you can’t book travel unless other processes have already taken place: ‘Have you done your immigration review?’ ‘Your tax review and planning?’ That varies a lot these days but I think you’ll see more of it.

“If the travel team has any sort of ownership over time and attendance,” she continued, “That can be a source of data.”

Companies may need to know not only where and when someone was traveling in a particular jurisdiction, but also what they were doing there. For example, are they selling products and services? PwC noted that where contracts are signed “becomes a critical aspect once any tax authority challenge arises.” This raises the importance of tracking the travel records of especially senior personnel.

“Another strategic issue is, what’s your philosophy about involving the employee or leaving them out of this as much as possible?” Hemphill asked. “On some issues, they will be the best source of info: ‘What did you do and how long were you there?’ We don’t really want to do that to employees so is there another place to get that information? The systems may not be 100 percent accurate but is that good enough?”

Looking at travel booking and expense data, companies can pull hotel nights and assume travelers worked where their hotels were located. “But maybe it’s across the border from the actual place you worked,” said Hemphill. “Maybe you just transferred at the airport. We tried to stay in the bell curve and not get distracted by details. Trying to solve for every exception will bring you to a grinding halt.”

One nifty coincidence: some of these tracking goals match up with those of risk management departments. Not to mention the related privacy concerns. Hemphill said she discovered this alignment in a conversation with a security officer of a former employer. Both wanted to track travelers, she said, just with different levels of intensity and frequency.

“We teamed up, and you do need to team up with stakeholders to get that executive backing,” she said.

Travel and activity data are only pieces of the puzzle, Hemphill noted. Those details plus employee demographics, compensation figures and other HR info combine with general corporate facts to provide firms a picture of their potential liability and the requisite material to respond to tax authorities.

Could It Be Trumped?

But isn’t the United States about to overhaul its tax structure, and couldn’t that have an impact?

Unfortunately for companies that might want to wait for that, KPMG international tax principal Manal Corwin this month said “we don’t know” what the Trump Treasury’s position will be. “In contrast … the legislative and regulatory changes that have been ushered in by BEPS are actually quite certain in a number of countries right now and will have very real impacts immediately that aren’t going to wait for reform,” Corwin said. “While some companies are taking a bit of a pause, trying to think about what this is going to mean, we’re increasingly seeing companies realize that they really need to assess BEPS impacts.”

The key country-by-country reporting aspects of BEPS will impact U.S. multinationals, Corwin added, “whether the U.S. has adopted those regulations or not.”

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Sources: Uber For Business Premium Isn’t Worth It

[UPDATE, April 18, 2017: Uber for Business now lets users request and pay for rides for others. The account is centrally billed. Uber business clients access the “Central” service dashboard via tablet or computer. They can request multiple rides for fellow employees, customers or others. Those riders do not need to use the Uber app or have their own Uber account. They’re connected to driver via SMS messaging or phone calls. A limited “demo” is available to standard Uber for Business accounts; regular use of Central requires an upgrade to the Premium tier.]

Since launching a “premium” tier within the Uber For Business program last summer, the ride-hailing giant increased its fee to 10 percent from 5 percent of spending. The fee for the higher level of service puzzled several corporate travel managers, who said under the condition of anonymity that they’re not interested in all the included features.

The standard Uber For Business program hit the market in 2014 and added elements last year. It includes integration with some expense systems and basic dashboard reporting. Employees from enrolled accounts can pay with individual corporate cards or through a centralized payment process. Admins can manually flag trips that appear to violate company policy and designate managers to approve trips. Policy controls allow accounts to limit the locations and time periods in which employees can request rides, and to decide if employees must use an expense code for each trip.

According to the Uber website, added features in the premium level include bulk employee management, downloadable custom trip reports, custom expense codes, code synchronization and recurring reports. Employees can, if need be, correct payment info and justify their rides. There is no minimum spending requirement for the premium program. Uber notes that “alternative payment options” are available for “large” companies.


Image: Reuters/Toby Melville

According to an Uber contract template obtained by The Company Dime, the premium tier also includes “rich trip data,” a monthly billing option that consolidates all payments, automated trip flagging that uses “machine learning” to identify noncompliant rides, access to the Uber For Business trip data API and integration with the International SOS Travel Tracker for risk management purposes.

Current and potential clients expressed resentment and even shock that they’d be asked to pay for the opportunity to shift business to Uber, even if the premium service includes some beneficial items.

The International SOS component and automated policy audit appeal to some buyers. But the better reporting touted by Uber for premium accounts may be redundant for those getting good enough data from their payment and expense processes. Travel managers at a few large companies said central billing isn’t a big draw for them.

DK Consulting Group CEO Dave Kilduff said the duty of care aspect is a nice feature, but the enhanced reporting would be lost on most people. Reviewing ground transportation spending data, he said, is a pretty low priority.

Kilduff also said he understands why Uber levies a fee for the premium service. It costs money to integrate with accounts, furnish detailed reports and connect with International SOS, he explained. “But that doesn’t mean I would pay it,” he added.

Sources said the 10 percent is negotiable. Some have achieved low-single-digit percentages. That’s still a big number for companies that use Uber a lot.

Travel managers also took exception to an exclusivity clause in Uber’s contract language. According to the contract template, the customer “agrees not to refer to any Uber competitor as a ‘preferred travel partner.’ ” It defines a competitor as “an entity engaged in the provision or facilitation of on-demand ground transportation services.” The “provision” part is interesting because Uber repeatedly insists it’s not such a provider, even including a contract clause stipulating that the customer acknowledges as much.

Asked to review the contract, Kilduff pointed to what he described as “overly broad” clauses that essentially give Uber first right of refusal for lots of the client’s transportation needs.

“Company will work with Uber to identify certain initiatives to solve company’s transportation needs which may include, without limitation, guaranteed rides home from work programs, employee commuting, ground transportation for prospective employee travel, or ground transportation for corporate events,” according to the template. “Prior to discussing such potential initiative(s) with any third party, company shall provide Uber notice of its intention and company will negotiate terms for these proposed programs with Uber in good-faith for at least thirty (30) days before negotiating with any third party.”

“If I were a corporate travel manager, absolutely I’d say no,” Kilduff said.

“My clients have balked at both the exclusivity and premium clauses,” according to Bill Knepper of GoldSpring Consulting. “The general feeling is that unless the rebate is substantial (and to date it has not been), why eliminate Uber or Lyft over the other one? Additionally, the whole concept of paying for Uber’s premium service just sits wrong with travel managers. They don’t have to pay a premium in any other ground transportation segment and they aren’t about to pay for Uber’s.”

The rebate Knepper referred to is paid to the client based on how many users it enrolls after signing a deal.

According to the contract template, the rebate is available in the standard program, which has no added fees.

In September 2015, Uber said more than 50,000 companies enrolled in Uber for Business. That’s the same number cited by Travis Bogard, who joined the company last summer as global head of Uber Enterprise, in a December 2016 post. “We expect those numbers to at least double by the middle of [2017],” according to Bogard.

While general grumbling about Uber’s bumptious ways continues, some buyers said the company lately has been more flexible. They said that in addition to negotiating the premium service fee for some companies, Uber has in some cases backed off the exclusivity requirement.

Uber did not respond by presstime to a request for comments.


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Ground Transportation’s Battle For Convenience

Despite Concerns, Uber Is Winning


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Microsoft Maximizes Travel Management Resources By Getting Them From American Express GBT

Microsoft has avoided “significant disruptions to stakeholders” since deploying in May 2016 a travel management outsource model that pushes the frontier of process over people. While the client continues to “own” strategy and sourcing, American Express Global Business Travel handles day-to-day travel manager tasks previously assigned mainly to travel department contractors.

The setup freed Microsoft’s own travel professionals to focus on the master plan, including emerging areas such as the traveler experience. The process orientation allows the company to organize around getting things done rather than who is doing them.

The outsourced team includes two sourcing individuals and eight travel managers (in China, France, Germany, India, Italy, Japan, Singapore and the United States). They provide programs that support Microsoft globally, including day-to-day travel and card activities like risk management, reporting and regional and local sourcing support.

Microsoft global travel outsource lead Patrick O’Halleran

The program requires highly detailed governance structures. Microsoft global travel outsource lead Patrick O’Halleran
got cracking on that soon after joining the tech firm in mid-2015 following two years outside the industry. The travel team spent much of the next year documenting what they do each day, creating position statements, drawing 40 process maps and — to set forth responsibilities — generating a 250-line RACI chart.

“We’re now moving the model from people management to more of a process-driven, outcome-and-deliverable model,” said O’Halleran, a former GBT vice president. “It’s an evolution and difficult to accomplish across a global travel program in 100-plus markets.”

“We have more than 60 global travel projects to deliver on by the end of the fiscal year in June,” said Microsoft travel director Eric Bailey. “They’re related to travel technology, online booking tool deployment, payment and other areas. The Microsoft Travel full-time team defines and delivers global strategic initiatives. While the outsource team is responsible for delivering to stakeholders in the regions, the teams mutually agree on timeframes and priorities.”

GBT is up to the task, while admitting it’s a big one.

“We like Microsoft because they challenge us and keep us on our feet,” said Rodolfo Elizondo, VP and head of global business consulting at American Express Global Business Travel. “They want to do things other [business process outsourcing clients] are probably not pushing. They want to move to a more process-oriented model. That’s interesting in the context of a people-driven model. It will continue to create more efficiencies in the workflow, but getting to a full process-driven model will be challenging. I don’t believe we’ll get to a point where we get rid of that people model, but it’s a good ask.”

Elizondo said GBT’s BPO services fall into two buckets. Microsoft and four other clients including Philips are in one. These are large, multi-region clients whose dedicated outsource teams might be five to a dozen people. “That’s a big endeavor,” he said, “and one that requires a very strategic decision and change in mindset for some of the clients.” While there is growing interest from among that group, Elizondo said interest is growing faster from the second group — companies considering an outsource model for just one country or region. He said GBT currently has about 10 clients in that setup.

Rodolfo Elizondo

American Express Global Business Travel VP and head of global business consulting Rodolfo Elizondo

The decision to outsource often comes from the top, Elizondo said. When companies can navigate the tricky parts, particularly related to drawing up clear expectations of both internal and external responsibilities, then accountability, good performance and the KPIs to measure it all are achievable.

For Microsoft, the travel outsourcing program addressed the company’s requirement to shift away from contract workers. O’Halleran said the travel department had been using about a dozen of them and was looking to create “a scalable model to manage deliverables.”

While efficiencies of outsourcing may be demonstrable — if sometimes hard to swallow, when they’re driven by reduced demand for labor — a bigger challenge in O’Halleran’s mind is trust.

Elizondo referenced the “Chinese wall” between his group and GBT’s TMC operation. That protects the client’s interests versus those of the TMC inasmuch as these do not agree.

It’s still “GBT managing GBT,” said O’Halleran. “The outsource team needs to continually build credibility. Ongoing transparency is critical.”

O’Halleran also recognizes travel is different from some of the more quantifiable corporate services in, say, accounts payable or finance.

Lest anyone think the reorientation is all automation and less human, note that the transition helped allow Microsoft to dedicate a staffer to employee engagement and the user experience. Julia Fidler’s mission since May is to give voice to the “customers” — travelers, stakeholders, business users and partners. Her job is to ensure “that the traveler experience is a primary driver for decision-making — aligning projects and daily business with a culture of being ‘customer obsessed,’ ” according to her LinkedIn profile. Traveler experience initiatives are among the key 2017 projects Bailey highlighted.

O’Halleran said part of Fidler’s work is about understanding employee demographics. As such, the travel team has constructed traveler personas to better address the specific needs of various parts of its population. These include road warriors, occasional domestic travelers, occasional international travelers and first-time travelers.

Additional info: Elizondo said that while the services are part of GBT’s consulting division, there is no particular pricing model for GBT’s BPO services. In some cases, they are bundled with TMC pricing. Microsoft is using a standalone pricing model.


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Teleconference 3: Online Booking Tools

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ASTA, The Company Dime Partner To Study Transition From Unmanaged Business Travel

Last week the American Society of Travel Agents and The Company Dime announced a research partnership to learn more about the barriers and opportunities related to converting “unmanaged” business travel to managed travel. Why do businesses large and small implement travel management practices? What role do travel agencies play in that, and what other services are crucial to the shift?

As we have pointed out a few times on this site, there are a number of new options for companies looking to apply some level of consolidation to otherwise unmanaged travel spend. These tend to be tech-driven startups focusing on a new approach to one or more tools in the kit. Often these newbies seek the expertise, support and/or services of a travel management company to round out their appeal.

ASTAASTA president and CEO Zane Kirby described the collaboration as part of the group’s efforts to help members grow their business. Working with ASTA affords The Company Dime an opportunity to study an interesting part of the market that traditionally attracts less attention than do mature corporate travel programs.

Our joint announcement has more details. If you’re a travel management company executive, your company is likely to hear from us soon.

We’d like to thank ASTA for this opportunity, particularly its Corporate Advisory Council which is helping shape the project. Its members are Gloria Bohan (Omega World Travel), Craig Carter (Luxe Travel Management), Marc Casto (Casto Travel), Chris Dane (Hickory Global Partners) and Denise Jackson (Balboa Travel Inc.).

We look forward to sharing our findings during ASTA’s Premium Business Summit in June.


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Evolving Travel Policies Challenge OBTs

Travel suppliers want to provide personalized offers to travelers. Some travel managers want to customize travel policies to better fit individual travelers and the specifics of a trip. The problem is, some online booking tools can’t or don’t easily handle the nuances.

OBTs connect with traveler profiles. Those often include basic data like an employee’s level in the organization, loyalty program info and airplane seat preferences. But they’re usually not dynamic and don’t cover all the attributes some travel managers wish would influence policy parameters. OBTs also incorporate rules engines. They can be pretty sophisticated, allowing for subgrouping and other kinds of granularity. For the most part, though, they use static rules.

Sources at booking tool providers said customers can add information and configure systems almost any way they want. But that takes some work and is difficult at scale. “If you have the time and inclination, you can really make a policy for everyone in the company,” said Deem chief commercial officer Tony D’Astolfo.

That concept has supporters but needs tech advances. OBT providers looking to make systems smarter may incorporate machine learning and artificial intelligence.

Doing so could help support more complex policies like a new one at Novartis. According to corporate travel director Kathy Kaden, travelers should consider a connecting itinerary rather than a nonstop flight if the journey is at least six hours, if the connection wouldn’t add more than two hours and if it would save at least $300.

“But it’s not easy,” Kaden said in September during the Business Meetings and Travel Technology Expo in New York. “There’s no technology that can put those three layers in place.”

The Novartis policy aims to balance cost savings and what’s reasonable from the employee perspective. Like many other programs these days, the company considers productivity, comfort and wellness. “The way people travel now and would like to travel now is very different than the way Baby Boomers traveled,” Kaden said. “Tools and policies don’t reflect that trend.”

online booking policy

Image: Thinkstock

There’s also interest among program managers in tiered policies based not on someone’s place in the corporate hierarchy but on how often they travel or the purpose of a trip.

Travel Tech Consulting’s Norm Rose has studied OBTs since they emerged. He said policy parameters are “pretty binary.” They indicate preferred or nonpreferred suppliers and identify lowest logical fares, but all that “may not be clearly defined and implemented through every channel,” he said. “Implementing subtle policy — such as the ability to fly business class after you fly two international trips in economy during the calendar or fiscal year — is difficult with current tools.”

To keep pace with e-commerce personalization, Rose said, providers may turn to new technologies to help with “so-called fuzzy logic where assumptions are being made.”

That’s what Amadeus is working on with Cytric. Jay Richmond, head of the Amadeus business travel group in North America, said during a July 2016 interview that the booking tool’s rules engine “handles fuzzy logic and scenario-based decision trees.”

In follow-up emailed comments, Richmond explained that Cytric supports static and dynamic rules. One example of the latter is a rule defining which hotel rates to display to a user, perhaps omitting rates that are a certain amount or percentage more expensive than the best available rate.

Asked about the Novartis scenario, Richmond replied that Cytric can manage three layers of policy, “however, this can have a dependency on the exact requirements.”

He boiled down the problem Amadeus is trying to fix: “As suppliers have gotten more complex in how they manage revenue and yield and how they manage content, ancillaries and fare families, the tools that travelers use to search and book haven’t kept pace. A lot of what we thought of as roguish behavior really is the tools’ inability to deal with complex scenarios of policy against complex supplier content. Policy is making travelers angry because the tool can’t support it.”

He noted that some companies need manual intervention on 20 percent to 30 percent of their online bookings because tools flag them as out of policy even though they weren’t. “That is untenable,” Richmond said.

Speaking last month during The Company Dime’s Teleconference, Carlson Wagonlit Travel Solutions Group vice president Christophe Renard agreed that “it is very complex to really personalize, as much as you would like, what is displayed to each traveler.”

The personalization trend in the travel industry “is at odds” with the concept of a travel policy, said Ben Newell, Sabre vice president of product management. “How do we create personalization inside the program parameters? If you are this kind of traveler, or at this level in the company, do we have a different rule set for you? We have some of that in place, but it needs to be richer.”

Branded fares have been a particular issue for users of the Sabre GetThere booking tool, according to Newell. “Previously there was one price that we had to evaluate policy against,” he said. “Now you have four different flavors of that price and the different criteria within that are really important for business travelers. It’s an area where we have seen a lot of challenge across the industry to keep up. It is something we are spending time on.”

Newell said Sabre also is working to enable GetThere accounts to define different policies based on the trip purpose identified by travelers during booking.

As it is, Sabre’s policy engine has “over 3,000” toggles related to policies, preferences, configuration and messaging. A rules engine offers 30 templates for air, car, hotel and rail. Those include “more than 200 different conditions and each of those has six different behaviors,” said Angela Redel-Gomez, Sabre product manager for traveler experience policy solutions. “All these things inside each rule make each evaluation unique.”

Concur’s booking tool lets users set policies by trip purpose and accommodates journeys including both business and leisure components.

When it added support for branded fares, Concur enabled clients to “choose for whom or when premium fares are allowed versus needing approval versus out of policy,” according to comments attributed to SVP Doug Anderson.

Concur clients also can pick which employees are covered by a “high-frequency traveler” policy option. “We don’t count user trips and then automatically move them between policy sets,” according to Anderson, “but they can be easily reclassified either directly in our tool or within ERP/HR tools that connect with our system.”

Regarding Rose’s specific example, Concur users can designate a booking reason code dictating that a traveler can book in business class after surpassing the economy segment threshold. Anderson also indicated that Concur, via lowest logical fare rules, can accommodate a multi-parameter policy like the one described by Kaden.

At NuTravel, chief strategy officer Rich Miller said the company sees its rules engine as a differentiator. “But does it provide everything the industry is evolving to? Probably not today,” he conceded. “We’re getting those requests. Travel managers are taking into consideration the wear and tear on the traveler. They are becoming more sophisticated on what they want to offer and allow their travelers to do.”

He said simple policies on connections and class of service have given way to gray shades. “Policy engines in most cases don’t allow that today,” Miller said. “We are looking to build those enhancements.”

The same goes for Deem. “We are not at the point where our system is modifying on the fly, based on what people do,” D’Astolfo said. Such intelligence is a goal, but “policy will not be the driver,” he added. “It is one element but the overarching driver really is information, all these data sources, to create a better search.” He referenced Deem’s Olset acquisition and the opportunity to apply Olset’s algorithms and machine learning capabilities.

Deem users already can preset different policies based on trip purpose, according to D’Astolfo. Like clients of competing tools, they can create subgroups within subgroups. Each can have its own policy parameters. D’Astolfo said he has seen some clients go as deep as four or five levels.

Is It Worth It?

Rose wondered if more sophistication in corporate booking tools would have the opposite of the intended effect. Conditional logic, policy messaging and content variability based on the traveler or the trip can serve to confuse or annoy travelers and bog down the system. These consequences could widen the perceived ease-of-use gap between consumer and corporate tools. It could lead to program leakage or travelers more often calling agents and incurring full-service fees. If it is frustrating, self-service becomes self-defeating.

According to Anderson, Concur has seen a trend toward more simplified policies. Those, he suggested, help with program adoption. “When policies are too complex or nuanced, it’s harder for travelers to make the right choices,” Anderson added. “A growing number of businesses are placing greater focus on managing exceptions – for example, air bookings exceeding cost thresholds or trips longer than X days.”

“It is a ridiculously complex area,” said Sabre’s Newell.

Sabre is redesigning the GetThere air shopping path (due out this quarter) and updating the mobile site. As it does, it’s trying to work out how to keep things simple for travelers while giving travel managers what they need behind the scenes.

“That balance is why [travel managers] struggle,” Newell said, “and why it’s harder for an OBT to make those kinds of improvements.”

For example, Newell explained, a client may wish to display a hotel property in a given market but gray it out. That way the traveler knows that content is in the system but not within policy. Maybe the client configures the system to show that property, allow the traveler to book it and present messaging. Or maybe the client does all that and also includes a field in which the traveler must explain his or her choice. “We tend to think policy is black and white — ‘you can or cannot book this’ — but that’s not the reality we have seen,” Newell said.

Additional info: A pilot of Amadeus Cytric in North America is underway at some corporate clients and TMCs. The official launch is scheduled for the second quarter. Officials at Egencia and KDS owner American Express Global Business Travel did not provide information.

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Alternatives Sought As CWT Shutters WorldMate Consumer App, Focuses On Corporate

[UPDATE, Jan. 10, 2017: The headline of this article was revised to add clarity.]

Carlson Wagonlit Travel is discontinuing the consumer-facing version of WorldMate, the popular itinerary app it bought in 2012 for reportedly $20 million. A company official said CWT would continue to support WorldMate’s email parsing API, which backs several similar apps and services including Sabre’s TripCase.

“CWT is focused on its core business of providing the best end-to-end customer experience for business travelers,” according to a company statement. “We are making strategic investments in products and technologies that will help us meet the needs and demands of our clients. As we prioritize our resources, we will discontinue products and services that do not provide strong value for our clients.”

The priority is CWT’s To Go app, according to CEO Kurt Ekert. Even the company holiday card made a corny reference to an “appy” new year.


Image: Thinkstock

“This is reinforcing the fact that TMCs are looking for proprietary solutions, including mobile solutions,” said Travel Tech Consulting’s Norm Rose. “CWT is very interested in keeping that in-house as a Carlson app or Carlson capability rather than supporting the consumer side. They look at this as kind of a platform play, in a way. You’ve got both Amex and BCD Travel working with [Travelport’s] Mobile Travel Technologies. Everyone knows mobile is the platform of the future. CWT is looking at WorldMate to support that going forward. Enhancements they want to make on that they want to make for Carlson clients and not be distracted by consumers.”

Though they may not be employees of CWT clients, business travelers are some of WorldMate’s biggest users. Its website claimed 10 million of them. A few frequent travelers posting in a FlyerTalk forum reacted strongly to the news, in some cases asking about alternatives. FlyerTalk members over the years made a game out of comparing the pros and cons of WorldMate with TripCase and Concur’s TripIt.

More alternatives have emerged. Traxo recently gained steam among managed corporate travel providers. Last summer, “travel concierge” service Pana said it would build an itinerary solution.

Now called Pana Free, Pana’s iPhone-based itinerary tool is in “public beta.” It offers an introductory experience that Pana hopes will drive interest in its premium services.

After opportunistically posting to the FlyerTalk discussion about WorldMate’s demise, Pana CEO Devon Tivona today told The Company Dime that his firm’s itinerary aggregating capabilities take the concept to another level. Like pre-existing tools, it can scan email inboxes for travel confirmations or import them when forwarded. Tivona also said a behind-the-scenes bot applies natural language processing artificial intelligence. This cuts out reliance on templates, which can enable errors when suppliers change formats for their email confirmations.

The big innovation, Tivona said, is the use of real people to fix things that go wrong before customers experience issues.

“We’re guaranteeing that 100 percent of emails will get into your itinerary,” said Tivona. “Ninety-seven percent of that is through parsing. But if parsing ever fails, a human team will parse that out of your confirmation email and put it into your itinerary.”

As such, he said, there’s no need to publish a listing of supported providers, as TripIt and WorldMate have for years. They’re all supported.

This also goes for the app’s check-in service — now available for domestic air travel. While technically possible, automated app check-in traditionally is spotty because suppliers may or may not enable the right connections. If a person is providing a service by checking you in, that challenge goes away.

Itinerary app developers have struggled for years with monetization. They have tried to secure revenues from subscriptions, hotel commissions and merchandizing. Concur offers the option of bundling TripIt Pro with TripLink. Sabre’s TripCase now has receipt capture as an in-app purchase. WorldMate just over two years ago won an award for its doomed re-shopping services.

At least for now, Pana Free is a loss leader, said Tivona. Just like the main Pana service, how Pana Free could fit into a managed travel environment is to be determined.

Traxo has more traction there.

In addition to direct API connections to suppliers, Traxo offers email forward/inbox parsing. Traxo CEO Andres Fabris in an April 2016 interview said the company had a couple thousand templates in place. “Twelve percent of the time there is an unsuccessful parse,” Fabris said. “Half the time it’s not related — it’s spam or a loyalty statement. For the other 6 percent, it’s a new format. What we do that’s unique is we flag it for manual review, and our team looks at it.”

The company during the past 18 months signed partnerships with Cornerstone Information Systems, Travel and Transport, Chrome River and World Travel Inc.

Traxo last month announced a $5.2 million Series B financing round led by TripAdvisor.

Additional info: CWT as of Jan. 1 discontinued sales for WorldMate’s top-level Gold service as well as the Expedia-provided hotel and car bookings. It directed Gold members who renewed after September to the app stores for refunds. CWT indicated it would “do our best” to maintain email parsing, calendar sync and flight notifications through Sept. 30. CWT said the basic WorldMate app would be removed from stores on March 31.


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Airline Consolidation, Other Factors Further Squeeze Travel Agency Commissions

Once in a while, some in the buyer community are excited by the dollar signs associated with global distribution system incentives paid to travel management companies. Disclosures from the US Airways v. Sabre trial recently offered such an occasion. Testimony indicated this money is significantly smaller than commission revenue from airlines, but a new examination of U.S. government data shows the latter income source is down dramatically — and not just historically.

No one familiar with industry history should be unaware of the cliff on commissions between 1995 and 2000, though the visual is striking. In the peak year of 1993, United Airlines alone paid more than $2 billion in sales commissions to third parties including travel agencies. And that was a far smaller United than we have today. In 1993, U.S.-based airlines as a whole paid more than $8 billion globally, or 12.6 percent of passenger revenue. By contrast, in 2015 they paid about $1.27 billion in commissions, representing 1 percent of passenger revenue. That ratio held during the first nine months of last year.

This wasn’t news to Executive Travel president and founder Steve Glenn, but he was “pretty shocked” by the scale.

Of course, airlines cutting and eventually eliminating the standard 10 percent U.S. point-of-sale commission that existed before 1995 was the primary driver. But the squeeze was not only long ago. From 2011 to 2015 — a period featuring what may be one last round of legacy airline consolidation — commissions paid by U.S. airlines dwindled further. Despite carrying 9 percent more passengers and generating 11 percent more in passenger revenue during the timeframe, U.S. airlines paid 17 percent less in commissions ($1.27 billion in 2015 versus $1.53 billion in 2011).

During the five-year period, commissions paid on domestic travel increased by a little under 1 percent to $804 million. That’s the highest level for domestic payments since 2004. So the real impact was on international travel. Commissions paid for DOT’s three main international reporting regions (Atlantic, Pacific, Latin America) dropped 35 percent from 2011 to 2015.

International reductions were particularly steep from 2014 to 2015, when commissions in the three regions fell by 36 percent after having risen in prior years. Economic troubles in South America helped cut commissions paid on travel to the region by more than half to $135.5 million. Airlines flew more passengers but at lower yields. Including US Airways, commissions paid by American Airlines for Latin America travel plummeted by two-thirds from 2014 to 2015 (to about $78 million from $233 million). AA’s Latin America revenues fell by about $1.4 billion (20 percent) in that time, according to its annual report. United cut commissions by about the same rate as AA, to $13 million.

Atlas Travel & Technology Group CEO Elaine Osgood said her TMC felt that Latin impact. In general, she said, “although we recognize the reduction in commissions paid from 2011 to 2015, we have been working hard to increase our margins, which continues to allow us to sustain and scale our business.”

Commissions paid by U.S. carriers for transatlantic travel fell by 24 percent from 2011 to $170.3 million in 2015. United’s payments in that region halved between 2014 and 2015, to $28.7 million. Over the Pacific, the five-year industry decline was 21 percent to $142 million. From 2014 to 2015, United was down there by 26 percent and Delta cut by 35 percent.

Airline consolidation certainly played a role. Industry pundit and former Tzell Travel executive Jerry Behrens said the same of consolidation on the agency side, shifts in booking channels away from agencies and downward changes in the yield and class-of-service mix. For example, he said, airlines over the last couple years moved a lot of the transatlantic business class fares into lower fare buckets, generating less in commissions.

As Glenn noted, the best commission opportunities are on international travel. However, the share of commissions for domestic travel relative to the total for U.S. carriers grew to 63 percent last year. It was about half in each year going back a decade. Share-shifting agencies earn the most commissions, noted airline analyst Robert Mann. Domestically, sources said, this tends to be a factor mainly for transcontinental and premium business.

International commission reductions continued during the first nine months of 2016. The total fell 11 percent compared with the same period in 2015. Mann suggested one cause of the outsized impact on international could be the practice of not paying commissions on fees, notably fuel surcharges. As fees levied by airlines account for a growing proportion of what passengers pay, the remaining commissionable portion (the base fare) shrinks.

The data showed other carrier-specific trends. Two years after its merger with Northwest Airlines and as the post-recession economy picked up, Delta in 2011 paid $634.4 million in commissions. The pair had not paid more than $600 million combined since 2002. From 2011 to 2015, though, Delta’s total fell by 16 percent to $536 million.

Still, Delta remained far more generous than its primary rivals. Including Continental’s numbers, United’s total in 2015 had fallen by 13 percent and wasn’t half Delta’s.

Behrens said airline management teams have taken divergent points of view. After the Continental-United merger, the company made a conscious decision to pay agencies less. But leaders at Delta were “philosophically the opposite” after the Northwest deal, viewing the higher payments as an investment in the highest-yielding channel, Behrens said.

Combined, American and US Airways came in at $366.3 million for 2015. Under the leadership of Scott Kirby and Doug Parker, US Airways was not known as an especially lucrative source for agencies. That became more apparent during 2014, the first full year of operation after the airlines announced their merger but before it was final. US Airways commissions that year returned to recessionary levels after four years of stability. AA’s commissions topped out in 2014 before dropping back again a year later.

Southwest Airlines’ M&A activity also ate into agency revenue. In 2011, Southwest recorded $8.5 million in commissions — its lowest number during the quarter-century of DOT data. That jumped to $34.4 million the following year with the acquisition of AirTran. The total fell back down again each year since then, to a piddly $2.8 million in 2015.

“Southwest absorbed AirTran’s more traditional agency commission deals in the merger, then extinguished them as they rolled off,” noted Mann. “Poof, no more commissions!”

Alaska Airlines commissions between 2011 and 2015 were up marginally and JetBlue’s commission line rose 33 percent. JetBlue’s payments have been on the upswing since the airline rejoined GDS channels a decade ago. Before that, JetBlue paid agencies next to nothing during its first few years. “Going back into GDSs and adopting the Sabre host exposed JetBlue to more commercial agency desktops and commissions, against the increased revenue that commercial agencies deliver — a considered strategy,” according to Mann.

The overall downward trend continued into 2016. Available data covers the first nine months of that year, and total commissions paid were $952.5 million, down from $974.7 million in the prior-year period.

Like GDS incentives and other supplier revenue, airline commissions help support travel management services. TMC executives routinely say that as any supplier revenues come down, client fees must go up.

Additional info: Unless otherwise noted, all data are derived from the U.S. Department of Transportation’s Bureau of Transportation Statistics. They do not include commission payments by non-U.S. airlines. A DOT press official indicated that airlines do not identify for regulators the entities to which they pay the reported commissions. Sources cautioned that the information is not perfect and may not offer precise comparisons between carriers. There is no common formula for reporting, and the data are not audited. Relative differences in historic usage of regional airline partners — and variations on how commission expenses were allocated between mainline and regional operations — could influence comparisons. An Alaska Airlines official pointed out that some of the money is not paid to agencies but rather to other airlines for interline service changes. A Delta official indicated the reported figures represent worldwide agency commissions but also monies paid to general sales agents and charter operators. 


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Security Experts Highlight Concerns About Reservations Data As GDSs React To Vulnerabilities

Global distribution system providers this week did not contest the results of an examination by Germany-based tech security experts showing vulnerabilities in reservation systems. Security experts contacted by The Company Dime said the potential for abuse may be greater than the researchers outlined in that such information could be used for crimes including corporate espionage and intellectual property theft.

In a Dec. 27 presentation at the Chaos Communication Congress in Hamburg, Karsten Nohl and Nemanja Nikodijevic of Security Research Labs examined holes in reservations systems including GDSs. They demonstrated that it’s relatively easy to find out someone’s travel plans using commonly displayed and discarded record locator information. They showed that very little manipulation of airline and other travel systems is required to learn a traveler’s email address and phone number, commandeer the value of unrestricted tickets or reroute loyalty points. A bit of hacking or phishing can expose mailing addresses or credit card information.

Seriously, find an hour to watch the video (scroll to bottom).

“We have seen the presentation,” a Sabre spokesperson acknowledged. “We have numerous layers of security in place. Discussing how we maintain security and the privacy of travelers undermines those safeguards and the security of our systems.”

GDS vulnerability“Cyber security and the privacy of customer data are critical priorities for Travelport and an area in which we invest extensively,” according to a Travelport press official. “We make ongoing investments in our own systems and also engage with the various industry bodies we participate in, to implement any changes recommended in support of the general digital travel booking ecosystem.”

Most frequently referenced in the presentation, Amadeus was more forthcoming: “Amadeus is assessing the findings of the research on travel industry security, and we have upgraded security to our own properties. We give security of customer systems and data the highest priority and our systems and processes are under continuous review. We will take these findings into account and work together with our partners in the travel industry to address the issues that have been exposed here and seek solutions to potential problems.”

The key vulnerability hinges on the industry’s use of record locator numbers which often use characters issued sequentially or within a range. These codes serve as passwords on travel websites and itinerary services, but they don’t meet today’s typical standards for cyber security, according to the researchers. This makes brute force attacks relatively easy.

The codes also are printed on boarding passes and luggage stickers that are often discarded at airports. Sometimes they’re hidden with a bar code that is easily unmasked using free online tools, the researchers showed. At one point in the presentation, they drew laughter by pointing out tens of thousands of photos of boarding passes posted on Instagram. On the spot, they demonstrated how easy it was to use one of these photos to break into a traveler’s online travel account.

It’s only funny for a minute.

Pallorium Inc. CEO Steven Rambam is an international fraud and missing persons investigator. Asked about the vulnerabilities demonstrated last month, Rambam said abuses outlined by the tech experts left out much of the story.

“Travel information is incredibly valuable,” said Rambam. “Where you’re going can reveal business activities and future plans. Who is traveling with you can help identify business associates and also personal pressure points. Intelligence agencies target this information all the time. The same Chinese agents that hacked [U.S. Office of Personnel Management] files also simultaneously hacked United Airlines, presumably to see where the government agents they identified were traveling. And let’s not forget that if you have access to a target’s reservation, you can arrange that your operative is sitting next to him on a long flight home. That sort of thing happens a lot more than you’d think.”

Asked what a company can do, Rambam said that unfortunately there is very little. “Hacking and this sort of impersonation are crimes,” he noted, but “there are so many possible penetration points that only the most incredibly inept hacker would be detected. And, since 911, it’s nearly impossible to travel under an alias.”

“There are plenty of reasons to be concerned about this situation,” said consultant Luke Bencie of Security Management International. “It would be a great way to track CEOs to determine if they are considering a merger or acquisition of another company. This would lead to insider trading, as people could determine whether or not to buy or sell a stock early.”

Author of “Among Enemies: Counter-Espionage for the Business Traveler,” Bencie also said the information could allow criminals to track relatives of wealthy individuals for kidnapping and ransom; set traps that put corporate employees in compromising positions and enable blackmail; or break into travelers’ homes when they’re on the road.

During the security conference presentation, Nohl welcomed Amadeus’ responsiveness but also noted that making the requisite changes to systems across the industry would be daunting.

“We’re talking about hundreds of companies who have to come together and decide [they] want to introduce passwords for each booking,” he said. “That is a long-term goal. In the short term, though, at the very least we can expect these sites to do the bare minimum of web security.”

For example, Nohl said, website owners should limit the number of requests that can come from a single source. This reduces the chances of success for a ne’er-do-well’s brute force attacks.

He drew applause with this one: “Privacy is never enough to convince a big company, but if you throw in a little bit of fraud, it may be enough.”

Additional info: U.S.-based privacy advocate Edward Hasbrouck has been sounding the alarm on this issue for many years. His response to the SR Labs presentation offers reams of background.

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