Jeff Klee On Babies, Bathwater And TMCs

From The FieldAmTrav CEO Jeff Klee takes a cold, hard look at the value propositions of travel management companies, how to view the startups coming after them and the difficult actions they need to take in order to have a future.


In his recent post, “On The Compromises Of Corporate Online Booking Tools,” Tony D’Astolfo warns travel buyers not to throw the baby out with the bathwater by choosing an unproven travel management company just to get a better booking tool. In this metaphor, the bathwater is the OBT and the baby is the traditional TMC offering.

There is plenty of bathwater out there, for sure. 

But maybe the baby needs to go, too.

I know it sounds crazy at a time when TMCs are experiencing record prosperity and valuations. But let’s face it, for the most part we’re still peddling yesterday’s travel management services, maybe with a few extra bells and whistles. Fundamentally, the value proposition of a TMC today is similar to that of a decade ago. This slow pace of progress has put a target on our backs, and startups are coming out of the woodwork to take a shot.

TMCs provide valuable services. But what we rarely talk about is that in order to get benefits A, B and C, company travelers have to give up the D, E and F they’d get by booking directly with suppliers. 

Jeff Klee, AmTrav
AmTrav CEO Jeff Klee

These dynamics should concern all of us. The travel management business is like a bucket leaking (albeit slowly) more water than it is taking in. Our value proposition is shrinking faster relative to supplier sites than we are growing it elsewhere. Clients seem relatively accepting of this — for now. Within the industry there is a sense of comfort, not urgency. 

But that’s what the startups have going for them. Sure, we can dismiss them as “unproven” for a little while longer, but don’t we see where this is going? They’ll reach the moon first if they’re the only ones shooting for it.

To be clear, I am not trying to frame a contest between legacies and startups. We’re all on the same side and have to overcome the same obstacles. Some of us have just been quicker to take up arms. 

That’s my point, that we should all join the battle because, yes, there is one being fought. The problems are well chronicled — outdated technology, rigid protocols, dysfunctional processes and ridiculous data flows. They tie our hands, close our minds and stifle our imaginations. If we ignore these problems, the market will eventually turn on us.

There are three big things that we as TMCs need to do. Unfortunately, none are easy.

Completely Overhaul Our Technology Platforms

Many TMCs still place the GDS at the center of their technology stacks, using it not just as a content source, but also as a database, a CRM system and a point of sale solution. This is suicide. 

More than anywhere else, this is where we need to get rid of the bathwater and the baby.

As products and services become more complicated, TMCs absolutely must have their own modern, flexible datastore where they store, retrieve and manipulate customer, booking and transaction data — independent of booking source. This datastore should be the single version of truth for the whole organization and the only interface with mid-office, back-office or reporting systems. The platform should pull inventory and sync bookings from any GDS or non-GDS pipe. The OBT, agent desktop and mobile app should all ingest the same content and use the same datastore. Passive GDS segments should finally make their way to the ash heap of history.

Close The Content Gap

Once we have the proper technical platforms to consume full content, we must do whatever it takes to bring every fare brand, seat product, airline ancillary, hotel room, hotel upgrade, etc., into our systems from whatever source necessary — for the sake of our customers and our supplier partners. Truly full content should be a table stake.

Of course, we’ll have to change our mindset. When someone asks a GDS, “When will this NDC content be included in my existing workflow?” we’ll want to applaud enthusiastically the GDS with the courage to say, “Never.” We should understand that shoehorning new content into old workflows dumbs down the content and exponentially increases the time to market. True full content must be the overriding objective. To that end, the existing workflow needs to be sacrificed.

Supplier content isn’t the only type of content we need to improve. Our customers shouldn’t need to know the difference between travel data, expense data and card data. It’s on us to find a way to loop back the expense data so we can simply report to them their total trip cost.

Start Innovating

Here is where it will finally get fun. With a platform that allows them to be technically agile and the full content imperative out of the way, people a lot smarter than me will go to work, unconstrained by historical bottlenecks. They will come up with innovations that I can’t even imagine to make life better for travelers, travel arrangers and their companies. This will push the industry forward.

You may wonder why I pitch this so passionately. As a TMC founder, if I’m right that TMCs will become irrelevant if they don’t follow my advice, shouldn’t I keep quiet and exploit the eventual difficulties of my competitors? I don’t see it that way. I really do see this as a “we’re-all-in-this-together” kind of thing because no one — regardless of their valuation — has the scale to do this alone. It is critical for all of us that there are enough successful TMCs to support a vibrant network of service providers for the community. Similarly, we need enough TMCs out there generating enough business to justify supplier investments into third-party distribution. 

Throughout the years, the TMC community has had the patience of Job, but patience is no longer a virtue in the digital age. To strengthen our industry, we collectively need to take action. We need to commit to taking control of our own destiny, instead of waiting for GDSs or expense management companies to solve our problems and plug our gaps. I know that what I’m suggesting is much easier said than done. To get where we need to go, we’ll have to fight fights, bite bullets and repay a boatload of technical debt. 

Although it will be hard, it will be even harder if we wait much longer.

Author: Jeff Klee

AmTrav CEO Jeff Klee is a self-described computer geek who developed and sold his first video game at the age of 13. In college, he and a buddy got a crash course in the intricacies of the airline business while planning their own backpacking trip and later decided to use that know-how to help others save money on airfares. What was first known as 1-800-Cheap-Air was founded out of a University of Michigan dorm room in 1989. When the company took off, Jeff ditched his law school plans for a far more exciting journey, combining two passions — travel and software development. CheapAir.com was born, and soon after AmTrav for Business, which together serve almost 400,000 travelers annually. Jeff grew up in Los Angeles. He still lives there with his wife, two young kids, and golden retriever, none of whom, when the Dodgers are losing, want to be anywhere near him. Connect with Jeff on LinkedIn.

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Matt Zito
Subscriber
Matt Zito

Jeff, I really like how you articulated what a future TMC tech stack should look like. A flexible datastore to store, retrieve and manipulate customer, booking and transactional data independent of source.

Jennie Robertson
Subscriber
Jennie Robertson

LOVE!! >insert high five emoji here< 😉

Kevin Trill
Subscriber
Kevin Trill

Great summary Jeff and I can only agree with you. As a longtime IT/travel person, I have seen the GDSs arrive and, based on the current trajectory, depart (at least in how they work now technically and or commercially). What they will be in the future is another conversation. TMCs which share your sentiments are nevertheless challenged with the way forward, let alone having the resources and vision to contemplate the alternative(s). If we TMCs don’t address it then others will, and I think the ecosystem will be worse without TMCs. Similarly, the GDSs have offered and continue to offer… Read more »

Mat Orrego
Advisor

Bravo Jeff. The business models for our industry have to adapt to so that the technology can be best applied. Technology is an enabler or better ways of doing business.

Chris Crowley
Subscriber
Chris Crowley

Bravo Jeff – you are trapped in a non-proprietary technology platform that was innovative in the 1960s but looks at best restrictive now and will look even more restrictive if One Order comes to town.

Chris Dane
Subscriber
Chris Dane

Jeff is always on the leading edge and a visionary for changes that need to happen in this business.

Lachlan McEwen
Guest
Lachlan McEwen

Jeff, great article, I agree with everything you said, the travel agents/TMC community need to take control and work with the travel tech industry to help solve these problems. Could I say you’re looking for a platform that is multi GDS, can connect directly to airlines (commonly referred to as direct connect), provide access to hotel aggregators or any other supplier in one single travel consultant friendly user interface that also provides B2B and B2C capabilities? Be interested in your feedback if this is the type of solution you are looking for!

Megan Howard
Subscriber
Megan Howard

As always, appreciate your perspective and desire to make the industry better.

Ron DiLeo
Advisor
Ron DiLeo

These are all great points reflecting thought leadership but there’s an elephant in the room that no one is addressing in these comments and it has to do with revenue. A TMC needs to be paid three times for the set of services they provide: clients need to pay them (they pay the least of the three), suppliers need to pay them and the GDSs need to pay them. If any of those sets of revenue go away or even diminish, the margins from the other two sources aren’t enough to cover the spread. The abundance of investment funding that… Read more »

Sridhar Balaji
Subscriber
Sridhar Balaji

Jeff – great article! I agree with Ron DiLeo on the revenue equation problem. I also feel that clients will pay when they see service uptick, user experience and clear value offered by their TMC. Business travel, while a huge market, is very fragmented. Disruption via technology will need to be offset with proven gains in customer defragmentation, UX and service quality and that will happen.