The Company Dime on Monday hosted its first LinkedIn audio event, welcoming industry contacts to discuss whatever they’d like. Though much of it rehashed industry debates, some of the conversation was pointed and challenging.
In a LinkedIn audio event, hosts can welcome participants to a virtual stage, bringing up the attendee’s avatar and opening their audio line for the full crowd to hear.
First up was tClara’s Scott Gillespie, responding to last week’s article about data quality issues due to operational realities, inconsistent data naming conventions and a lack of integration and investment, with a market-based take:
These problems have persisted for many years and we have made modest progress but nothing substantial relative to the problems you cited in the article, so my conclusion is there’s not a market for a solution. The buyers are expecting to pay too little and the suppliers are saying, “We need more than what you’re offering to make it worth our while to solve that problem.” I think the conclusion is that buyers are basically willing to live with the problems. Solving the problems will not add enough value to justify the costs.
ZS Associates global meetings and travel manager Suzanne Boyan disagreed:
I do think there are travel buyers who want to have the data. I think the incentive structure within the suppliers is incorrect and there’s not an incentive for our partners to clean up the data because it makes the transparency harder — there is no transparency, let’s just go there — and they benefit from that, right? If you can’t see the sight lines of the money then negotiating properly becomes very difficult.
Boyan said her company would be willing to pay more for better-quality data if corporate travel were “as transparent as other industries.” That could advance duty of care and supplier negotiations, she said, while preserving a “fair profit margin.”
According to Maria Chevalier, formerly of TripActions, PredictX, Hilton and several buyer roles, not all companies have the budget to invest in data management strategies. “There are definite benefits to it if you look at the pillars of travel management, from helping drive the procurement strategies and finding great value from safety, security, risk mitigation and operational excellence,” she said.
“That’s case-by-case,” Gillespie responded, “but the article impressed on me that this is still an industrywide problem and not enough success stories are making their way to the front page. And so management is saying, ‘I want to spend my money elsewhere.’ “
Chevalier went back to fragmentation as a one cause of data challenges and also noted the hotel name normalization issue: “How many ways can you spell Hilton?” The reality is that buyers need to combine, cleanse, match and report on data, she said.
According to travel risk management pioneer Bruce McIndoe, the data is there.
“The travel industry tends to be inwardly focused and not upward and outwardly useful,” said McIndoe. “When I work in domains adjacent to travel like security, compliance [and] risk management, they’re blown away with the data the travel department has access to — they’re just not aware of it. This is not just worrying about personnel when they happen to be on a company-sponsored trip, which is a narrow period of time with a small population. What they’re concerned about is, ‘Where are all my people?’ So, location awareness and mobility in general. Someone decides they want to work in Costa Rica. They will get there on their own dime and so who is tracking that? I think travel managers need to talk to these adjacent managers.”
“This is all connected” to evolution in airline distribution, Boyan noted when that topic came up.
“We talk about better data and a better experience for our travelers,” she said. “There’s probably no travel manager who doesn’t want that. But there are roadblocks in the way. I think United is really pushing for it. I haven’t seen quite as much momentum from the other legacy carriers in the U.S. This might be an area where Europe leads the charge to show us how it’s done.”
Travel Tech Consulting’s Norm Rose and In The Black Group’s Ron DiLeo identified the prevailing money flows in the corporate travel space as roadblocks, and Boyan agreed. “The model is broken and the fact that buyers don’t have the data to even see that is problematic,” she said.
Rose described the “elephant in the room” as “A, B and C TMCs who do not want to lose their revenue who are resisting this. Whether it’s called a bilateral agreement or not, like Lufthansa frames it, there’s a need for an agreement between the TMC, the buyer and the airline to move into an NDC environment and that often means less of the compensation these big TMCs have received for years.”
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“The issue isn’t an avoidance of innovation or change,” said DiLeo. “It’s not technology. It’s math. For NDC and these disconnected GDS channels to become mainstream, someone has to cover the GDS revenue component of it, whether you like it or not. The only way a TMC can be profitable is if they’re paid three times on a transaction: by their preferred supplier partners, by their customers and through the GDS. If any of those three things goes away, they’re not making money. Unless a buyer is willing to pay an extra $5 or $10 for every transaction, which is roughly what the GDS revenue exposure is going to be, then it’s going to continue to be one-off situations which keeps everyone fragmented.
Buyers “get tired of being nickel-and-dimed,” said Carmen Smith, ICF senior manager for travel and events, but “there needs to be some transparency and courage to change. It’s not so much that we … mind spending, but what are we spending on?”
“I guess if you’re a CTD maybe you have that level of transparency,” said Rose, referring to ARC’s Corporate Travel Department designation. “But if you’re just a normal corporation working with a TMC, you don’t get the visibility into those revenue sources and how they’re really on the back of your reservations. A TMC doesn’t get a [GDS incentive] unless a segment is booked by the corporation. It’s still the corporation paying for the ticket. So this lack of transparency — we talked about data not being transparent — this is part of all this conversation and I would hope a buyer would stand up and say enough is enough.”