Facing Down the Competitive Threat of Open Booking Vendors

by Fred Gebhart February 07, 2013

This is the final article in a series on open booking and travel management.

Open booking, aka Travel 2.0, may be the wave of the future, but for traditional TMCs and corporate-focused travel agencies, open booking tools and the vendors who sell them are troublesome.

For one thing, open booking tools portend a shift of transactions away from agencies to other channels. For agencies that rely on transaction-based revenues, that’s a problem.

TMCs and agencies aren’t necessarily wild about technology companies like Concur coming between their travel suppliers and corporate clients either. It’s not just the fact that open booking often ends up in travelers’ bypassing negotiated rate programs.

Open booking tools put tech vendors a little too close to your customers, in the eyes of some, and that poses a competitive threat.

Foot in the door?
As one travel executive asked, “Does promoting Concur to your client base open the door to them soliciting your accounts later on as they continue to evolve into a TMC?

“It’s kind of like the problem agents face when they promote the American Express card to their corporate clients to help better manage their T&E and then two years later, Amex is pitching that corporation for their travel account, leaving the agency in the dust,” said the executive, speaking off the record.

So how do travel agencies keep Concur and other open booking vendors from eating their business?

One answer is this – rethink your business model.

Look beyond transactions
Yes, new intermediaries like Concur Connect that come between supplier and client are in a position to take a piece, maybe a majority, of travel agencies’ transaction-based business.

But transaction revenues are already under competitive pressures. (See sidebar.) Some innovative agencies have already moved to eliminate transaction fees in favor of expanded fee-based consulting programs.

Larger TMCs don’t have much to worry about in terms of revenues, said Norm Rose, president of Travel Tech Consulting. They have the resources to move from a transaction-based business to a more consultative role. Carlson Wagonlit, American Express, BCD Travel and the other industry giants have been adding consulting services for years.

Smaller agencies are making the same shift, sometimes more quickly than their giant rivals.

Offer your own tools
Atlas Travel’s response has been to develop an open booking tool on the new Amadeus platform.

The new tool, now in final stages of development, is not part of Amadeus, but will provide automatic data capture for traveler tracking and reporting purposes, according to chief operating officer Lea Cahill.

Here’s another answer to the question of how to keep Concur and vendors like it from eating your business – focus on delivering service that requires human intervention, just as successful agencies have always done.

That’s something Concur can’t do, co-founder Mike Hilton admitted.

Concur: agencies still needed
Concur can deal with the transactions, but it does not have the staff or the expertise to deal with the complications of travel, said Hilton, executive vice president for product management and strategy, global marking.

Moreover, Concur’s technology culture doesn’t mesh well with the kind of personal service that drives agency success.

“The reality is that travelers still need support and companies still need robust reporting,” Hilton said.

“If companies are embracing the process of open booking, they need agencies that embrace the same concept. We recognize that agencies are mission-critical to business travel.”

In Hilton’s eyes, open booking tools can enhance an agency’s value to clients.

“Open booking adds new data streams that were never there before for agencies to use. Having a fuller view of travel makes for better analytics for the company and better support for the traveler. Having a fuller view of travel makes an agency more valuable, not less,” Hilton said.

Into the future
Automation is the future of travel management, said Richard Eastman, president of The Eastman Group.

To make his point, he likened travel managers to airline pilots. Airline pilots rarely fly aircraft today; they manage the aircraft systems that do the flying. Pilots take over only when automated systems can’t handle some unexpected event.

In the very near future, travel managers won’t manage traveler itineraries or policy compliance; they will manage the systems that create itineraries and monitor policy compliance. The only time a human will step into trip management is to solve a problem, Eastman predicted.

If Eastman is right, travel managers and agencies that position themselves to ride with the change will survive and thrive. Those who expect transactions to continue to dominate business travel management should start polishing their resumes.

Ensuring compliance
In the meantime, travel managers still must deal with the perennial problem of travelers who refuse to comply with policy.

“If you are going to have maverick travelers, you need to look at ways to bring them back into the fold with gamification or some other strategy,” said Carmine Carpanzano, CEO of nuTravel.

“Give them an incentive to do the right thing. A lot of travelers don’t like to be told what to do, but companies still need travelers’ cooperation to meet the company’s duty of care and negotiated contract volumes.”

“We need to change as an industry to show our users that we care about their experience,” Carpanzano added. “At the end of the day, it is supplier discounts that are meaningful to the company. We have to find ways to demonstrate that reality to the end users, our travelers.”