2-Minute Survey: Travel Program Priorities

Folks, here’s a super-quick 3-question survey about travel program priorities.

Travel Program Priorities Survey 

If you are a travel buyer, please weigh in…it will take less than 2 minutes, and you’ll shed some important light on this issue. 3 questions, 2 minutes – it’s easy!

This is an anonymous survey – you couldn’t leave your name even if you wanted to. It’s also unscientific, but I think the results will still be very interesting.

If you’re not  a buyer, you probably know a bunch of these fine folks, so feel free to forward this to them. (That’s also meant to be a nice way of asking you non-travel buyers to not take the survey).

I’ll share the results here on this blog, and on stage at the Business Travel Intelligence Summit on May 22nd in New York. If you haven’t heard of this one-day deep dive into the real value of travel data, have a look at the agenda here.   It’s the first event I’ve seen designed specifically to discuss travel data, and it already has over 100 buyers registered to attend.

I hope to see many of you there!

 

What’s The Real Goal of a Travel Program?

 

Quick – name three metrics that travel managers care most about…and no, you can’t say savings, savings and savings.

Savings, for sure, maybe followed by discounts and policy compliance, or average ticket price/room/car rate.    These are time-tested, industry-accepted, common-sense metrics that are the foundation for status-quo management of the travel category.

(Going to GBTA’s Convention? See a related meet-up note at the end of this post)

Before you reject my call to demote these traditional metrics, consider the maxim “Measure what matters”.  Note that it isn’t “Measure what’s laying around, looking like it matters”.  It’s not “Measure what we’ve always measured”.

It’s the “what matters” part that’s the key.  That, and an evolved view of travel management’s mission.

Shouldn’t the goal of managing travel be to create the most value from whatever the travel budget is?  To create the biggest business impact, net of the cost?  Sure…which means we need to think about measuring said impact.

Top 5 Posts in 2015; What should I write about in 2016?

Let’s start 2016 off in the right direction..

Please tell me what you’d like me to write about.

To make things quick, easy and anonymous, here’s a 1-question survey of possible topics:

Tell Gillespie what to write about

If you’re not into super-short surveys, you can always drop me a line at scott.gillespie2008@gmail.com, or post a comment or two below.

Here are the five most-read posts during 2015:

#1 Why TMCs Need a Dramatically Different Sales Approach

#2 Hotel RFP Hell: Is The End at Hand?

#3 On Concur’s Future

#4 Lufthansa Accelerates Managed Travel 2.0

#5 A Better Way to Manage Road Warriors and Their Costs

Many thanks for reading, and great good wishes for an interesting 2016!

 

Delta Makes On-time Bet; Leads on Total Cost of Travel

Remember when Delta capped commissions twenty years ago?  It shocked the industry. Transformed corporate travel programs into cost centers.   Re-wrote the buyer-TMC business model. Ushered in professional procurement practices. Overnight.  Wow.

Well, Delta has done it again.  Much less drama here, but with even more long-term  impact on our industry. For airlines, yes, but also hotels, ground transport and TMCs.  We all need to pay attention to this.

Why? Because Delta is forcing the quality question front and center into the travel procurement decision.

This is a big deal.  By guaranteeing that its on-time performance will be better than its two main rivals, Delta is making buyers factor in the quality of its operations as part of Delta’s value proposition.

Delta shows buyers the value of cancelled and delayed flights – and lets buyers set their own values.  The argument is sound and simple.  “Delta saves you this much over our two rivals by completing more flights.  That’s why we should get even more of your business.”

So now buyers also need to factor in the quality of Delta’s rivals.  On a very measurable metric.  That matters a lot to travelers. Which has been “free”, or at least unlinked to price. Or explain to management why this quality stuff  doesn’t matter.

I think this is the first clear and ever-so-practical step taken by a major travel supplier to get buyers to focus on the total cost of travel. Not just the up-front price paid, but a pretty big piece of the whole enchilada.

In effect, Delta is unbundling the price of on-time performance.  In a way that wins them friends, not enemies.  It’s brilliant, and I love it.

Measuring quality in each travel category is possible, but few buyers make much effort.  It’s much easier to assume (or pretend) that “they’re all the same”. That’s a classic procurement play.  It reinforces the commodity nature of the suppliers, leaving them little choice but to compete on price.

Now, the analytics behind any negotiation have to include the value of each airline’s quality.  Today,  the metric is system-wide performance.  Tomorrow, who knows which factors the industry will want to compete on?

Here’s the thing: putting quality into the procurement equation is like bringing a puppy home to your kids.  There is no way you’re ever going to take that puppy back.

That’s why this is such a big deal for the entire corporate travel industry.  Think of the consequences:

United and American now have to compete harder on this dimension of quality, and/or find other important quality factors which favor them.  They too will have to put some money on the line. And then there are Air France/KLM, British Airways and Lufthansa…hmmm.

Hey, what about hotels?  Quality matters there, too, right?  Maybe Marriott puts its average TripAdvisor rating up against Hyatt’s and Hilton’s…you can see how this will unfold.

More money at stake means more buyer bandwidth for linking quality to price.

I spoke about this very concept last week at GBTA’s Advanced Airline Sourcing session.  (NB: I had no advance knowledge about Delta’s on-time guarantee.)  In that session, I showed why buyers need to evaluate trip quality along with price, and how this could be done with the airline category.

Here’s the slide that shows how easy it is to link an airline’s price to quality:

The point is that we can readily link price and quality, and we should.  Only by rewarding suppliers who deliver higher value can we expect both buyers and suppliers to win in the long run.

For more information on linking price to quality, see this deck, slides 7-23. You’ll see why the total cost of travel is the key to true travel program optimization, and why these airline  prices are per hour, not per mile or kilometer. (Oh come on, let’s all admit it –  price per hour is a way better metric for non-airline folks.)

Delta, thank you for putting quality squarely into the procurement decision. That’s the kind of innovation we can all appreciate.

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GDS Surcharges: What’s A Fair Price?

Now that Lufthansa Group has announced its €16 surcharge for bookings made in the GDS channel, let’s tackle the fundamental issue it raises.

If the GDS channel offers a better value to corporate buyers, then what is  a fair price for using that channel?

Asked the other way, if booking directly on an airline’s website offers less value than the GDS channel, how much of a price incentive does the airline need to offer its customers?

Lufthansa has set that price at €16.  If the price were €1, the corporate travel industry would still be having a tizzy fit, but only on principle.  You couldn’t credibly claim that the benefits of booking in the GDS-TMC channel are not worth such a small amount.

Just to make this more debatable, assume that instead of setting a surcharge for bookings made in the GDS channel, an airline offered its corporate customers a €100 discount on all tickets booked directly via its website.

Of course the airline would see a huge take-up on that offer, because at that price, the disadvantages of the direct booking have been more than offset by the direct-channel incentive.

The point is that there must be a price at which the benefits of booking via the GDS channel matches the value received.

It is unfair to both the GDSs and the airlines to pretend otherwise.

So why shouldn’t an airline set a price and see what happens?  How else will the market really know what the true value is?

More coverage on this issue here, here, here and here.

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Lufthansa Accelerates Managed Travel 2.0

Lufthansa Group announced it will charge 16 Euros for each booking made in the GDS channel.

This is a seismic event for the corporate travel industry for these reasons:

• Channel steering becomes a differentiator for legacy carriers
• GDS/TMC  and GDS/airline economics will need re-shaping
• TMC/Corporate deals and service levels will need re-engineering
• The value proposition for TMCs gets murkier while their need for adding non-booking value becomes crucial
• Closing the data loop for corporate direct bookings becomes imperative

My best guess about the steady-state result?  Managed Travel 2.0 will be widely enabled, if not adopted.  (Kindly recall that MT 2.0 is not the same as Open Booking.  The former closes the data loop between supplier-direct bookings and the corporate buyer; the latter does not – that’s called unmanaged travel.)

But much depends over the next few years on

Travel Buyers, What’s Your Big Analytical Pain Point?

A lot of folks in the travel industry don’t enjoy the numbers side of the business nearly as much as they do the people side.  Fair enough, as the whole industry is built on the premise of building better interpersonal relationships.

But what is it about the analytical efforts that are really causing you the most pain?

Maybe if we understood those pain points better, our industry could do a better job of making the numbers side a bit easier on everyone.

If you are a travel buyer, please take 2 minutes to answer five quick questions here:

Travel Buyers: This Quarter’s Travel Data Pain Points?

The survey is anonymous, and meant to shed some directional light on the problems.

I’ll publish the results here and on LinkedIn.

Please share this as you see fit.  Thank you!

A Better Way to Manage Road Warriors, and Their Costs

You road warriors are a hardy bunch, aren’t you?

You spend over a hundred hours a year on planes, take trips on short notice, cross too many time zones, lose sleep, gain weight, get up way early and come home late, and give up more than your share of weekends.

All while being squeezed by travel policies that leave you shaking your head, wondering if the people who approved these policies really, truly understand how hard it is to be a heavy-duty road warrior.

The Travel Friction Concept

Let’s call all this wear and tear you’re taking on “travel friction“.  You get it, right?  The more trips you take, the tougher those trips are, the more you get burned out by being on the road.

Fun fact: Real road warriors, those in the top 10% of all travelers, absorb

Why TMCs Need a Dramatically Different Sales Approach

Ever notice how Travel Management Companies (TMCs) have a hard time selling their value?

It’s not a complicated value proposition.  “We’ll help you book travel at low prices and help your travelers on the road, so you’ll save money and sleep better.”

That’s a pretty easy benefit statement to grasp, right?  So that’s not really the problem.

Two Big Problems

TMCs compete on the wrong metric, and they sell to the wrong people.

Air Sourcing Moves Out of the Slow Lane

The big bottleneck in airline sourcing projects is the time and cost of entering detailed airline contract terms.  That will soon change for the better.

Fayrnet, a product of Volaro, automates the loading of airline contracts into GDSs.

In speaking today with Patrick Healy, Volaro’s Director of Sales and Distribution, I discovered that this tool could  – and should – be easily adapted to handling corporate contracts and proposals from airlines.

Healy says it handles Category 25 and 35 fares (discounts off published fares, and fixed, aka flat, lane or zone fares, respectively).  The demo I saw quickly converted a typical Excel-based airline contract for dozens of fixed fares