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?

GDS Surcharge - Fair Value?

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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Posted in Airlines, Distribution, Travel Procurement | Tagged | 7 Comments

Lufthansa Accelerates Managed Travel 2.0

Broken pavement grayLufthansa 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 Continue reading

Posted in Distribution, Managed Travel 2.0, Travel Management, Travel Procurement | Tagged , | 4 Comments

Manage Travelers and Their Taxes with Traveler Data

Editorial license from istockphotoSure, payroll taxes are not in scope of a travel manager’s job.  But there is a great way for travel managers and TMCs to add real value here by being proactive with traveler data.

Curious?

The Problem

Many countries and other taxing jurisdictions are aggressively seeking more payroll taxes from business travelers.  This means their pay could be docked for spending just one day in a foreign country on business.

This article reports that “more than 100 countries have joined The Global Forum on Transparency and Exchange of Information for Tax Purposes, which is working toward automated exchange of immigration reports, hotel stays and airline reservations. Better-informed enforcement bodies will have an easier time catching non-compliant firms and individuals.” (emphasis added)

The problem is not limited to international travel.  In the US, many states have some form of traveler tax, according to this 2013 Pew report.

The Solution

File this under “Being a proactive problem solver”.  These traveler tax issues place the burden of proof on the employer.  So travel managers should reach out to their payroll tax liability folks to discuss the types of travel data needed to manage these risks.

There is the historical travel angle, and the future travel angle.  The key is to analyze each traveler’s location and duration history, and calculate how many days the traveler has until triggering some type of tax liability.

Complex? OMG, yes.  Fortunately, there are at least two firms working specifically in this area.  Blackspark uses TMC booking data and is integrated with Concur, while Monaeo uses the traveler’s mobile phone data.

The point is that there are automated ways to feed traveler data into the equation.  This can keep travelers from triggering significant tax liabilities – and from refusing to travel for fear of losing more of their hard-earned pay.

TMCs, you should raise this issue with your clients.  If you get enough traction, why not incorporate pre-trip alerts to help manage these future tax liabilities?

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Posted in Data, Travel Management | Tagged , | 4 Comments

Travel Managers, Choose Your Career Path

Compass in hand, fork in trailYou travel managers have very challenging jobs.  You also have two very stark career paths in front of you. Let’s start with where you’re at today:

You’re managing a complicated and ever-changing mix of problems.  One hour it’s all about traveler service issues, the next it’s a rash of technology speed bumps, followed by constant demands for reporting cost savings.

You get sucked into endless supplier meetings, do your best to reconcile messy data points, and pray that the new travel policy proposal gets past the latest stakeholder review checkpoint –  all while trying to stay on top of 200 e-mails a day.   There’s more, but this makes the point.

A big tip of the hat, folks – you’re doing important work across a variety of disciplines, with many stakeholders ready and willing to critique your results.  It’s a pretty unique job in many ways, and chances are good that you enjoy most of it.

But you need to ask what’s the future for a travel manager.  What type of role will you hold in 3 years, 5 years, 10 years?  Will ever-more automation and ever-better analytics put your current job to pasture? Continue reading

Posted in Managed Travel 2.0, Travel Management, Traveler Friction | Tagged , , | Leave a comment

Survey Says: Biggest Analytical Pain Points Are…

* Quantifying savings (36%), and measuring the traveler experience (16%)

* Working with travel technology tools, e.g. self-booking, expense reporting and data reporting tools (34%), and the airline category (20%)

* Deciding how to structure the analysis (22%), getting good data (20%) and proving cause and effect from the data (20%)

* Meeting the analytical demands of Senior Executives (28%), Procurement (26%) and Finance (24%)

This comes from my recent survey of 50 anonymous and self-proclaimed travel buyers  – so take this as directionally interesting; not statistically significant.

It’s curious to me that this group is still struggling with Continue reading

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

question-mark-in-mazeA 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!

Posted in Data | Tagged , , | Leave a comment

On Concur’s Future

Planet earth in spaceIt’s easy to be a Concur critic these days.  But “these days” ain’t the same as “in the future”.

I attended Concur’s annual customer event, Fusion, this week.  Let’s start with the negatives:

  • Concur clearly knows their user base has been frustrated by poor SaaS lately.  It’s a major sore point with customers, and a central issue for management. Will management make good on these promises? TBD.
  • Concur is playing catch-up with KDS on making expense reports easier to write, and making the booking process easier to use. No signs this year of any breathtaking innovation.
  • Understandable concerns about how the acquisition by SAP will affect Concur.
  • TripLink, Concur’s key to closing the gap on unmanaged spend, is stuck in low gear. Lots of sales, very few proof points of it adding value – yet.
  • Palpable angst from TMC execs about the future of their business models in the face of TripLink’s potential to enable off-channel bookings.

So if you’re not a fan of Concur, stop here, because the rest of the story is much brighter.  Continue reading

Posted in Travel Industry, Travel Technology | Tagged , , | 4 Comments

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 Continue reading

Posted in Sustainable Travel, Travel Management, Travel Procurement, Traveler Friction | Tagged , , | Leave a comment

Why TMCs Need a Dramatically Different Sales Approach

An uphill struggleEver 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. Continue reading

Posted in Travel Management, Travel Procurement, Traveler Friction, Trip Friction | Tagged , , , | 6 Comments

Why Data Predicting Trumps Data Reporting

Predict What Matters Quick – name a travel metric that your CFO would pay a lot of money to predict reasonably well.

Next year’s travel savings? Maybe. Next year’s travel spend? Maybe.  But he won’t pick your firm’s future travel policy compliance rate, or next year’s average airfare, or your traveler’s future satisfaction with your online booking tool.

My point is that while firms spend a lot of money on travel data reporting, the core value that those pretty dashboards deliver is not very high – not in the grand scheme of your firm’s business.

Here’s why: Data reports are the result of the 20th-century management dictum “Measure what matters”.

Within the boundaries of a travel program there are dozens of things that matter.  And so we’ve figured out how to measure them. In order to report them.  In order to manage them.

But all those dials and gauges and stop lights really do is simply give you signals.  Signals that you have to interpret to keep your travel program  between the white lines of your side of the road.

What those travel dashboards don’t do is tell you how to get to a better travel program.

They can’t, because they have two big flaws:

  • Data reports are stuck in the past
  • Travel data reports are stuck in the world of travel

Gas Gauge vs. GPSSo that’s the data-driven solution to getting better travel programs – deal with the future, and deal with data well outside of travel.

Enter Predictive Analytics

The key is linking travel’s impact to business outcomes.  Outcomes that matter on a much bigger scale, like sales, customer satisfaction, employee attrition, health/safety costs, etc.

This will fundamentally change the way you view and manage a travel program.

Instead of seeking to minimize travel costs, you’ll be trying to maximize sales, or perhaps minimize employee turnover – by putting a travel program in place that clearly contributes to those goals.

If sales are trending down, or employee turnover is trending up, what should you, the travel manager do to help fix these problems?

Obviously, you’ll need some new lights on your dashboard – lights driven by data from Sales and HR.  More importantly, you’ll need to know how to impact those non-travel metrics.

That’s where predictive analytics comes in.  You need to have a data-driven understanding of how things like cabin policy and hotel tiers impact bigger, non-travel metrics like employee productivity, health and safety, and attrition.

You need to predict with confidence that by changing a variable in the travel policy, it will cost $X and improve the non-travel metric by Y%.

You’ll do this in one of two ways.  If your travel program is big enough, you’ll be able to mine your own data and build these models.  If your program is too small to offer enough data, you’ll depend on benchmarks and case studies from the larger firms.

Data Reporting vs. Predictive AnalyticsEither way, you’ll find yourself importing non-travel data into your travel dashboards, and exporting pro-active, fact-based advice on how to drive to your firm’s bigger goals.

Management theories evolve.  Dictums change.  It’s time to move on from measuring what matters to predicting what matters.

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Posted in Data, Metrics and KPIs, Travel Management | Tagged , | 3 Comments