“Why would suppliers offer discounts under this open booking format? Why would they simply not let their revenue management team set prices and do away with all discounts?”
Discounts won’t go away in MT 2.0. Here’s why:
Let’s assume that suppliers would still want more than their fair (i.e., unmanaged) share of a corporate account’s business. How will they get that extra share?
Suppliers can expect to get their fair share by relying simply on the power of their airline schedule or hotel location, their brand, and their revenue-managed pricing – assuming their competition is not offering any special deals to a corporate account’s travelers.
To get more than their fair share, suppliers must offer deals to corporate travelers – better deals than whatever their competitors offer. Pricing is a big part of that deal offer, so I expect corporate discounts to continue as a key factor in MT 2.0.
Those discounts will be offered in the managed booking channel, just as they are now. Keep in mind that Managed Travel 2.0 doesn’t mean eliminating the corporate booking channel. Rather, MT 2.0 means not requiring it to be the only booking channel.
I expect suppliers to also offer corporate discounts on Brand.com sites, likely tied to the traveler’s e-mail domain. In both channels, the suppliers will offer price and non-price incentives to an account’s travelers to win more share, just as they do now.
What becomes more important is the travel manager’s ability to communicate these offers to her travelers, not just within the corporate booking tool and agency channel, but more directly to travelers, regardless of where they book.
Beyond communicating these offers, the travel manager may well be expected to critique them, much like a film critic. Why is this offer better than that one? Which audience segment will this offer appeal to?
The more assertive travel managers will go even farther. They will curate the offers, winnowing out the low-value, plane-jane deals from those with carefully crafted value packages. They’ll promote these offers to their traveler segments with clear, concise and credible communications.
Yes, travel managers are already too busy. Tackling this new and not-easy task isn’t going to be practical for a lot of you. So look for TMCs to fill this role. Why not? Who should have a more informed view on these offers than a TMC?
These are the travel managers – and TMCs – that will become truly trusted advisers among their travelers.
In MT 2.0 discounts don’t disappear, although they may well decrease. What will increase is the need for travel managers and TMCs to connect travelers with the best trip-specific suppliers.
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