A colleague recently asked if travel suppliers will continue to offer discounts in the world of Managed Travel 2.0.
“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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A discount for me is different than a negotiated fare … Access to negotiated fare from different booking channels as promoted by MT 2.0 is a great idea, with one condition: the access to fares is fair.
But, access to discount or offer is for me another story … another process. Some travel policy can accept it or not.
With NDC coming, it will be more and more difficult to know if a discount is really … a discount. Life for travel managers will be harder than before, and curating will become a science. TMCs and independent firms are already offering this service, but their job will become more difficult if data are not shared. The main issue is that it will be less and less possible to compare fare (at least in real time) … since nobody except airlines will have access to all fares … So how to define a discount then? Pricing rules will be opaque and non transparent to all the ecosystems.
NDC was created to promote upsell and selling of ancilliary services, based on who the traveler is (and eventually the corporation he works for). Travelers will get dozen of great offers and services and “discounts” that they will not be able to buy most of the time. Is it good or bad?
If you are outside the TMC controlled channel, I do not see how a travel manager could manage this increase of offers due to targeting and personalisation. I do not think airlines will implement the travel policies of all the companies they have a deal with … So managed Travel 2.0 will be in fact a way to increase travel costs … but please online bookers!
If you can not access all fares, you can not compare, and then discount does not mean anything anymore … And it’s true, people thinking they’ve made a great deal online are always happier than the others, and happier than the ones who manages the travel program and can see the numbers.
Scott … It’s time for Procurement to move on from simply cost cutting to value creation beyond purchase price. All too often that’s the only lever procurement people manage, generally cost savings are all that’s measured. It’s getting very old seeing yet another article on what amounts to “strategies” to cut a supplier’s margin. In today’s procurement world “supplier relationships” go little beyond cost cutting. Loyalty is a thing of the past, and relationships are becoming nonexistant. Oh sure procurement professionals talk about the value of relationships and working together, but talk is cheap. It’s time to move past simple price.