New Chapter, New Focus

It’s a tough time to say goodbye to all the great folks at ARC.  May 15th will be my last day there.

Like so many other fine firms, ARC is facing the pressures of the travel industry’s epic downturn. A special thanks to Mike Premo, Lauri Reishus, Dickie Oliver, Tom Casalino, Eric Barger, Doug Mangold,  Arun Gupta, Chuck Thackston, Ben Kean, Noah Robins, Vanny Zhang, Kristen Ebersole, Chuck Fischer, Shelly Younger, Sarah Boyd, Steve Solomon, Peter Abzug, Peter Kane, Megan Leader, John Pittman, Dan Swain, Heather Unger, Tanya Nass, Sofi Momen, Sohum Karia, Paul Barber, Brian Coleman and Rich Licato for your leadership, collegiality, insights and commitment to serving ARC’s customers. I am very grateful for the time I spent working with so many good people, and surely wish all of you well in your efforts to re-position ARC for the years ahead.

So what’s next?  It’s hard to imagine a bigger question than the one surrounding the travel industry’s recovery. There will be massive changes ahead, and that means plenty of opportunities for innovation.

This blog will focus  initially on the innovations and adaptations meant to bring about the travel industry’s recovery.  I’m curious to see what comes to market, and impatient to see what works.  If you’d like to share something along these lines, I’ll be at scott@tclara.com

NB: This blog’s title had been Gillespie’s Guide to Travel + Procurement. This blog has all of the prior posts, but the page menu has changed to reflect the new focus.

A Big Win No One Is Talking About

http://www.sweetthreadsdesign.com/blog/welcome-home-front-door-spring-decorTwo years ago I wrote that travel managers face two paths.

One path is to keep doing what you do today: jumping through endless supplier meetings, putting out fires around traveler service issues, continually hacking away towards inbox zero… In short, doing all those things that add short-term tactical value.

The other path leads to adding higher, more strategic value by focusing on travel’s broader business impact. I’ll preach about taking this path at GBTA in Boston on July 17th.

One area along this path that I think is rife with opportunity is non-employee travel. Think recruiting trips for on-site interviews, new-hire training, or guest visits such as speakers, partners, or customers.

Most all the current corporate travel tools and systems were built for current employees. If you worry that your own travelers don’t enjoy that experience, how do you think your non-employee travelers feel? Continue reading

What’s The Real Goal of a Travel Program?

 

Nine Fall LeavesQuick – 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. Continue reading

4 Services for Reducing Traveler Friction

Reducing Travel Friction

Reducing Travel Friction

Innovation and traveler friction are popular topics for you folks, so here are a few quick profiles of new ways to make life easier for travelers.

DUFL – Allows travelers to travel without luggage.  A mashup of FedEx and your favorite Downton Abbey butler.  DUFL stocks a private closet with your travel clothes, and sends them to your hotel in advance of your arrival.  You leave the DUFL suitcase at the hotel upon checkout, and DUFL retrieves it, cleans and repacks your clothes, ready for your next trip.  Yes, there is an app for that.  More about DUFL here.

Expensify – Automatically, and near- instantly, reimburses travelers for their on-the-road expenses. Snap a photo of the receipt, and the expense reporting tool automatically cues it for payment the next day.  It’s hard to imagine making expense reimbursement any easier.  More about this feature here. Hat tip to BTN for the coverage.

FlyAnotherDay – Helps travelers and planners avoid trips to major cities around the globe during city-wide events.  An easy way to check a destination’s potential for travel congestion.  A new service with affordable pricing that solves a pesky problem.

What3Words – not really a travel app, but keep reading…this app makes finding places really easy, especially those places without a street address.  Imagine your travelers wanting to meet on a campus for a recruiting trip, or at a ferry point, or an oil rig.  This service makes it easy to identify any location on the globe using three words.  Interesting implications for travel risk management, yes?

 I have no commercial ties to any of these firms; just a fan of their efforts.

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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:

Quality-normalized Prices

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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Pain-less TMC RFP Process

Anyone who’s worked on a TMC RFP knows what a royal pain in the butt these projects are.  Lots of reasons for this – it’s an infrequently sourced category, there are no standard data elements, questions or pricing schedules, and there is no easy way to score bids.

Don Swartz, principal of Corporate Travel Buyer Resources, figured there had to be a better way.  As a former TMC guy and active consultant on TMC bids, he had a ringside seat to these and other problems.

Don’s solution? Streamline and standardize.  Impose reasonable limits on buyers and sellers. Make things easier and faster. Stay focused on the goal: Help buyers make good choices from several well-crafted offers.

The result? A notable reduction in cycle time Continue reading

It’s Time For a New Generation of Travel Management

Next year will mark the 20th anniversary of the dawn of modern travel management.

Ship's Wheel on blueIn 1994 Delta cut commissions to travel agents, turned travel departments into cost centers overnight, and ushered in the need for more sophisticated management of the travel category.

Our industry responded well.  It developed a core set of best practices.  Online booking technology and Prism’s airline contract management tool accelerated the importance of having an effective travel policy.

Consolidation of TMCs, use of procurement techniques, improved data reporting, duty of care – all these and more are now well-known hallmarks of managing a corporate travel program.

We’ve learned how to add value. The body of knowledge is solid, stable, strong.  The castles of best practices have been built.

But castles have limits.  They are neither mobile nor flexible. They aren’t suited for exploration and discovery.  After 20 years, we need explorers willing to chart new courses, to explore new frontiers.

It’s time to search beyond the diminishing returns of Managed Travel 1.0.   Continue reading

What’s the airline’s cost of your ticket?

How helpful would it be to know the airline’s cost of any ticket?

Procurement pros often use cost modeling to estimate profit margins, then use that as  context for price negotiations.

But airline pricing doesn’t depend much (some would say at all) on costs – it’s all about supply and demand.

Evan Konwiser and I are developing a website aimed at this issue.  The initial focus is on the consumer market, but we are keen to understand the potential for the corporate travel market as well.

Your feedback will be greatly appreciated!  Click here to weigh in using this 8-question, 3-minute survey: https://aytm.com/r762623

Feel free to share the survey link as you wish.  The survey will close out after 250 responses.

Alternatively, your comments here are most welcome, as always.

The End of Travel Data Darkness

Ending Travel Data Darkness with a Switch

Ending Travel Data Darkness with a Switch

This is the year in which travel data darkness begins to die.

By data darkness, I mean the opacity of travel booking data made outside of company-approved booking channels.  Exhibit A – hotel bookings made on Brand.com. Given that most companies can’t see 40-50% of their hotel bookings, this is a big black hole for most travel managers. And safety/security managers. And tax managers (more on this later).

Sure, you may get this data via the corporate credit card, or eventually via the expense report, but by then that data’s wattage is pretty dim.  Surely you need brighter data – more detail, in real time, regardless of how or where your travelers book.

No problem.  The solution – conceptually – is so close and so simple. And it has tax benefits to boot.

It’s your company’s Continue reading

When To Greenlight an Open Booking

Managed Travel 2.0's Booking Paths ver. A

(click for a larger view)

When does it make sense for travelers to book outside the corporate channel?  Whenever you can get through each of these three gates:

1) Will the open booking data be acquired quickly by the corporate traveler security system?  This is a show-stopper for a lot of sites.

Some solutions are to use a tool like ProcureApp, or getting travelers to forward their bookings to an itinerary management tool, like TripIt.  Soon, we’ll see data capture solutions from Concur and GDSX, among others.  If getting the data is not a problem, then onward…

2) Will the  consumer site provide cost-competitive prices? Continue reading