Let’s Buy Less Effective Trips!

Travel Programs Insights cover pageSaid no one, ever.

Imagine giving management a choice between these two travel programs: “Nickels and Dimes” and “Goldmine”.

In the Nickels and Dimes program, they get travelers who are more burned out, more likely to quit, have less productivity, report higher rates of sickness, are less willing to travel, and for the kicker, produce 22% less effective trips.

In the Goldmine program, they get the opposite – happier, healthier, more productive travelers who are more willing to travel and – pay attention – produce more effective trips.

Of course the Goldmine program is going to be more expensive.  Just like an iPhone is more expensive than a cheap flip phone…you get what you pay for.

And yet travel managers Continue reading

GBT’s Non-GDS Charge Makes Sense

Shopping Cart IconBuyers have a new distribution dilemma.

American Express GBT is phasing in a $10 surcharge for handling airline tickets from carriers who don’t use common industry channels for sales and settlement. (More coverage herehere and here.)

Think of this as the opposite of the €16 surcharge that Lufthansa Group is applying to tickets purchased via the traditional GDS/TMC channel. One happens if you buy in the GDS, the other happens if your LCC airline doesn’t play there.

Both of these surcharges annoy buyers. “What – you’re going to charge me more based on where I buy a ticket, or who I buy it from – that’s outrageous!”

In fact, it makes perfect sense.  Lufthansa and GBT make the same point – their costs to Continue reading

Relationship Advice for Road Warriors

Surely a ton of travel creates unique strains for road warriors and their families.

Fortunately, these problems are fairly predictable, and can be managed with a bit of planning, effort and honest communication.  If you know a road warrior or two, read on, as they may well benefit from the sage advice from Megan Bearce, author, licensed marriage and family therapist, and wife of a road warrior.

I connected with Megan on the issue of traveler friction, something she knows well, especially as it impacts couples and families.  She’s written a terrific book on this subject, and offers the following practical advice.

SuperCommuter CouplesA Guest Post From Megan Bearce:

I am happy to report that whether you are a road warrior or a “super commuter,” (employees who travels 90 miles or more to their job), physical separation doesn’t have to mean emotional distance.  Below are three strategies from my book, Super Commuter Couples: Staying Together When A Job Keeps You Apart, to help your relationship thrive despite being apart.

1) Coming home:

People assume that reuniting after days on the road would be exciting, but in reality this 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

Two Steps Closer to a 2-Channel Future

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Travel managers, you’re gonna need a two-channel booking strategy.  Maybe not this year, but fairly soon in the scheme of corporate travel time.

The second shoe dropped last week, when The Company Dime broke the news (paywall, worth it) about airlines making complex trips (roughly anything not a simple one-way or round-trip) more expensive  – sometimes moderately, sometimes drastically more expensive.

Reliable sources estimate these complex trips to be anywhere from 7% to 16% of a corporate account’s transactions, depending on your definition and travel patterns.  Call it 10%  – that’s a significant chunk of bookings that are now at risk of much higher prices.

The cost-avoiding solution is to book each individual destination within the itinerary as

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

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Pencil as a question markLet’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!

 

Why Lufthansa Will Change Our Industry for the Better

Lufthansa Group announced a bold move to charge 16 euros for each ticket issued through a GDS.  Like any other unilateral cost increase,  it’s unwelcome. Travel managers are fuming; many of you seem really angry.

It reminds me of the withering challenges Continental took on back in the day when they forced corporate accounts to accept Prism’s contract monitoring as a condition for getting corporate discounts.

Today, contract monitoring is widely used because it benefits those buyers who meet their market share commitments.

So, deep breaths everyone.  Let’s consider the longer-term implications of Lufthansa’s unbundling the distribution value of the GDS channel.

First, this is another form of ancillary revenue for the airlines.  It just happens to be aimed at the travel manager, rather than the travelers.  Like travelers facing choices about fare families and other forms of bundled benefits, you travel managers have to decide if the GDS-bundled price is worth the value.

No doubt, there is real value in booking via the GDS/TMC channel.  Easy comparison shopping, immediate itinerary support from your TMC partner, and full data integration come right to mind.  The good news is that you still  have this well-oiled, high-value channel available to you.

Whether the GDS channel is worth 16 euros is your call. What used to be “free” is now out in the sunshine, where free markets can more easily decide its true value.  The debate needs to be about the price, and not Lufthansa’s right to charge it.

Now let’s imagine what may happen if other airlines adopt this same unbundling strategy, enough so that most travelers – leisure and business – have the same choice every time they want to buy a ticket on most any airline.

Will the leisure traveler place the same value on easy comparison shopping, TMC support, and data integration?  Of course not.  So all those leisure transactions will move to the lower cost, lower value channel of airline-direct booking, which is where most of them are anyway.

Guess what?  A big chunk of business travelers book just like leisure travelers.  They are price sensitive.  They book in advance.  They don’t change their travel plans.  And they don’t worry about needing a dedicated agent if something goes wrong.

Call these the commodity travelers of the business world.  They will naturally gravitate to the cheaper booking channel, removing a not-insignificant volume of transactions from the GDS engines.

All you travel managers in low-cost cultures will feel pressure to help them do this.  You’ll shift some of that pressure to the airlines, your TMC partners and other parties to bring you back the data you need from all those airline-direct bookings.

Those pipes will grow.  Maybe not great pipes, but good enough for the essential job of providing duty of care data and some purchase/policy information.  You’ll get by, and you’ll save some money by swimming in this cheaper distribution channel.

But with the GDSs losing notable volumes of their bread-and-butter transactions – the basic trips, no itinerary changes, no refunds or exchanges – their profit margins will take a hit.

The GDSs are left to handle the complex ticketing jobs on smaller volumes, and so will raise their fees to the airlines.  The airlines will respond by adjusting their GDS channel surcharge, until the market stabilizes in favor of the airlines.

Why will the airlines win?  Because GDSs set their prices to airlines in multi-year contracts, while the airlines can change their channel surcharge prices overnight.

But here’s the magic of free markets.  When all the airlines are charging GDS surcharges and reducing their distribution costs, they have to decide what to do with their new profits.

Well, we’re seeing this movie play out with traditional ancillary revenues.  Airlines are using those profits to fund new terminals, buy new planes, invest in the traveler experience…all good things for an industry criticized for treating passengers as an afterthought.

On an even more optimistic note, assume that the airline industry gets its fill of new terminals, new planes and happy travelers.  What then?  Will they be able to keep their fatter profit margins, or will the typical airline revenue management models takeover, and seek more volume by reducing fares?

I think that’s what will happen.  In the long run, these GDS surcharge revenues will get competed away in the form of lower airfares, until the airline profit margins are back to where they are now.

And don’t think this is all bad news for the GDSs.  This surcharge shock will give them every incentive to prove  – and improve – the value of their channel.  Look for significant upgrades in the way they commercialize their shopping assets, and  sell and service travel bookings. Amadeus’s new Exchange Relief product is a good example of this type of value-creating innovation.

On an even more optimistic note, what if this surcharge shock transformed the daisy chain of money being passed around this industry?  Wouldn’t it be great if everyone knew the costs of each step in the channel?  Even better, if they had choices about which steps to pay for?

Silver linings, folks…this will eventually be good for our industry.

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

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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