Lufthansa Accelerates Managed Travel 2.0

Lufthansa 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

Open Booking Takes Off With United

The corporate travel industry today took a big step toward making Open Booking a practical choice for travelers and travel managers.

United and Concur announced their intention to launch a TripLink-enabled booking path on United.com by the first quarter of 2015.  It will allow corporate travelers to obtain net-of-discount pricing, and have their reservations serviced online and by UAL’s reservation department.

Booking data will be automatically sent to the Concur platform, where it will be available to travel managers for further compliance monitoring and duty of care processing.

Folks, this is the hat trick of Open Booking – discounts, data and duty of care.

What’s not clear yet is how the TMC fits into this.  

Turning the Open Booking Lights On

Good debates require good definitions.  The polarizing phrase “Open Booking” is a case in point.  It has at least two very different meanings.

A popular interpretation of Open Booking has travelers booking outside the approved corporate channel, with no responsibility to get their booking data back to their company. This is truly “rogue” booking behavior.

Rogue bookings undermine a travel program’s ability to manage duty of care, and to collect important information in a timely manner.  The travel manager is very much in the dark about these travelers and their spend.  Call this “Open Booking, Lights Off”.

The less understood version of Open Booking comes from the principles of Managed Travel 2.0  Specifically, the one that says “Let travelers book anywhere – so long as the company gets the data quickly.”

It’s that last phrase that requires the booking be done in  such a way that the company gets timely visibility of the booking.  Call this “Open Booking, Lights On”.

Some 40-50% of corporate hotel bookings are done in the dark.  That’s a big black hole of spend and traveler location data.  This black hole isn’t being resolved by traditional means.

How is failing to address this well-known and persistent  problem not a dereliction of duty of care?

Travel managers must find a way to turn bright lights on to this problem.  It’s a question of how, not why.

Want articles like these delivered to you by e-mail?  Sign up here.  It’s free, and you can unsubscribe at any time.

Will Managed Travel 2.0 Do Away With Discounts?

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

The Future for Travel Management Companies

Managed Travel 2.0 has a huge implication for travel management companies (TMCs).

Namely, the business model for TMCs is going to change.Here’s how I see it:

Fifth in a series on Managed Travel 2.0

First, let’s start with the core issue – the booking transaction.  It’s the center of the TMC’s universe.  They organize and price their business around this function.  Everything else is basically an ancillary service. It’s all about the transaction fee.

No surprise that clients view the transaction fee as a bull does a red cape.  It’s highly visible, a tempting target, and instinctively from a procurement perspective, it’s something to attack.

Key Principles of Managed Travel 2.0

Fourth in a series on Managed Travel 2.0

Freedom. That’s the big difference between managed and unmanaged travel. Under a managed travel program, travelers have some fence posts to abide by. The question is how much room to roam do you give your travelers?

In Managed Travel 2.0, travelers have a great deal of freedom, bounded by a few vital limits.    Let’s look at each of MT 2.0’s key principles:

1. Shop anywhere – period.  Why ride against the tide?  Your travelers are doing this anyway.  Let’s acknowledge it, accept it and move on.

2. Book anyone – so long as the supplier is safe.  Travelers need to know who to avoid. Classifying suppliers on safety is a core responsibility of travel managers. Not much of a restriction, practically speaking.

But that “book anyone” bit – does that include non-preferred suppliers?  Oh, yes.

The Rise of Managed Travel 2.0

Third in a series on Managed Travel 2.0

Creativity is often born from conflict.

For two decades, modern travel management has preached the virtues of travel policy compliance, use of preferred suppliers, and booking through the proper channels.

See GE’s description of its global travel program as Exhibit A.  It’s six sigma production line thinking at its best.  It’s the pursuit of travel program optimization via the logic of travel management.

But that policy-first approach frustrates travelers who have access to plenty of good consumer travel tools, who know the value of their time and their trips, and have no problem staying within their travel budget. For them, it’s all about the art of traveling.

Michael Tangney, Google’s travel program manager, gets credit for pioneering a new approach in 2008. Give travelers a target airfare.  If they book