For TMCs, Open Booking Demands Shift in Thinking

by Fred Gebhart August 15, 2013

Managed travel isn’t dead, or even dying. It is changing. The tactics that helped travel managers and TMCs manage travelers, travel spend and travel data a decade ago are faltering as travelers find it easier to book outside approved channels.

Today’s travel managers have a choice. They can keep trying to corral travelers within approved channels – and expect to lose track of the quarter of all travelers who go outside policy.

Or they can use new tools and techniques to manage across all channels, gaining visibility and data on that same 25% of business travelers who book and buy outside approved channels and currently escape data tracking and management systems.

Accepting open booking
“The battle for managed travel is already over,” said Scott Gillespie, co-founder of travel analytics firm tClara, at the recent GBTA convention in San Diego. “There is not a lot left to do to create value in traditional travel management. We have to change the way we manage.”

A year after Gillespie and consultant Evan Konwiser laid out a framework for what they called Travel 2.0, open booking has become an acceptable model for managing travel, if not the standard.

American Express, Carlson Wagonlit, BCD Travel, Egencia and other TMCs may not embrace open booking, but they have introduced tools that support it, since travelers who go out of channels still need to be tracked, managed and serviced.

A win-win-win?
“This new style of travel management embraces a need,” said David Kong, president and CEO of Best Western International, speaking at the recent GBTA Convention 2013.

Kong called the move to open booking a plus for all parties involved.

“This is a win for travelers because more open booking is easier. It is good for vendors because more travelers can use brand.com websites. And it is a win for travel managers because they have more data on more travelers than ever before.”

The effect on TMCs is less clear.

Something old
The updated version of travel management is not a free for all where travelers can book anything at any price. Travel policy doesn’t disappear. But instead of policy mandates, policy sets expectations and guidelines for booking, buying and conducting travel.

The goal of travel management doesn’t change, either. The idea is still to collect data as close to real time as possible, know where travelers are and be able to contact them at all times and to manage the total travel spend.

“Travelers should be able to book anywhere but bring that data back into the corporate system,” Concur CEO and chairman Steve Singh said at GBTA.

“Every day travel is booked outside the corporate system. We want to bring all that data back into the managed system. We have to embrace this shift and be sure that we are adding value for our corporate customers and travelers.”

Something new
What does change is the role of the travel manager and TMC. Instead of enforcing travel policy, they educate around policy.

Unmanaged travelers aren’t giving away the farm, Gillespie said, pointing to a 2012 GBTA study that found unmanaged travelers spend about 3% less than managed travelers.

“This is about making your own responsible travel decisions rather than following the company decision in every case,” he said.

Gillespie suggested that a move to open booking is a natural consequence of the move to self-booking. “We forced travelers to make their own bookings. We encouraged them to make decisions and we lost control. We let travelers become the chief decision makers.”

Today, TMCs and other vendors are introducing tools that let travelers make their own decisions and bring the data back into the managed system.

Pricing models
What vendors have not yet introduced are new payment models to replace transaction fees. But there have been tentative moves.

BCD Travel senior vice president Jorge Cruz said the company is developing a subscription model with client SalesForce.com. The goal is to replace transaction fees with per-traveler fees.

“Charging directly for service and data management isn’t a new pricing model, it’s just new to travel,” Konwiser said. “TMCs have tremendous value to add servicing the traveler and managing data. And they clearly should get paid for the value they provide.”

Next time: New tools to manage travel.