On stage from the Global Business Travel Association annual conference in San Diego, Phocuswright emeritus chairman Philip Wolf posed a series of questions to both attendees and three esteemed travel industry veteran panelists.
The most pointed part of the conversation focused on whether or not unmanaged travel is a panacea to the ails of an increasingly complex business travel management landscape.
Unmanaged travel, also known as "open travel" or "open booking" – as opposed to managed travel which generally has a Travel Management Company engaged to both book and monitor travel within a set company travel policy – is the concept of allowing business travelers to independently manage their own travel without having to go through a set process or back-end tool.
A traveler simply goes about booking their travel in a preferred manner and submits expense reports to their company for reimbursement.
As global business travel rebounds – the just-released GBTA annual report shows global business travel trending up 5.4% in 2012, to $1.112 trillion – the claws are coming out to grasp onto market share in a changed environment.
Many companies had reduced travel spend during the downturn – and thus a drop in fees to travel support companies – only to discover that enterprise-level complexity is no longer necessary as the sophistication of consumer tools explodes.
The consumerization of B2B products comes with plenty of push-back by industry stalwarts, and some very valid concerns regarding throwing the baby out with the bath water.
Just because a consumer tool is slick and pretty does not necessarily make it the best way to deliver the most effective and impactful internal business travel program.
When asked directly on stage regarding the impact of open travel, David Kong, CEO of Best Western, put it like this:
It definitely poses a problem in terms of what the managed travel segment is going to look like in the future, what would you folks look like in the future, what's your role going to be going forward.
If you make it so easy for the traveler to book any hotel, any airline that they want, regardless of whether it's a preferred program or not.
As judged by audience applause, a quick breakdown of the industry response to the "managed vs. unmanaged travel" question posed by Wolf shows a relatively even spread of thought amidst the global business travel community. This contentious split emphasizes the often-at-odds interests of the business travel ecosystem, as each individual ship attempts to navigate the increasingly choppy high seas of managing business travel.
Unmanaged travel is…a win-win-win for the business, supplier and traveler
The groups fully in favor of unmanaged travel are generally those who see the importance of empowerment and independence both wrought by the Internet’s transparency and digital natives now entering the workforce out of college.
Smaller companies are generally apt to see the advantages of unmanaged travel: increased travel satisfaction, lower costs associated with little to no compliance or travel program management, and the ability to be nimble when it comes to implementing technological solutions.
Unmanged travel brings fewer rules into an employee’s life and allows them to book according to their own personal preference: a loyalty program, proximity, schedule, etc.
Pam Massey, senior manager for global travel at the Bill and Melinda Gates Foundation, refers to this as the “what’s in it for me factor.”
Another attendee, in a Q&A session on “The Transformation of the Managed Travel Landscape” with Runzheimer International’s Austin Klein, described their program as “do the right thing.” Her company simply asks employees to do right by the company, and has a very straightforward travel guidelines.
By focusing on trusting employees, companies can both empower them and boost their satisfaction with the travel program – and ensure that employees feel in control of how they choose to travel.
“Trust them to make the right decisions in the budget given,” says Mr. Klein, “that also allows them to be as affective as possible.”
Those that see the collaborative, transparent and open nature of the Internet as the ideal tool to allow already-sophisticated travel shoppers to purchase travel on their own back up this school of thought.
Travelers win because they can control their own travel experience; companies win because their travelers will be more satsfied with their travel as it was their own decision-making process behind the travel; and suppliers win because they are still getting bookings while building a direct customer relationship that is more easily influenced by loyalty programs and other direct-to-consumer promotions - giving the suppliers more bang for their marketing buck.
Unmanaged travel…is a wash and doesn’t necessarily have an impact one way or the other
By replacing managed travel with unmanaged travel, many argue that this is simply switching out one system for another.
Unmanaged travel will also need tools to ensure effective reimbursements, budget compliance and safety information as far as location of travels. This will require its own suite of products, both paid and unpaid, including a workflow that integrates into a company's travel management plan.
Why replace managed travel, which has been around for many years and has matured in sophistication, with unmanaged travel that is relatively new and much more nebulous?
Companies in this camp are likely the ones that stand to benefit either way: generally, the suppliers. While many suppliers have negotiated preferred rates with TMCs and other entities responsible for booking large volumes of travel, many are agnostic as far as where their customers come from.
In some respects, allowing travelers to book directly on a brand.com website means that travel brands have more direct relationships with their customers, and are thus able to increase Customer Lifetime Value.
Open travel could also mean higher rates paid by travelers, as preferred rates are dropped in favor of allowing travelers the freedom to book wherever they choose. This could, in a theoretical sense, boost income for some suppliers who have poorly negotiated contracts with travel management companies.
There are also those who are hedging their bets by evolving products to both meet the desire of independent choice of travelers and the need for compliance controls for businesses.
One such product is Sabre’s TruTrip feature, which integrates into both an agent's view and the traveler-facing TripCase product, which will offer a seamless way for travelers to bring out-of-policy bookings into their company’s travel workflow.
This will allow travel managers to still fulfill their “duty-of-care” and fiduciary obligations while also giving the traveler some breathing room as far as choice of how, where and when to book. The data in this is also valuable, as it offers travel managers a glimpse into the types and timeframes of travel booked outside of the company policy.
With this data, travel managers can better understand and evaluate the needs and trends of their travelers, while travel management companies will have a much more clear grasp on the value of their services to the companies that employ them. If a TMC can show how much a traveler would have saved if they had booked a preferred vendor through the company’s managed travel portal, then that TMC has hard numbers on the value of their service.
Unmanaged travel…is a lose-lose-lose for all involved
The crowd was a bit more vigorous in its applause for this perspective. There are clearly some very entrenched business interests in the managed travel ecosystem, not to mention a “way of doing things” that has been in existence since the original GDS systems were rolled out globally in the late ‘90s.
With many tens of billions of dollars of travel managed by the largest travel management companies - BCD Travel, Carlson Wagonlit Travel, etc - there is enormous vested interest in maintaining managed travel as status quo across all industries.
The common refrain for this position is that the travel management companies help ensure compliance with policy to keep the travel budget in line, provide duty-of-care to travelers, and maintain a comprehensive understanding of safety and delay issues impacting travelers across a global travel program.
As travel is often the second largest controllable expense after labor and employee benefits, this is indeed a compelling case.
Much of the discussion hinges around travel satisfaction and independence - especially when it comes to the digitally-native Millenial generation that has grown up in a sophisticated digital shopping environment.
Michael Batt, founder and chairman of corporate and leisure travel agency Travel Leaders Group, sees the benefits of allowing outside booking - as long as there is still a managed system in place.
You don't want a free for all in travel management and travel sourcing...as an owner of a company - I own half our company - I like everything to be monitored. I'm more comfortable that way.
If it's about bringing in data that should be managed by the corporate travel management team and also by the travel agent, it's actually bringing bookings outside the system into the system, I'm all for it.
If it's about accepting the urban legend of "the Millenials are really smart, they can scour the Internet and they do a better job than corporate travel manager" - I don't believe that for a minute.
Steve Singh, the leader of Concur's consolidated approach to travel and travel management, sees open booking as an already existing reality that simply needs to be accepted and integrated.
This is just one topic within a broad view of the travel industry. Open booking, whether we accept it or not, happens today. Every single day it happens. Transactions are being booked outside of not just the TMCs, they're being booked outside of Concur Travel. To be fair, I don't like that. But it's happening.
Our view on that is that we should allow someone to book with Best Western, or book with United, but we need to be able to bring that information back into the travel management program. And on top of that, it's really important that the corporate rates a customer negotiates should be upheld and delivered upon that booking. This is just the reality of where we are today.
If someone is booking outside of the managed travel program, how do you reach them? How do you know where they are? Let's bering all that information back in. We want to encourage the right behavior, make sure you're in policy, make sure you have the capacity to be served, make sure you have the capacity for your company to reach you. But also acknowledge that human beings will go to a pattern of behavior that's appropriate to hem.
Regardless of what perspective a company has on this managed vs unmanaged travel issue, the clear winners are going to be the nuanced players that can bridge the gaps between these 3 aforementioned groups and ensure that consumer-fueled independence easily co-exists alongside cost and safety compliance.
No easy feat, but the winner’s spoils will without a doubt be significant.
NB: Flight path image courtesy Shutterstock.