Digital transformation has forced a litany of changes on both the buyer and seller sides of the travel industry. As Web 2.0 and cloud computing emerged, virtually all industries began to digitize, and corporate travel management was not immune. Then a global health crisis leveled its own brand of disturbance.
At the same time, travelers heightened expectations for customer service, and personalized experiences were going through their own step change.
Now travel distribution models themselves are shifting. Caught in the middle, travel managers have found themselves in an ecosystem of continuous disruption, the latest being new distribution capability (NDC) driven by airlines. How are corporate travel managers navigating the current wave of change and how can they best adapt and remain relevant, while keeping their travelers moving?
Are we using NDC?
In the past year or so since the airlines began to shift their distribution strategies via NDC in earnest, players at every link of the value chain have been adopting, piloting, adapting and connecting. The U.S. Travel Association has reported that 24% have experienced challenges with the rollout; and half of North American travel buyers (55%) say their programs have not even started to implement NDC. Just as hotels did a few years ago with dynamic rates, airlines are on a journey to take control of their content strategies to maximize their product merchandising and minimize distribution costs. Major players like American Airlines are shaking up the game, targeting business travelers directly, offering the best rates and tailored offers on their brand websites. And corporate travelers are responding, motivating travel management companies (TMC) to change their operational practices. The disruptions are not only a procedural headache but also require serious adaptations in servicing and technology.
APIs for direct connections
For brand carriers, the travel industry is all about creating and nurturing connections. This innovative new distribution technology connects airline brands directly with corporate travelers. It is basically an API (application programming interface) connection, many of which are already widely employed for online travel agencies and metasearch distribution and booking in the hospitality industries. However, when business travelers book rooms, cars and flights directly with suppliers, corporate travel managers encounter problems that go well beyond mere frustration.
Governance issues
Naturally, business travelers don’t care about acronyms, nor whether they get an NDC airfare, global distribution system (GDS) fare, OTA or direct rate. However, travel managers need their travelers to draw within the lines because if the company can no longer track purchases or authorize bookings, they lose visibility and control over supplier spend. If managers only get purchasing information once they have been submitted as expenses, they lose all ability to direct spend to preferred suppliers or optimize travel budget.
The whole process of off-channel bookings is fraught with problems of governance as managers need to know that employees are staying in the right hotels and importantly staying within the spending boundaries. Managers need to bring travelers back into the managed travel program for completeness of the approvals process, visibility, the payment of the trip, traveler tracking and enforcing policy controls.
Disruption management
In business travel, at least a third or more of all trips change. Travelers who make direct bookings for all or part of their trips still expect their company to be able to help with disruption or credit management. Travelers just want good fares within their budget and to maximize loyalty points; oblivious to the logistical complexity that comes with trying to get service or support from their TMC if they have no visibility over the booking.
The challenges in transitioning from legacy GDSs and EDIFACT to a fragmented technology ecosystem that connects to NDC is causing a disruption management problem for corporate travel departments. For now, at least, that generally spells operational friction for everybody involved.
Frictions and emissions
Travel managers must regain the ability to service and support travelers from door to door. And they must do so while simultaneously matching the frictionless, personalized customer experiences that hotels and airline brands are striving to provide. In today’s atmosphere of sharp regulatory scrutiny, compliance leaders must mitigate any corporate travel risks. Especially in large enterprises, business travel is a significant part of Scope 3 carbon footprints. GBTA’s Business Travel Industry Outlook Poll reported that 49% of travel buyers say they are either the lead decision maker or one of the decision makers when it comes to travel risk management. Travel managers must ensure that employees are making smart and sustainable travel choices.
The connected journey
To solve their pain points in 2024, travel managers need technology platforms that unify the entire travel experience in a single source of truth, no matter the content source. The right travel technology pulls together all travel channels in alignment with corporate policies. A unified platform keeps managers in the loop, ensuring they can keep their travelers safe and help in the event of changes, problems or emergencies. But the technology must preserve the all-important customer experience, giving them ease, choice and flexibility, so employees have no need to book any parts of their journeys outside the lines.
Moreover, AI tools now can automate and elevate the connected journey by efficiently offering personalized booking options for the traveler serving up a handful (instead of hundreds) of options that align with the traveler’s personal preferences, company policy and travel patterns. And travel managers get to see the entire picture, both at the individual traveler’s level and at the corporate level.
Technology has proven that it sometimes causes problems and sometimes solves them for corporate travel managers. Historically, about 30-50% of all hotel accommodations have gone outside of the travel program, direct to suppliers or OTAs, aka leakage.
Corporate travel managers have had to tolerate leakage, and they’ve really struggled to do anything about it because they haven’t been able to offer the choice and convenience travelers can get through other channels. Now with the advancement of platforms that can seamlessly integrate all of these diverse booking offerings, managers have the capability to make their jobs easier while keeping their travelers coloring within the lines.
Source: PhocusWire.
