Planning business travel can be overwhelming. A lot of energy and time is demanded from companies to cement solid travel programs. It is necessary to select the right dates, book hotels and lodging, arrange local transportation, as well as delegate booking methods, negotiate discounts with suppliers, establish travel policies and handle problems that always pop up. Beyond that, it is critical to analyze trip expenditures and guarantee that costs fit in the company’s budget.
With rapidly developing technologies and emerging generations of business travelers, the managed travel ecosystem is facing new challenges. Travel Management Companies (TMCs) are noticing a growing trend, which generates a lot of discussion about its employment: open booking. Before going into depth on the specificities of this term, let’s first examine the main roles of a TMC.
What is a TMC?
While managing travel can be stressful, companies of all sizes can count on specialized firms for assistance. A TMC’s primary function is to build up an entire travel strategy, determining appropriate policies for each company and centralizing administrative procedures. As expected, they optimize time, assuming a company’s previous travel management responsibilities and saving money through negotiated fares with partner channels. Depending on travel frequency and number of travelers, some companies have their own travel managers within the headquarters as this might result in an expenditure reduction.
What is open booking?
While there is a lack of a mature conception for open booking, it is secure to define this emerging practice as the permission for employees to book with airlines, hotels, rental services, and rail providers using whatever method they prefer—either directly, online, or via a third channel. Be careful not to confuse this term with end-to-end booking, which we previously covered. Simply put, end-to-end means integrated booking with expense reporting, while open booking is more of a concept, a travel management style which gives more freedom and personalisation to modern business travelers.
An overview of open booking by the travel industry itself
A 2013 research white paper from BTN Group highlights the major concerns from 139 corporate travel buyers about open booking. This process of giving the booking responsibility to travelers is breeding divergent opinions regarding its benefits and problems, as well as requiring TMCs to think of new strategies, due to the the intensified growth of internet users in the beginning of this millennium.
According to the BTN Group survey, thoughts on the subject of open booking are varied. However, close to 50% of the respondents agreed that the biggest flaws of open booking are the inability of travelers to book negotiated rates and the loss of travel spending data. Also, companies’ policy compliance and duty of care appear to be considerable concerns. Yet, some see benefits of open booking as it relates to data. Global travel manager Kathleen Kaden at Cognizant, an American IT and business consulting company, stated that less than 25% of hotel bookings are compliant with her company’s policies. So, for this challenge, Kaden sees open booking as offering the opportunity to retain data provided by external channels in order to better comprehend spending, as well as locating travelers easier.
A report on “Innovation and Opportunity in U.S. Corporate Travel”, from the travel industry research firm Phocuswright, shows that cost reduction also remains a top strategic priority for travel managers. This factor is also one of the biggest reflection points for managers while evaluating the employment of open booking. When it comes to international traffic, online booking platforms hardly beat deals between TMCs and partner suppliers. “That’s where your discounts really pay off versus 2 percent savings on a $250 domestic ticket,” Michelle DeCosta, senior manager of global travel and client experience at Sapient, explains in the BTN Group study. She illustrates in the paper an experience from her company, which tried a six-month pilot with open booking: “We did a ton of data analysis and quarter after quarter it showed that those booking outside the program paid 15 percent to 20 percent more than those booking within our program,” concluding that the open booking practice at Sapient represented higher costs.
The cons of open booking may be especially apparent for small to mid-sized businesses (SMBs), companies that often do not even have travel policies. A lack of policies is relatively common in these enterprises, where technically open booking shouldn’t cause any break in the status quo. However, when there’s no robust administration, the major open booking cons of no spend tracking, great time spent on search, and inaccessible negotiated rates might be a huge headache for SMBs.
Mobile + flexibility + data = why open booking is taking place
Some companies that have been asking business travelers to struggle through the impositions of rigorous policies are steadily losing strength to open booking. From a traveler’s perspective, this practice adds more satisfaction to their business trips because in essence, it gives more freedom of choice. Apart from the benefits and limitations of this trend for corporate travel management, let’s examine why it’s becoming more popular:
The mobile inevitability
Download your customizable travel policy template here
In 2015, people in the U.S. spent 54% of digital media time exclusively on apps. This means that business travelers are likely going mobile. New endeavors in the travel environment are seeking to follow customer behavior, and big companies crave to maintain their market. For example, Concur, a leading provider of spend management solutions for business travel, bought TripIt in 2011 for approximately $120 million. Combining existing users, they offer almost the same objective of service, but together aim to consolidate mobile and web services. By this acquisition, Concur intends to blend a consumer-focused app into its heavily business directed solutions.
A key fact to remember: simplicity is essential. That’s what first caught users’ attention on TripIt, which started operating in 2007, offering high technology features in an easy-to-use website interface. The user could simply forward the booking receipts to [email protected] and TripIt would create travel itineraries, which facilitated display and organization of trips. Mobile oriented, the travel organizer app still operates on the same concept but now automatically connects to your email account. It locates confirmations and uses them as the base information for creating itineraries, which are able to be visualized in any device that supports the app. Previous Concur users can authorize synchronization between the accounts and use the preferred system. For a yearly subscription, TripIt Pro gives real-time notifications, deals through ‘VIP’ travel benefits, reward-points programs and other features like availability alerts of a seat that you wanted so hard you acquired a paid version just for it. Similarly, but in a business travel management approach, the Concur app focus on expense reports and financial information about a traveler’s trip. Simultaneously, it’s possible to organize travelers by administrating their expenses, tracking locations, receipts and itineraries, therefore, reinforcing policy compliance and increasing duty of care.
Given that users are increasingly moving to mobile and that mobile apps are continue to evolve with more and more useful features, as the TripIt example shows, business travelers are going to find open booking easy and convenient.
Workers want more flexible treatment
According to research led by Norm Rose, Senior Technology and Corporate Market Analyst at Phocuswright, mobile technology is also instigating the usual business traveler to demand more personalized services. In the meantime, supply channels are trying to tighten their relationships with their best customers by personalizing offers. These increasingly traveler-centric shifts in the business travel industry encourage companies to enfold more flexible operations into their corporate policies in order to adapt quickly to changing needs.
Yet, why should companies give in to employees’ desires for more personalization? An analysis through the lens of LinkedIn data shows that people who graduated between 2006 and 2010 almost reached 3 jobs after 5 years of graduation. If this trend persists, it is likely that future workers will continuously carry the habit of shuffling jobs. It seems that if companies want to keep employees, they are going to have to make them happy.
Many of these employees are millennials. A report from PwC (PDF; 574KB), a multinational leader in professional services, foresees that in less than 4 years, millennials will form 50 percent of the global workforce. Millennials’ affinity for anything digital clearly sets them apart from the other generations. They started soon using technology in their lives and they’re likely to enter the workplace with a vastly superior knowledge of recent business tools. Their experience of the global economic crisis influenced their transitory behaviour and distrust in certain institutions, resulting in a prioritization of their personal needs over the organization’s. According to the study, they “want a management style and corporate culture that is markedly different from anything that has gone before – one that meets their needs.” Therefore, this tech-savvy generation won’t sustain structures that don’t provide the demanded customizations in the working environment.
However, not every company is able to provide to its travelers a full experience of open booking, letting them book entirely on their own, prioritizing preferences. A termination in long-established partnerships between more traditional companies with reliable third party channels might represent more than an operational switch, but rather a rupture in the company’s organizational culture. Dorian Stonie, senior manager of global travel and social technologies of Salesforce.com, one of the biggest software and cloud computing companies, affirms in the BTN Group research on open booking: “With the speed of technology today, change is happening not by the year, but by the quarter. There’s a new app coming out, new distribution channels opening daily. For us, it’s not an all or nothing. It’s a matter of how do we start embracing that technology.”
The importance of data
Coupled with the sureness of mobile in the travel industry and the requested flexibility from the arising workforce, the studies above paint an attractive view of opportunities that come along with the open booking trend. For managers to please travelers and for accountants to build more detailed financial reports, they are expected to use tools that are working to remedy challenges that appear as a result of open booking.
Sources say that problems will be solved by gathering data from bookings made by employees, inverting the management order. Stonie adds that instead of a traditional program, at Salesforce.com, they are “opening up the distribution channels, but managing the information on the back end.” Big companies like Salesforce.com have great IT structure, with stable data management procedures for quality analysis and reports. This evidence of good handling of information encourages them to aggregate other sources of data in their systems. With some adjustments here and there, online booking tools’ statistics can help companies enhance travel programs, providing progressively better experiences to travelers and happier accountants, not counting the influence that later analysis of data serves for decision-making.
On the other hand, SMBs, many of whom turn to unmanaged travel, now can see open booking at least as a little improvement in company management strategy. It’s important to remember that these solutions might not replace entirely the role of a good TMC service (yet), but the solutions allow these enterprises to save money, have stronger policy control, and grant them the ability to guide their financial and overall projections from enhanced data collection.
So, is open booking good or bad for your company?
There are some important considerations to explore before making a decision about open booking:
- Policy Compliance: A major factor for travel programs to achieve success, policy compliance is the bond of all related factors, which centralize knowledge of a company’s travel profile. Open booking doesn’t exclude the need for well-structured policies, as they prevent legal, organizational, and financial risks.
- Expense management: As data is the central base for economic projections, you have to be sure you’re eliminating blind spots. To guarantee financial concreteness in the long run, you must look very hard into data capturing means to implement an open booking strategy safely.
- Duty of care: Keeping track of travelers is crucial. The recent rise of terrorist attacks has shocked the world and is provoking a common fear everywhere, so heads up if existing tracker apps will sufficiently help you more than your current booking method.
- Money saving: With open booking, you might reduce some costs like interme
diate fees from Global Distribution Systems (GDS) and travel management companies. At the same time, strong strategic supplier relationships might be lost in this perspective. It’s good to weigh these costs.
- Time saving: How much time do you expect your employees are going to spend while booking directly with outside channels? Depending on the company work environment, the result can be a productivity issue.
- Traveler satisfaction: Millennials are driving bleisure into travel budgets. So a reminder is that travelers’ contentment is valuable when implementing new solutions. Stonie added that open booking in Salesforce.com reduced the noise, as he says, “How many times have you heard ‘I can find it cheaper’.” Freedom of choice pleases the techies.
- Changes in logistics: Educating employees about a company’s policies might require reflection and time from managers to cede them full responsibility to book services in the way they prefer.
It’s inevitable that open booking has the potential to take a major place in big companies as new generations of travelers become the majority of the workforce. It is important that companies stay alert to employees’ satisfaction in order to assure longer term relationships with good workers. Not only to provide a suitable travel management system for companies, satisfying the traveler is progressively pivotal in the process of TMCs doing a great job, which allows us to anticipate that the booking process won’t be the major concern of corporate TMCs. A white paper by Phocuswright (PDF; 142KB) about the changing role of travel management entities concludes that these firms would rather focus on providing creative services from highly parsed data gathered from daily updated technologies, and, knowing that each client has unique processes, eventually changing their policies, applying improvements relying on an innovative perspective of travel management.
Are you ready to broaden with open booking? As for now, when there’s no final answer regarding a technology solution, companies will succeed when they smartly implement customized solutions that bundle rapid gathering of data, good staff policy education, and security alternatives, with the company’s management strategies and managed travel programs. Therefore, room to grow in business travel industry is undoubtedly vast for tech companies.