In view of the turbulent ups and downs in the US & European economy, business travel buyers are increasingly looking at newer opportunities to cut travel costs. Our own internal bookings report for HotelHub shows almost flat growth in GDS hotel bookings in 2011, while non-GDS bookings grew at a much faster pace. We first noticed this growing share of non-GDS hotel bookings in mid-2011 and the full year data confirms this trend. While this is strictly based on bookings passing through HotelHub, we believe that this represents a wider, emerging trend.

What is driving this trend for increased bookings through non-GDS hotels? Looking at what is happening in the market, we have identified the following factors:

Business travel slowdown imminent
Last week GBTA forecast that business travel spend would increase 4.6 percent in 2012, but that growth is expected to be slower than past year – with a 0.8 percent decline in person-trips. Last week also saw a report that U.S. travel agency air transactions processed through ARC in December decreased 4.6% year over year – the 11th consecutive month of declining volume.

Rate negotiation process is getting increasingly tougher
As hotels try hard to remain profitable in a slow economy and with declining market demand, they have toughened the rate negotiations with buyers. Initial reports indicate rate increases in most markets. This is forcing corporate travel buyers to look at alternative strategies to generate savings from their travel programs. Some are consolidating hotel use to fewer properties, so that the volumes can be used for negotiating lower rates. Others are looking at benefiting from negotiating off-cycle (like Citi does by running their program from April to March).

Demand for wider range of rates to aid policy compliance
With negotiations getting tougher, corporates must still focused on their key objectives of improving travel policy compliance and security for travelers during business trips. They are finding a better value proposition in using hotel aggregators. The real-time availability of rates and inventory from GDS and non-GDS channels helps corporates access to wider rate options, without compromising on amenities.

Hotel aggregation offers key value proposition
Aggregating GDS and non-GDS hotels from multiple channels to a single interface, helps Travel Managers and TMCs save lot of time and cost in servicing booking requests. The latest versions of HotelHub already displays policy compliant hotel search results customised for individual traveller profile, which offers a major advantage in corporate hotel reservation process. The technology behind this has undergone major refinement over past few years due to better connectivity and common standards adoption across the industry.

The limited hotel/rate choice traditionally on a GDS and largely exclusively used by TMCs, has capped the share of business travel hotel bookings that channel could attract. Buyers are moving to other options offering wider choice. The moves by GDS firms to aggregate non-GDS content is an indication that they are realizing the gap and are attempting to do something about it. But TMC and corporate buyers as well as the economic and resulting business travel slowdown will probably continue to change the way GDSs are addressing these business models in the future.

Dec 7, 2011

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Cloud-based Computing and Software as a Service(SaaS) are two major technology buzz-words at the moment and the momentum behind the growth of ‘The Cloud’ as the way forward seems unstoppable. The implications of this new model of delivering software solutions and services are enormous for both technology providers and for technology ‘consumers’ alike. This is as relevant to the Business Travel Industry as to many other Industry sectors and in this post we want to consider what some of these implications may be.

There have been many good articles written on cloud computing recently, as seen here, here, and here, which offer a good background on the subject.

In summary the key drivers for the growth of the cloud are described below:

Smaller, lighter and sleeker gadgets to travel with

Today’s smartphones and tablets have taken the business travel industry by storm in providing compact devices that deliver huge productivity advantages for business travellers through on on-the-go computing and data access.

Secure anytime anywhere data access

One of the biggest fears among business travellers is the loss or theft of a laptop full of data that has not been recently backed up. Thanks to the cloud, data is safe and automatically backed up for quick access from anywhere. The apparent downside risks to data security through having data stored on the cloud – most notably you always need access to the internet – do not yet seem to be hampering the growth of the cloud.

Save time and space in collaboration

With the convenience of the cloud, business travellers can access data across any platform or device in real-time. Moreover, work done online is saved on the cloud in as many versions needed – and quickly syncs with desktop machines back in the office. It’s also easier on your device storage, that doesn’t need to be emptied frequently to create space for ever-increasing file size and count.

Technology costs are declining

Most cloud-based apps are much faster and less expensive to scale, and hence follow a ‘freemium’ model with free basic app with limits and more features on subscription basis. This helps the apps grow their subscriber base much faster too.

Simplifies system integration

Gartner estimates that up to 35% of the implementation costs associated with on-premises application development is for integration. In comparison, cloud computing makes it faster and easier to integrate and extend legacy environments as well as connecting to other cloud services – making the process much faster and scalable.

Voice – the next big horizon

With the launch of iPhone 4S with Siri – the voice app – there’s a whole new dimension open with mobile devices that work just with voice, right from search, sending messages, storing tasks and what not! The markets have gone crazy in dreaming up the awesome possibilities this can bring in the future. Some day in future, a business traveler would say to their mobile device – “Book a 5 star hotel near London Mayfair on 18th December, use my business card” and the device might actually go ahead and find the best rates online and book it with a stored credit card.

Future Potential

The potential productivity and financial benefits for the business traveller of using cloud-based services in combination with mobile devices are substantial. Business Travel Managers are increasingly going to demand that their TMC can provide cloud-based solutions to service the needs of their clients.

Similarly the potential benefits- particularly in terms of reduced operating costs – for the TMCs themselves of using cloud-based software solutions are also potentially significant, increasing the demand for business travel technology providers to deliver world-class cloud-based applications and services. The potent combination of increasingly powerful mobile devices and the availability of software solutions via the Cloud will completely change the way business travellers think about and experience travel technology.

The travel technology industry must gear up for and lead this change…

Travelers are increasingly relying on mobile devices and apps to plan and travel around the world. As faster and smarter phones are being rolled out, the booking tools are going mobile too but on a slower pace. The number of mobile bookings in the travel space has accelerated from $20 million in 2008 to over $200 million in 2010. (eyefortravel, May 2011)

Businesses travelers are demanding the same level of convenience and functionality from their mobile devices as on their desktops. A recent survey by Sabre in August2011 reported that two-thirds of travelers want to search and book hotels on a mobile device.

Hotels are increasingly going mobile
According to TripAdvisor’s latest ‘Accommodation Owners Survey’, 84% of respondents feel it is important to offer a program that allows travelers to book their inventory using mobile devices. There are many technology providers today who offer mobile booking capability as part of their package or as an upgrade.

Mobile hotel booking tools are becoming commonplace across websites and social media channels like Facebook. This quick and easy accessibility is leading more and more users towards self-booking of hotels and flights. Larger hotels have already started seeing the behavioral changes due to mobile accessibility. The bookings through mobile channels are growing fast, however lead times to arrival is getting shorter.

With both the ‘consumers’ and the supply-side of the market increasingly adopting mobile booking technology, there are some potentially significant implications for TMCs, presenting both risks and opportunities.

Travelers demand better mobile technology experience
Rather than relying upon their TMCs’ systems to check options and availability of flights and hotels, travelers are simply pushing buttons on their smart phones to achieve this. This is a trend that is not going to go away.Traditional paper tickets and formal travel documents have already largely given way to digital boarding passes and mobile itineraries, and mobile booking technology is just an extension to this trend.

This demand for convenience and accessibility has the potential to seriously impact upon the traditional relationship between the business traveler, the corporate Travel Manager and their TMC partner.

TMCs need to look at embracing this mobile technology and harnessing it to strengthen their relationships with the their corporate clients otherwise they risk being increasingly marginalized.

Policy compliant booking processes are key irrespective of screen-size
Corporate travel managers demands for efficient booking technology to support them will not change – irrespective of screen size. They are still focused on their key objectives of improving travel policy compliance and improved security for travelers during business trips.

TMCs need to demand that their technology partners can deliver the sort of mobile booking technology solutions that their customers are demanding of them. A number of travel technology vendors today already provide a useful and unbiased display of travel options on a single screen, by gathering their data from the various GDS and non-GDS channels. Search results can be ordered by preferred hotels or chain, star category, and budgets.

By accumulating this data from multiple sites, the user benefits from a wider range of options to suit their budget and requirement. With some technology solutions, search results can already be tailored to reflect a customer’s travel policy and budget. This makes hotel reservation process much easier and faster with least manual intervention. This highly efficient and compliant solution now also needs to be available via mobile technology.

Some of the newer technology tools on the market also offer the ability to track business travelers in case of emergencies, natural disasters like earthquakes or ash clouds – offering a much needed control in times of crisis. These same features are slowly but surely moving onto mobile to benefit business travelers.

Mobile technology isn’t a panacea – it is no replacement for personal service
But what happens when the traveler is unfamiliar with the destination, or when a trip involves complex itinerary? In such cases, mobile or online booking services become less helpful, and the traveler can benefit from the use of a good travel agent and the ‘human touch’ comes into the picture. Travel agents are able to provide valuable information by tapping a wide range of resources not readily available online. The knowledge and experience seasoned travel agents command appeals to travelers who value service over price.

There’s no doubt that with the evolution of travel technology, self-bookings via mobile are going to grow further. However, business travel with all it’s complexities will always value the ‘human touch’ of travel agents as they do today. Smart TMCs would benefit by adopting the changing technology to improve their offerings, customer support and strengthen loyalty in these challenging times.