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.

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.

While President Obama doesn’t expect another recession, the recent, rapid stock market decline has worried both investors and businesses. Fears of recession have gathered pace after JPMorgan lowered economic growth estimates for America, following a similar move by Morgan Stanley. Due to these concerns, the Baird/STR Hotel Stock Index comprised of 15 of the largest hotel companies publicly traded on a U.S. exchange, is down 22.5% for this month.

This has brought back the memories of the 2008-09 downturn, which affected almost all parts of the travel industry. There’s huge demand from companies to ensure employees are travelling with good reason and within pre-defined policy limits.

Travel Management Companies(TMCs) with technology supporting and helping companies to efficiently manage these demands will find it easier than others to tide over a downturn.

The last downturn has forced travel agents to analyze their technology needs and invest in new systems to improve efficiency. Even during these tough times, travel agents can take few steps to prove their value to customers -

A. Attract new clients

It might seem out-of-sync, but a downturn brings a churn in current business relationships. It is well-established from past research that travelling and doing business face to face is fundamental for growth. So, business travel itself may not see a big slowdown.

However, companies unhappy with current legacy systems to manage their business travel will look for efficient alternatives – which opens an opportunity for smarter players to grow their client base, by using scalable technology to offer better service at lower costs.

B. Cut costs – increase profitability

In many cases, companies are noticing that their costs of doing business are steadily rising. Add to this, the customer pressure for lower rates, and agents have a real, customer driven challenge on their hands – cut costs to survive.

Fortunately, advances in the technology available to support TMCs offers a potentially very effective solution. Agents should look at identifying the right technology partners, who can help them…

C. Get clients to spend more

If you have been losing business because your clients have cut travel budgets, it’s time to ask: Can you offer hotels with a wider choice on budget, while complying with the company’s travel policy?

“With a huge selection of 200,000 hotels worldwide from GDS and non-GDS channels on HotelHub, your customers can find a hotel to suit any budget,” says TCT CEO Jay Virdee about HotelHub, “HotelHub helps companies enforce travel policies across the organization, and helps control costs during downturn. TMCs can use technology in this way to maintain their revenue flow without adding costs.” Your booking system should help you grow business when your competition frets.

D. Add Value for your clients by better servicing their needs

Agents need to find new ways to improve their operational efficiency in current booking and service processes. Can you show value to your clients in lower costs to process bookings? Cloud-based SaaS solutions help reduce down-times, offer ease of anytime anywhere bookings, and quicker turnaround times.

Tough times don’t last, but smart companies who use smart technology certainly will…

Image courtesy: seekmee

In March 2011, the US Department of Justice finally decided to OK the $700 million Google-ITA deal in favor of Google. The question on everyone’s mind is how would Google’s travel game-plan affect the travel industry. Every new feature addition from Google since then is getting wide attention. The new rate displays on Google’s hotel search results is one such feature which is expected to affect many travel industry segments.

For close to a year now, Google has been quietly experimenting ‘Hotel Price Ads’ that displays ads with hotel price for hotel searches inside Google Maps. In some markets this has already gone live. We have found three variants of this new ad format being tested currently…

A. Local Seven-Pack: for a query like “new york hotels”, the rates don’t display directly in the Seven-pack, which is the top 7 hotel results taken from Google Places. The user needs to click either the Place link or the Map to see the rate display on search results as seen below.

B. Google Maps results: for the same query ‘new york hotels’ the Google Maps search result now displays the hotel rates from multiple OTAs.

Here’s how the map displays Google price ads…

C. Place Page For a Hotel: The Google Place page for specific hotel too displays the hotel rates from multiple OTAs.

So what does this mean for the various parties involved?

Online Travel Agents(OTAs):
Though they have to pay for it using AdWords, OTAs currently get better visibility (above the hotel’s direct link) on Google’s rate display. The click on rates takes the user directly to the booking confirmation page on the OTA site, which should be a driver of conversions. Google has indicated it will open the service up to a wider range of advertisers

Hotels:
Google’s current rate display leaves hotel link at the bottom of all other options, and most times the direct rates aren’t displayed. This could be because the hotel’s direct rate feed isn’t integrated into Google at this moment. But this acts as almost an inducement for users to book with OTAs because they may not take the extra trouble of going manually and finding rates on direct hotel site.

Hotel loses anywhere between 10-30% in commission for the booking which comes in though OTAs. For the same hotel displayed above, we found the rates on direct site were at par with OTA rates as seen below…

So effectively the hotels aren’t going to see any advantage with this rate display unless they integrate their direct rate feed into Google while also ensuring their direct rates are lower than OTA sites competing there. There is a serious risk to their margin unless they act on this.

Business Travelers:
The business traveler benefits here, as the search result displays rates across multiple OTAs, making comparison and decision making easier than before. However, this would be limited to an individual booking.

The larger companies and Travel management Companies too would be using hotel booking systems (such as HotelHub) which can already pull best rates from multiple GDS and non-GDS channels. So, this might not be of much interest to them.

All said and done, business travel is still small compared to the much larger leisure pie. Google knows when this new rate display functionality comes out of the experimental stage and becomes available to all users worldwide, competition among OTAs & hotels to increase visibility will dramatically increase and the click rates they can charge will increase exponentially. In short, Google makes money irrespective of whether this would affect the profitability of OTAs and hotels.