When I was at the TMC sharp end of the business I was a huge fan of employing clever people and, when possible, rewarding them for success in saving money for both my clients and my company I undertook quite a bit of research which confirmed to me that a good agent could bring an annual savings ROI of between 300% and 500%. Only trouble was that people were so focussed on taking any manpower cost out that they did not delve into the deeper implications of doing so.
Probably nothing much has changed in the last couple of years except that most of these clever folk have moved on to another industry. Headcount has given way to self book and people being employed are more likely to be for the lower skilled fulfilment side of these computer transactions. All cost is rightly under the microscope but is any allowance given to the need for savvy people who can look both inside and outside the box for service and savings opportunities?
As we all know, a booking computer is only as good as what is put inside it. It is also reasonably single focussed and can also be hoodwinked quite successfully when it comes to travel. Who is policing the content it stores? Who is fine tuning it? How often is it audited? Who is recognising the broader trends? This will become even more important soon as TMCs develop and refine their own yield and price capabilities.
I fear for a TMC industry that seems to be losing its own front line brains for the sake of saving a quick buck or two. Maybe someone will look at the same ROI figures that I did in the past and realise that employing smart people with the right incentives is an investment in saving money not just an unwelcome cost.
In some parts of the world there are big shortages of experienced staff as the market recovers. The UK is a good example where TMC stripped their staffing levels to the bone during the recession and now cannot get them back as demand rises. It is essential a way is found to maintain a core of bright ambitious people without having to chop them whenever the market varies. Corporates also need to think about this the next time they scream at their TMC to lower head count. They do not simply pop back when wanted any more.
Friday, April 1, 2011
Friday, March 18, 2011
Combined Airline Deals – Good or Bad?
I was surprised to read that one of the new British Airways/Iberia/American Airlines triumvirate had stated that the market can expect combined corporate deals within the coming few months. Astonishing really considering alliances have been finding reasons ranging from anti trust to market difference to avoid doing such a thing in the past. However, if they now go ahead it has the potential to impact the market as significantly as direct connect.
Let us assume such deals are going to come on the market. What will they look like? What benefits or otherwise will they deliver? What value (if any) will they bring? And was it worth globalising ones travel programme for? Here are some of my thoughts which I must emphasise are my own and not shaped by what anyone else has said on the subject.
There will be a clear set of obstacles for the airlines, not the least of which will be coming to some mutual consensus. None of them will want to dilute existing yield particularly in their own market and they all have their own regulatory rules to abide by. For example BA and Iberia cannot fall foul of European competition law and AA has to live with its own US legislation. There is also an imbalance in that Iberia is based in a much smaller and less corporately mature market than the other two with less to contribute in key business areas.
The biggest obstacle is that of desire/willingness to combine commercial strategies particularly between AA and BA who are still deadly rivals for the same customers. Admittedly they will be very interested in being favoured with onward traveller connections but the core routes (and yields therein) are equally vital to both. However they will be interested in marrying their main services and ancillary connections together to best economic effect hence you can understand why Virgin and others tried to stop this happening.
If they are really serious about coming up with joint corporate deals (which I still doubt) what will they look like? I think they will follow the models used by some alliances with TMCs. I explained a bit about this in my blog in June last year under the heading ‘Global Travel Programmes – Delivering? Here it is again:
a) Initial deals will not be very different to now except there will be a bonus if you have arrangements with the others too.
b) An overall separate umbrella deal will be introduced over and above individual ones. This will be linked to growth.
c) The above will then start being modified so that you only earn if you achieve certain targets on all participating airlines.
d) The overall deal will be tightened to the extent that you have to put all participating carriers in your programme whether you wish to or not.
Eventually you may get one complete deal but it will be riddled with conditions and caveats as they all really do operate differently in different markets and different cultures and customers. You will not say get the same deal with BA as you get with AA and then both of those will be different to Iberia. And you wouldn’t want to either.
Call me an old cynic but I have said it before and will no doubt say it again. These airlines are not coming together to offer better financial packages to customers. Why should they? They are combining to win more customers and greater economies through linking services, connections and cost. The customer should get a better overall package but not necessarily a cheaper price. This is really just a much improved version of code sharing or alliances and you will soon see service harmonisation and rationalising happen.
In saying all this I believe it to be just the start of a journey towards meaningful global deals. Airlines saw commission reductions, net pricing and unbundling as ways to improve profit and look where that got them. If market pressures grow they will have to broaden their commercial offering in the future.
Let us assume such deals are going to come on the market. What will they look like? What benefits or otherwise will they deliver? What value (if any) will they bring? And was it worth globalising ones travel programme for? Here are some of my thoughts which I must emphasise are my own and not shaped by what anyone else has said on the subject.
There will be a clear set of obstacles for the airlines, not the least of which will be coming to some mutual consensus. None of them will want to dilute existing yield particularly in their own market and they all have their own regulatory rules to abide by. For example BA and Iberia cannot fall foul of European competition law and AA has to live with its own US legislation. There is also an imbalance in that Iberia is based in a much smaller and less corporately mature market than the other two with less to contribute in key business areas.
The biggest obstacle is that of desire/willingness to combine commercial strategies particularly between AA and BA who are still deadly rivals for the same customers. Admittedly they will be very interested in being favoured with onward traveller connections but the core routes (and yields therein) are equally vital to both. However they will be interested in marrying their main services and ancillary connections together to best economic effect hence you can understand why Virgin and others tried to stop this happening.
If they are really serious about coming up with joint corporate deals (which I still doubt) what will they look like? I think they will follow the models used by some alliances with TMCs. I explained a bit about this in my blog in June last year under the heading ‘Global Travel Programmes – Delivering? Here it is again:
a) Initial deals will not be very different to now except there will be a bonus if you have arrangements with the others too.
b) An overall separate umbrella deal will be introduced over and above individual ones. This will be linked to growth.
c) The above will then start being modified so that you only earn if you achieve certain targets on all participating airlines.
d) The overall deal will be tightened to the extent that you have to put all participating carriers in your programme whether you wish to or not.
Eventually you may get one complete deal but it will be riddled with conditions and caveats as they all really do operate differently in different markets and different cultures and customers. You will not say get the same deal with BA as you get with AA and then both of those will be different to Iberia. And you wouldn’t want to either.
Call me an old cynic but I have said it before and will no doubt say it again. These airlines are not coming together to offer better financial packages to customers. Why should they? They are combining to win more customers and greater economies through linking services, connections and cost. The customer should get a better overall package but not necessarily a cheaper price. This is really just a much improved version of code sharing or alliances and you will soon see service harmonisation and rationalising happen.
In saying all this I believe it to be just the start of a journey towards meaningful global deals. Airlines saw commission reductions, net pricing and unbundling as ways to improve profit and look where that got them. If market pressures grow they will have to broaden their commercial offering in the future.
Wednesday, March 9, 2011
Travel Evolution is not just about Technology – Right?
I always thought technology drives most change and the travel industry is no different to any other business in this respect. I assumed that the reason for travel evolution being so painful was that new technology had been so scarce for so long that now it has arrived people are overdosing on it. However unlike the pharmaceutical business nobody has tested products, understood the correct dosage or learned how to deal with adverse reactions.
Already you can look back over the recent past and see all sorts of corporate travel wonder solutions that have not actually delivered in accordance with their hype. Many were unsuitable, unrealistic or simply did not work but they all looked damn good on paper. Apart from any basic flaw there seems to be something in the way of success and I think I know what it may be.
The plain truth of it is that whatever new initiatives come along they will only be embraced if the various key players in the supply chain want to make it happen. Like the old saying that you can take a horse to water but you cannot make it drink the same goes for managed travel programmes and compliance. You still cannot get somebody to change their mindset unless you force them or justify your actions and I see precious little of either going on.
You see there are many people, either through tradition or personal experience, who still view travel as a service experience rather than a commodity. And whilst there are different suppliers of varying quality, frequent flyer programmes and individual timescales and demands there will always be service choices needed. When you think of it most corporations are insisting their employees undertake personal risks and comfort challenges with very little research into safety and standards. How do you know the airlines you have chosen are safe and comfortable? Cheap yes…but. A question that could soon be asked by lawyers in regard to ‘duty of care’.
It is not just the traveller who still has a perception that service is important. You can often see this ‘malaise’ in some suppliers and a large number of TMCs. I suspect they are getting so frustrated that service is not being given a value by typical procurement that they will continue to reduce it to a minimum like the low cost carriers. Why bother creating a value and service differentiator if nobody is interested in paying for it.
For so long the travel industry has been built around giving good service and being rewarded for doing so. Travellers too want to know they will be safe, comfortable and that somebody will be there for them if something goes wrong. Those buyers who focus mainly on unbundling, constant cost reduction and commoditisation need to take note.
My answer to my own question is yes, technology is key to the future but only as an enabler not as a solution. Pick your target end solution that matches your company ethos and then look for the enabling technology. I have seen so many people commit to unproven technology to try and solve an issue they did not really have. What is more important is service and solutions and if you embrace the need for the former to deliver the latter then all you need to do is choose the technology to enable it to happen.
Already you can look back over the recent past and see all sorts of corporate travel wonder solutions that have not actually delivered in accordance with their hype. Many were unsuitable, unrealistic or simply did not work but they all looked damn good on paper. Apart from any basic flaw there seems to be something in the way of success and I think I know what it may be.
The plain truth of it is that whatever new initiatives come along they will only be embraced if the various key players in the supply chain want to make it happen. Like the old saying that you can take a horse to water but you cannot make it drink the same goes for managed travel programmes and compliance. You still cannot get somebody to change their mindset unless you force them or justify your actions and I see precious little of either going on.
You see there are many people, either through tradition or personal experience, who still view travel as a service experience rather than a commodity. And whilst there are different suppliers of varying quality, frequent flyer programmes and individual timescales and demands there will always be service choices needed. When you think of it most corporations are insisting their employees undertake personal risks and comfort challenges with very little research into safety and standards. How do you know the airlines you have chosen are safe and comfortable? Cheap yes…but. A question that could soon be asked by lawyers in regard to ‘duty of care’.
It is not just the traveller who still has a perception that service is important. You can often see this ‘malaise’ in some suppliers and a large number of TMCs. I suspect they are getting so frustrated that service is not being given a value by typical procurement that they will continue to reduce it to a minimum like the low cost carriers. Why bother creating a value and service differentiator if nobody is interested in paying for it.
For so long the travel industry has been built around giving good service and being rewarded for doing so. Travellers too want to know they will be safe, comfortable and that somebody will be there for them if something goes wrong. Those buyers who focus mainly on unbundling, constant cost reduction and commoditisation need to take note.
My answer to my own question is yes, technology is key to the future but only as an enabler not as a solution. Pick your target end solution that matches your company ethos and then look for the enabling technology. I have seen so many people commit to unproven technology to try and solve an issue they did not really have. What is more important is service and solutions and if you embrace the need for the former to deliver the latter then all you need to do is choose the technology to enable it to happen.
Thursday, March 3, 2011
My 'Greatest Hits'
It has been a year since I started my blogs and I just had a look at my stats to see which ones of my 80+ posts recieved the biggest 'hits'. It was pretty close but I found the top ones from both my business and humour blogs and am pleased to reproduce them now for those that missed them. They are about TMC/Supplier relationships and a catastrophe I endured in an Australian toilet!
Here they are
Can TMCs Really Influence Business?
Part 2 -DealsOK, so we got to the point where we ascertained that TMC/agents still get incentives from suppliers, albeit presented in a different shape. I also mentioned that, in my opinion, this need not necessarily be a bad thing for corporate customers if managed right. What I did not go into in any detail was a) what these deals are b) how TMCs do (or do not) shift business and c) how such deals could benefit all. So let me address at least one of these points now and deal with the others another time.
What kind of deals?
There are three main types which are growth percentage rewards, net fares that can be marked up and increase share payments.
Payments for growth are usually a percentage of net ticket value sometimes paid back to zero and sometimes just for the growth element compared with previous year. Percentages paid vary enormously depending on supplier size, their importance/share of the local market and their strategic need to buy a way into the region. I have heard of deals ranging around 2% from a big volume airline to 50% from someone trying to make inroads into a market. Such deals are pretty unfashionable now in most primary markets but do still happen in numerous places around the globe especially from suppliers who have no effective systems to measure performance.
As time past some of the more major airlines started to get concerned that TMCs might simply start doing growth deals with all their competitors as, in a growing market, the prospects of growing volume with everyone was high. Also volume could vary greatly simply by the losing or winning of a major volume corporate account. This ultimately got addressed by airlines ‘red ringing’ the biggest clients which meant their volumes were taken out for volume and payment purposes.
There have always been a few net fare deals about. This is where an airline offers a fixed net price to specific agents who can mark it up by as much as they think they can get away with. These net fares were targeted towards specialist agencies who were involved in markets such as ethnic or tourist travel. In the main the plan was to gain this business but not dilute their yields by exposing such discounts to the corporate market. Nevertheless there has been growing overlap which usually manifests itself by corporate travellers that gets hold of the fare and demands to know why his TMC cannot match it. This has been going on for many years but in recent times some USA airlines have dallied in this area too by offering net business prices to TMCs instead of overrides.
In an attempt to make future deals work airlines started introducing rewards based on share increase. This is infinitely more difficult to measure and depended on the airline itself to produce the results with no way for the TMCs to verify them. Some of these deals became so very complex that it was almost impossible for anyone to predict what would be paid. .Another issue was that, for some dominant airlines such deals were considered by the authorities as anti-competitive and thereby illegal. However these deals are still widespread today.
Most modern deals are far more sophisticated and linked to ‘service level agreements’ (SLAs) although this term is a misnomer in my view. What they effectively do is reward TMCs for performing (or allowing) certain activities. These activities vary from allowing access to their staff, account managers and senior management to shifting share, providing key MI on their clients, promoting the airline’s campaigns and supporting a particular strategy. All such activities are measured and rewarded accordingly. These ‘incentives’ seem to work reasonably well for both parties as the airline usually sees more volume and the TMC gets it’s money in a way that negates them having to pay it straight on to the corporation as extra client income/overrides.
Originally TMCs used to negotiate SMAs with individual airlines but even that has moved on. Now the suppliers are trying to do deals by Alliances rather than individual members. These usually manifest themselves as umbrella incentives paid only if the TMC performs with a certain minimum number of their partners. This way the dominant airline in any alliance group can demand TMC preferred status for their smaller partners that would not otherwise register on their radar screen. Such deals are highly unpopular with most eligible TMCs for obvious reasons and particularly because many airline partners are either unable to provide accurate data or simply not a product they want in their portfolio especially if they clash with another preferred supplier.
Consolidation by alliances is one thing but the ability/desire to agree a global incentive agreement is even harder and suppliers have, in the main, been reticent to do this either with TMCs or corporations. Don’t get me wrong, there are some prototype deals out there but I am highly sceptical of their current value to anyone. After all the airlines still work on a system where they cannot tell their overseas offices what to do as they are cost centres in their own right and have the authority to say no.
Finally I expect to see a new type of deal arriving and it is not a million miles away from the net concept. Well actually it is here now but only in it’s formative state. The arrival of TMC specific fares is here and expanding. In the past, probably as a result of past legacies, airlines have stuck to treating all TMCs the same as each other as far as fares are concerned. This is changing with the arrival of new generation TMC technology platforms that can be very specific about who sees what fare where and when.. This will enable them to drive business to (and from) airlines at the press off a button. Airlines will be able to flex the fares they offer depending on need and thereby have a tighter grip on their yields in a similar way to what they do on their own dot com sites…if the TMC is incentivised enough to support them. As I say, it is early days but worth watching.
This subject is vast and worthy of a day seminar rather than a brief blog entry however I hope it gives some a basic grasp of what is going on in this somewhat secretive area. More on how such deals are supported and how I think all could benefit next time.
My Life in Toilets – Part 1
Yes I know…a strange title but stay with me.
In the process of writing these blog ‘memoires I started to realise how often the word ‘toilet’ was coming up. This sounds odd to me too but I began to realise that toilets had played an important (albeit traumatic) part in my career over the years.
Some of you who may have read my rambling will remember how I fought an Australian in a Sydney W.C. and a large female attendant in a toilet next to the Paris perimeter motorway but these are just small skirmishes in my war with public conveniences of the world. I have fought with and in toilets across all continents and I feel I owe it to posterity to clear my conscience now as I lurch towards my twilight years. After all, how many people can say they have lost business, ruined relationships and been arrested whilst simply trying to relieve myself.
My most disastrous first memory was when I got arrested for indecent exposure in Perth, Western Australia. It was an awful misunderstanding. I had flown to the other side of the world to visit my then girlfriend who had been ‘forced’ to emigrate with her parents a few weeks previously. I travelled on airline staff tickets and it took me two sleepless days to make the journey. I found her address which was in the suburbs of the city and presented myself on her doorstep unannounced. Her new boyfriend answered the door!
What has this terrible tale of a jetlagged and broken heart got to do with toilets? That came later when she, her new boyfriend and her parents felt obliged to take me along to a dinner dance they were about to leave for. I was clearly as welcome as hem aroids .We sat at a big table with huge flagons of cold Swan Lager in the middle and I sat and watched the lovely Sue dancing with her new love so closely that you could not squeeze a cigarette paper between them.
There was nothing for it so I turned to drink. After consuming one flagon by myself I felt the most excruciating need to relieve myself so I stood up and made my way unsteadily across to the corner of the room where the toilets were. It was all a blur to me but apparently I first went into the ladies and got ejected. I went through another door which said ‘MEN’ and there was a further plain door on the left going into the toilet itself and another on the right that provided access to another entertainment room.
By this stage I really feared I was not going to make it in time so I started unzipping and preparing as I walked. I was out and ready as I turned right and fell into the other function room where they were celebrating a golden wedding. There was uproar. One of the people there was an off duty police officer and he immediately pinned me to the wall, read me my rights and arrested me for indecent exposure.
He phoned for back-up and a car and marched me out onto the pub forecourt whilst I continued trying to pull up my zip. The zip got caught (some of my male readers may understand the pain) which made things even worse. To cap it all they would not let me go back in so I had to pee against the wall which added another charge to my sheet.
My lovely ex and her family knew nothing of this until they got a call from the police station and an order to come and collect me. By this time I had been able to explain my jet lag, tiredness and misery and they took pity on me after having a good laugh at my expense. Needless to say I was disowned by my reluctant hosts who drove me to Perth Airport where I spent the night in the departures hall.
Whenever I go back to Australia I always wonder if one day I will stand at the immigration desk and this arrest with reason will flash up on the screen. So far so good but there is more to come in ‘Toilets 2’ the sequel!
Here they are
Can TMCs Really Influence Business?
Part 2 -DealsOK, so we got to the point where we ascertained that TMC/agents still get incentives from suppliers, albeit presented in a different shape. I also mentioned that, in my opinion, this need not necessarily be a bad thing for corporate customers if managed right. What I did not go into in any detail was a) what these deals are b) how TMCs do (or do not) shift business and c) how such deals could benefit all. So let me address at least one of these points now and deal with the others another time.
What kind of deals?
There are three main types which are growth percentage rewards, net fares that can be marked up and increase share payments.
Payments for growth are usually a percentage of net ticket value sometimes paid back to zero and sometimes just for the growth element compared with previous year. Percentages paid vary enormously depending on supplier size, their importance/share of the local market and their strategic need to buy a way into the region. I have heard of deals ranging around 2% from a big volume airline to 50% from someone trying to make inroads into a market. Such deals are pretty unfashionable now in most primary markets but do still happen in numerous places around the globe especially from suppliers who have no effective systems to measure performance.
As time past some of the more major airlines started to get concerned that TMCs might simply start doing growth deals with all their competitors as, in a growing market, the prospects of growing volume with everyone was high. Also volume could vary greatly simply by the losing or winning of a major volume corporate account. This ultimately got addressed by airlines ‘red ringing’ the biggest clients which meant their volumes were taken out for volume and payment purposes.
There have always been a few net fare deals about. This is where an airline offers a fixed net price to specific agents who can mark it up by as much as they think they can get away with. These net fares were targeted towards specialist agencies who were involved in markets such as ethnic or tourist travel. In the main the plan was to gain this business but not dilute their yields by exposing such discounts to the corporate market. Nevertheless there has been growing overlap which usually manifests itself by corporate travellers that gets hold of the fare and demands to know why his TMC cannot match it. This has been going on for many years but in recent times some USA airlines have dallied in this area too by offering net business prices to TMCs instead of overrides.
In an attempt to make future deals work airlines started introducing rewards based on share increase. This is infinitely more difficult to measure and depended on the airline itself to produce the results with no way for the TMCs to verify them. Some of these deals became so very complex that it was almost impossible for anyone to predict what would be paid. .Another issue was that, for some dominant airlines such deals were considered by the authorities as anti-competitive and thereby illegal. However these deals are still widespread today.
Most modern deals are far more sophisticated and linked to ‘service level agreements’ (SLAs) although this term is a misnomer in my view. What they effectively do is reward TMCs for performing (or allowing) certain activities. These activities vary from allowing access to their staff, account managers and senior management to shifting share, providing key MI on their clients, promoting the airline’s campaigns and supporting a particular strategy. All such activities are measured and rewarded accordingly. These ‘incentives’ seem to work reasonably well for both parties as the airline usually sees more volume and the TMC gets it’s money in a way that negates them having to pay it straight on to the corporation as extra client income/overrides.
Originally TMCs used to negotiate SMAs with individual airlines but even that has moved on. Now the suppliers are trying to do deals by Alliances rather than individual members. These usually manifest themselves as umbrella incentives paid only if the TMC performs with a certain minimum number of their partners. This way the dominant airline in any alliance group can demand TMC preferred status for their smaller partners that would not otherwise register on their radar screen. Such deals are highly unpopular with most eligible TMCs for obvious reasons and particularly because many airline partners are either unable to provide accurate data or simply not a product they want in their portfolio especially if they clash with another preferred supplier.
Consolidation by alliances is one thing but the ability/desire to agree a global incentive agreement is even harder and suppliers have, in the main, been reticent to do this either with TMCs or corporations. Don’t get me wrong, there are some prototype deals out there but I am highly sceptical of their current value to anyone. After all the airlines still work on a system where they cannot tell their overseas offices what to do as they are cost centres in their own right and have the authority to say no.
Finally I expect to see a new type of deal arriving and it is not a million miles away from the net concept. Well actually it is here now but only in it’s formative state. The arrival of TMC specific fares is here and expanding. In the past, probably as a result of past legacies, airlines have stuck to treating all TMCs the same as each other as far as fares are concerned. This is changing with the arrival of new generation TMC technology platforms that can be very specific about who sees what fare where and when.. This will enable them to drive business to (and from) airlines at the press off a button. Airlines will be able to flex the fares they offer depending on need and thereby have a tighter grip on their yields in a similar way to what they do on their own dot com sites…if the TMC is incentivised enough to support them. As I say, it is early days but worth watching.
This subject is vast and worthy of a day seminar rather than a brief blog entry however I hope it gives some a basic grasp of what is going on in this somewhat secretive area. More on how such deals are supported and how I think all could benefit next time.
My Life in Toilets – Part 1
Yes I know…a strange title but stay with me.
In the process of writing these blog ‘memoires I started to realise how often the word ‘toilet’ was coming up. This sounds odd to me too but I began to realise that toilets had played an important (albeit traumatic) part in my career over the years.
Some of you who may have read my rambling will remember how I fought an Australian in a Sydney W.C. and a large female attendant in a toilet next to the Paris perimeter motorway but these are just small skirmishes in my war with public conveniences of the world. I have fought with and in toilets across all continents and I feel I owe it to posterity to clear my conscience now as I lurch towards my twilight years. After all, how many people can say they have lost business, ruined relationships and been arrested whilst simply trying to relieve myself.
My most disastrous first memory was when I got arrested for indecent exposure in Perth, Western Australia. It was an awful misunderstanding. I had flown to the other side of the world to visit my then girlfriend who had been ‘forced’ to emigrate with her parents a few weeks previously. I travelled on airline staff tickets and it took me two sleepless days to make the journey. I found her address which was in the suburbs of the city and presented myself on her doorstep unannounced. Her new boyfriend answered the door!
What has this terrible tale of a jetlagged and broken heart got to do with toilets? That came later when she, her new boyfriend and her parents felt obliged to take me along to a dinner dance they were about to leave for. I was clearly as welcome as hem aroids .We sat at a big table with huge flagons of cold Swan Lager in the middle and I sat and watched the lovely Sue dancing with her new love so closely that you could not squeeze a cigarette paper between them.
There was nothing for it so I turned to drink. After consuming one flagon by myself I felt the most excruciating need to relieve myself so I stood up and made my way unsteadily across to the corner of the room where the toilets were. It was all a blur to me but apparently I first went into the ladies and got ejected. I went through another door which said ‘MEN’ and there was a further plain door on the left going into the toilet itself and another on the right that provided access to another entertainment room.
By this stage I really feared I was not going to make it in time so I started unzipping and preparing as I walked. I was out and ready as I turned right and fell into the other function room where they were celebrating a golden wedding. There was uproar. One of the people there was an off duty police officer and he immediately pinned me to the wall, read me my rights and arrested me for indecent exposure.
He phoned for back-up and a car and marched me out onto the pub forecourt whilst I continued trying to pull up my zip. The zip got caught (some of my male readers may understand the pain) which made things even worse. To cap it all they would not let me go back in so I had to pee against the wall which added another charge to my sheet.
My lovely ex and her family knew nothing of this until they got a call from the police station and an order to come and collect me. By this time I had been able to explain my jet lag, tiredness and misery and they took pity on me after having a good laugh at my expense. Needless to say I was disowned by my reluctant hosts who drove me to Perth Airport where I spent the night in the departures hall.
Whenever I go back to Australia I always wonder if one day I will stand at the immigration desk and this arrest with reason will flash up on the screen. So far so good but there is more to come in ‘Toilets 2’ the sequel!
Monday, February 28, 2011
Travel Services – Buying is just the beginning.
I have encountered many of what I would call classic buyers in my career selling travel services. By that I mean very professional people who know exactly what they want and how to get it at the best rate. They are well practised in procedures and buying protocol and have a clear plan. Good stuff, but is it enough? I do not think so.
I think there are better deals to be done and improved return if two other abilities are learned and brought into play. They are presentation and selling skills. Buyers should know how to buy but there are often other considerations that come into play when buying a service like travel. For example unless you really are going to issue a mandate that is capable of monitoring and enforcing there is likelihood you could lose 20% volume from the programme. You will also probably be buying from people who are frankly not up to dealing with professional buyers. This brings me back to selling and presenting.
Most travel suppliers are becoming more and more cynical and suspicious about the ability of buyers to deliver volume negotiated in travel deals. They are now starting to hold back a little and only give the best package to those that convince them they can deliver volume where there mouth is. The most mutually successful deals I have seen are where buyers are able to ‘sell’ their ability to deliver in a way that has credibility. I once helped a buyer create their own volume delivery agreement which they gave to a delighted supplier and got a fantastic market leading deal.
The deal itself is the beginning not the end of the project. There are numerous ways people can get round a policy and I have seen them all. I could write a book about it! However many loopholes can be closed , or at least made harder, by the ability of the buyer to get to the right internal audience along with a strong sponsor and present their case. To me this is more important than the deal itself.
I have always tried to tell myself that to be successful I should out-sell the salesman and successfully communicate how clever I (the company) has been. After all if you have used you selling skills to get an exceptional programme you might as well you communicate the benefits to ensure everyone knows and acts upon it.
There is so much talk and activity around apps, social networking et al. perhaps if we used some of these fast developing tools to focus on compliance and rationales then companies would have greater control and diminished leakage. A better ROI than repetitive tendering and programme changes to keep a leaking travel bucket full.
I think there are better deals to be done and improved return if two other abilities are learned and brought into play. They are presentation and selling skills. Buyers should know how to buy but there are often other considerations that come into play when buying a service like travel. For example unless you really are going to issue a mandate that is capable of monitoring and enforcing there is likelihood you could lose 20% volume from the programme. You will also probably be buying from people who are frankly not up to dealing with professional buyers. This brings me back to selling and presenting.
Most travel suppliers are becoming more and more cynical and suspicious about the ability of buyers to deliver volume negotiated in travel deals. They are now starting to hold back a little and only give the best package to those that convince them they can deliver volume where there mouth is. The most mutually successful deals I have seen are where buyers are able to ‘sell’ their ability to deliver in a way that has credibility. I once helped a buyer create their own volume delivery agreement which they gave to a delighted supplier and got a fantastic market leading deal.
The deal itself is the beginning not the end of the project. There are numerous ways people can get round a policy and I have seen them all. I could write a book about it! However many loopholes can be closed , or at least made harder, by the ability of the buyer to get to the right internal audience along with a strong sponsor and present their case. To me this is more important than the deal itself.
I have always tried to tell myself that to be successful I should out-sell the salesman and successfully communicate how clever I (the company) has been. After all if you have used you selling skills to get an exceptional programme you might as well you communicate the benefits to ensure everyone knows and acts upon it.
There is so much talk and activity around apps, social networking et al. perhaps if we used some of these fast developing tools to focus on compliance and rationales then companies would have greater control and diminished leakage. A better ROI than repetitive tendering and programme changes to keep a leaking travel bucket full.
Friday, February 18, 2011
Anybody Understand the Corporate Hotel Market?
I spoke to somebody last week about the problems they were having whilst trying to organise a managed hotel programme for their company. He is new to this side of the business and could not comprehend the basic issues he was facing. All he was certain of was that nobody really knew what the company spent and whether they were getting good value. Ok they had a corporate card that most travellers used but nobody seemed to be able to tell him any useful spend detail.
He was also concerned that there seemed no simple, coordinated and efficient way of making, changing or cancelling bookings. There were so many different ways and each with varying processes. Some you could book online and some you couldn’t. Some on the GDS but most not. The majority necessitated a call to an agency which cost too much for such a transaction. He correctly identified that these variations contributed greatly to the lack of proper MI. What he wanted to know from me was what the problem is? Why is it so hard to book hotels in a way that gives him as a buyer what he absolutely needs to do his job? I gave him the basics as I saw them and thought you might like to read them too.
The hotel market is hugely fragmented. There are thousands upon thousands of hotel and most of them act individually. Yes there are major hotel chains and yes there are consortiums but even here a large amount are privately owned. Consolidating a programme becomes very difficult when there are so many different players with different systems and different communications methods and language. This differs hugely from airlines which are not only far smaller in numbers but use the same GDS booking platforms and share similar systems and codes however I did warn him that this may be changing soon!
So how should one make a reservation? It would be good to combine it with the air or rail booking but unfortunately the range of hotels in the airline booking systems (GDS) is tiny compared with the market. Add to that the difficulty of being able to use your own negotiated fares or room allocations and it becomes not a very feasible option.
You could connect to the numerous hotel booking web sites but again can you be sure you will be booking your deal and capturing sufficient detail. You might get one-off savings using their buying power but creating a nightmare in payment, reporting and control terms.
Out of frustration and a desire to save fees charged by agencies many travellers book direct with the hotel but is that what you really want them to spend time doing? And then again you could miss out on consolidated MI for policy measurement, security and negotiating purposes. I can understand why travellers or their administrators want to make hotel bookings personally but in my view you can forget about control if you let them do it. It is also very vexing when they find out the hotel GM is spot selling rates cheaper than your centrally negotiated deal. This is another thing that regularly happens in this industry.
I advised him that I can only see one logical way of consolidating all ones spend items together and that is through a Travel Management Company (TMC). There are not that many yet who can provide a true solution and it does not come for nothing so buyers need to be absolutely committed in order to reap full benefit
You basically need to find a TMC that can deliver a system that seamlessly links the GDS booking system to their own separate hotel booking and management platform. This platform needs to directly connect with the main hotel chains and have the ability to store and manage your negotiated rates and room allocations with them and the others. All this, and other services need to be on one customer friendly booking screen. It would also be valuable to have this screen branded to your company not the TMC.
Taking pre booked room allocations at key locations is essential in order to allow the system to confirm rooms to travellers straight away and avoid unnecessary costly and time consuming middle-man phone calls. These allocations when combined with those negotiated by the TMC themselves often mean that hotels that seem full can still be bookable to you. It also results in your travellers have their own company one stop shop that pulls together their whole journey along with bolt on services such as policy compliance authorisation system and communication opportunities.
To me his choice is relatively straightforward. He either does what 90% plus of corporations do which is keep their hotel programme separate from air or go the whole hog and combine the two in an online total travel solution which is only now beginning to become a viable solution. I wished him luck and went back to my hotel room…which I booked myself!
He was also concerned that there seemed no simple, coordinated and efficient way of making, changing or cancelling bookings. There were so many different ways and each with varying processes. Some you could book online and some you couldn’t. Some on the GDS but most not. The majority necessitated a call to an agency which cost too much for such a transaction. He correctly identified that these variations contributed greatly to the lack of proper MI. What he wanted to know from me was what the problem is? Why is it so hard to book hotels in a way that gives him as a buyer what he absolutely needs to do his job? I gave him the basics as I saw them and thought you might like to read them too.
The hotel market is hugely fragmented. There are thousands upon thousands of hotel and most of them act individually. Yes there are major hotel chains and yes there are consortiums but even here a large amount are privately owned. Consolidating a programme becomes very difficult when there are so many different players with different systems and different communications methods and language. This differs hugely from airlines which are not only far smaller in numbers but use the same GDS booking platforms and share similar systems and codes however I did warn him that this may be changing soon!
So how should one make a reservation? It would be good to combine it with the air or rail booking but unfortunately the range of hotels in the airline booking systems (GDS) is tiny compared with the market. Add to that the difficulty of being able to use your own negotiated fares or room allocations and it becomes not a very feasible option.
You could connect to the numerous hotel booking web sites but again can you be sure you will be booking your deal and capturing sufficient detail. You might get one-off savings using their buying power but creating a nightmare in payment, reporting and control terms.
Out of frustration and a desire to save fees charged by agencies many travellers book direct with the hotel but is that what you really want them to spend time doing? And then again you could miss out on consolidated MI for policy measurement, security and negotiating purposes. I can understand why travellers or their administrators want to make hotel bookings personally but in my view you can forget about control if you let them do it. It is also very vexing when they find out the hotel GM is spot selling rates cheaper than your centrally negotiated deal. This is another thing that regularly happens in this industry.
I advised him that I can only see one logical way of consolidating all ones spend items together and that is through a Travel Management Company (TMC). There are not that many yet who can provide a true solution and it does not come for nothing so buyers need to be absolutely committed in order to reap full benefit
You basically need to find a TMC that can deliver a system that seamlessly links the GDS booking system to their own separate hotel booking and management platform. This platform needs to directly connect with the main hotel chains and have the ability to store and manage your negotiated rates and room allocations with them and the others. All this, and other services need to be on one customer friendly booking screen. It would also be valuable to have this screen branded to your company not the TMC.
Taking pre booked room allocations at key locations is essential in order to allow the system to confirm rooms to travellers straight away and avoid unnecessary costly and time consuming middle-man phone calls. These allocations when combined with those negotiated by the TMC themselves often mean that hotels that seem full can still be bookable to you. It also results in your travellers have their own company one stop shop that pulls together their whole journey along with bolt on services such as policy compliance authorisation system and communication opportunities.
To me his choice is relatively straightforward. He either does what 90% plus of corporations do which is keep their hotel programme separate from air or go the whole hog and combine the two in an online total travel solution which is only now beginning to become a viable solution. I wished him luck and went back to my hotel room…which I booked myself!
Wednesday, February 9, 2011
Getting back to basics with business travellers
How much does the average business traveller know about travel programme management? I would argue strongly that the answer is very little which is a problem. How much does the average travel buyer know about the practicalities of using travel to meet individual traveller’s needs? Again I would argue very little except for their own particular experiences. Is this a healthy state of affairs? No.
It has always vexed me how little time and effort is spent educating, briefing and convincing business travellers of the rationale used when creating a travel policy. How can a company expect their travellers who obviously know their budgetary and practical travel needs better than anyone else to follow a policy that seems diametrically opposed to their objectives. Should they be told simply to do what they are told? Or should they have the company policy fully explained and justified.
I am not talking rocket science here. To start with one could get down to basics. Key travellers and budget holders should be approached and asked to explain any reasons why they have issues with the policy and invited to ask specific questions to illustrate these concerns. This will bring out the usual range of arguments about why certain airlines are used, why prices vary so dramatically and why can they not simply go out and choose the best fare for their own budgetary and travel needs.
These arguments are the underlying reasons why most corporations have significant known (and unknown) travel compliance issues yet very little is done about it. The average company seems keener to go out and negotiate prices with suppliers than undertake possibly more productive internal ‘housekeeping’ through communication and collaboration.
Here are a few basic example answers to basic questions that might provide surprising results if travellers understood why certain things are done that way:
Q: Why do I have to use agent X when if I book direct with an airline or use another agent I might get better?
A: The company as a whole needs a total picture of its spending and location of travellers for safety, security, financial and procurement reasons. Part of our contract with agent X ensures we get all this information and support in order to maintain control and drive improvement. Any bookings made outside the programme are lost to the company and weaken its ability to support the individual and corporate needs of all stakeholders.
Q: Why am I made to use certain airlines and certain fares when I can possibly go out on my own and find something better?
A: When the company negotiates these deals with airlines it looks at the total annual requirement of the group. It agrees fares that will be available throughout the period which represent significant discounts and other benefits. There will be occasions when lower fares will be possible but availability will be strictly limited and restrictions will apply. By going outside the programme and taking these one off individual discounts it will weaken the company’s ability to get greater benefits for all over a longer period resulting in higher cost. The overall benefit to the company of a negotiated deal is far higher than the occasional individual saving
Q: I went to an overseas conference and found other delegates who travelled on the same plane but paid less for their ticket than me. What’s going on!
A: The likelihood in today’s market of any person on a plane paying the same as another is very small unless they were booked together at the same time or booked on a fixed price. Airlines shift their prices constantly linked to time before travel, numbers booked and historic data. For example there is no such thing as a standard price on a low cost airline. That is why it is best to book early when fares are historically cheaper.
Q: Why should I pay fees to agent X? I could do it myself much cheaper.
A: The fee to Agent X is not just for making your booking but for a vast range of services provided by them to you and the company. These include back up, management information, billing, account management and a raft of others. All this is lost to you and the company if you book outside the programme to everyone’s detriment.
These roughly drawn up examples hopefully illustrate the need to communicate with
travellers to explain that the company is not totally mad and has valid reasons for
requiring their compliance. I bet that if you asked your travellers these questions they
would not give the same answers! After all, how can you expect people to do what
you ask when you don’t explain why? Surely a better way than introducing a mandate
and trying to enforce it on an incredulous traveller.
It has always vexed me how little time and effort is spent educating, briefing and convincing business travellers of the rationale used when creating a travel policy. How can a company expect their travellers who obviously know their budgetary and practical travel needs better than anyone else to follow a policy that seems diametrically opposed to their objectives. Should they be told simply to do what they are told? Or should they have the company policy fully explained and justified.
I am not talking rocket science here. To start with one could get down to basics. Key travellers and budget holders should be approached and asked to explain any reasons why they have issues with the policy and invited to ask specific questions to illustrate these concerns. This will bring out the usual range of arguments about why certain airlines are used, why prices vary so dramatically and why can they not simply go out and choose the best fare for their own budgetary and travel needs.
These arguments are the underlying reasons why most corporations have significant known (and unknown) travel compliance issues yet very little is done about it. The average company seems keener to go out and negotiate prices with suppliers than undertake possibly more productive internal ‘housekeeping’ through communication and collaboration.
Here are a few basic example answers to basic questions that might provide surprising results if travellers understood why certain things are done that way:
Q: Why do I have to use agent X when if I book direct with an airline or use another agent I might get better?
A: The company as a whole needs a total picture of its spending and location of travellers for safety, security, financial and procurement reasons. Part of our contract with agent X ensures we get all this information and support in order to maintain control and drive improvement. Any bookings made outside the programme are lost to the company and weaken its ability to support the individual and corporate needs of all stakeholders.
Q: Why am I made to use certain airlines and certain fares when I can possibly go out on my own and find something better?
A: When the company negotiates these deals with airlines it looks at the total annual requirement of the group. It agrees fares that will be available throughout the period which represent significant discounts and other benefits. There will be occasions when lower fares will be possible but availability will be strictly limited and restrictions will apply. By going outside the programme and taking these one off individual discounts it will weaken the company’s ability to get greater benefits for all over a longer period resulting in higher cost. The overall benefit to the company of a negotiated deal is far higher than the occasional individual saving
Q: I went to an overseas conference and found other delegates who travelled on the same plane but paid less for their ticket than me. What’s going on!
A: The likelihood in today’s market of any person on a plane paying the same as another is very small unless they were booked together at the same time or booked on a fixed price. Airlines shift their prices constantly linked to time before travel, numbers booked and historic data. For example there is no such thing as a standard price on a low cost airline. That is why it is best to book early when fares are historically cheaper.
Q: Why should I pay fees to agent X? I could do it myself much cheaper.
A: The fee to Agent X is not just for making your booking but for a vast range of services provided by them to you and the company. These include back up, management information, billing, account management and a raft of others. All this is lost to you and the company if you book outside the programme to everyone’s detriment.
These roughly drawn up examples hopefully illustrate the need to communicate with
travellers to explain that the company is not totally mad and has valid reasons for
requiring their compliance. I bet that if you asked your travellers these questions they
would not give the same answers! After all, how can you expect people to do what
you ask when you don’t explain why? Surely a better way than introducing a mandate
and trying to enforce it on an incredulous traveller.