Managing Travel 3.0 NextGen TMC

The Future of Travel Management 3.0

Its safe to say after 8 months living with the new Norm that came with Covid, travelling for business will forever change. As of this writing the TMC industry is still in free fall, M&A discussions are happening every day and one Mega merger between T&T and CTM has already materialized. According to recent ARC numbers business travel is still down over 70%-80%, 25% or more of the TMC will not survive, major airlines have started permanent job reduction efforts and virtual meetings will reimagine how business is done. 

The NextGen TMC will be defined by agencies who can move to a SaaS operating platform of services whereas the TMC owns the software and technology. The ability to scale operations up or down can be managed with a few clicks. Corporate travel buyers can quickly differentiate competing solutions in 30 minutes and implemented in 7 days (for 90% of companies). The industry has already seen change coming by way of the Amex GBT acquisition of the KDS T&E platform, Serko Zeno Travel & Expense, ITS, TripEasy platform of services,(including booking & ticketing), and Egencia. The valuation of TripActions has become clearer today with its recent announcement adding Expense to its platform of services. The race is on stretching the imagination of innovation which will benefit the corporate customer and its travelers. As with every disruption there will be winners and losers, in travel those that innovate will be best rewarded to capture a multi-billion dollar travel market Post Covid and redefine how Travel is Managed, Procured, and how a platform of Services as Software will redefine the future of Travel Management 3.0.

The innovation required for the NextGen TMC is long overdue in an industry that has accepted status quo for too long. Managing Travel 3.0. will include, procurement models that leverages both supplier and buyer value bringing real time data to make procurement decisions. The Covid disruption caused billions in losses by nearly ever supplier in the travel industry and will not easily be replaced. Using real time data to create transparency in the procurement of perishable goods will help create better buyers, that will also benefit suppliers with increased market share and reduce distribution costs. Those that can drive airline market share using real time data will bring increased value to both the supplier and customer.

As these new SaaS TMC’s continue to differentiate the booking experience built on a cleaner Microservices based Architecture that is highly scalable, and adopted Industry wide. The race has just begun to bring faster, more accurate solutions on a single platform. One of the newest technologies being discussed in Silicon Valley is Blockchain and how this will further change the status quo of Booking Travel, Procurement, Payment, and Expense Reporting. A brilliant young CEO from Silicon Valley recently said “ Smart Companies will know when to move their platforms to Blockchain when you see the demand for Blockchain programmers significantly rise”. AWS is bringing that vision closer into focus every day with a demand for Blockchain programmers emerging as a trend.

A look back in History

Modern Day Travel Management started after the 1978 Airline Deregulation ACT. Companies like American Airlines where quick to dominate the new era of travel distribution by placing thousands of Computer Reservation Systems (CRS) on many travel agencies in the country (aka Sabre), at the time it was a race between United (Apollo) and American to cover cities that had dominate market share as the airlines realized if they could control distribution via the travel agent desktop they would sell more airline tickets. The industry recognizes American Airlines Bob Crandall as one of the visionaries to dominate distribution as AA did become the world’s largest airlines by the end of the 90’s.

Several major events caused disruption in the TMC industry that included the 1995 Commissions Caps, Sept 11, 2001, and the 2008 Financial collapse on Wall Street. Each time travel companies had to pivot to reinvent themselves with less revenues. The agencies that survived all had one thing in common they reinvented themselves as not just a travel agency but as a TMC, using 3rd party booking tools and supporting technologies to bring increased value. In many cases the customer drove the innovation requiring new 3rd party services such as mid-office auto ticketing, pre- trip approvals, data collection, managing unused tickets, Duty of Care, dashboard reporting, all bringing increased value solidify the status quo we see today.

As we look back in the early dates of OBT companies like Cliqbook, ResEx, GetThere and Deem all emerged as the booking tools used by nearly 99% of all travel agencies to support their corporate clients. Since the early 2000 very little has changed by any of the legacy booking tools which saw the industry see over 50% hotel leakage reported by GBTA by 2019. The lack of attention by not including alternate distribution channels caused many corporate customers to speak out, GBTA reported the facts, yet very little was done to fix such major holes in the legacy booking tools invented in the mid 90’s. The industry was told Travel Management 2.0 was the norm that it was “Ok to book travel anywhere that made sense”. Now that we have come full circle and its become obvious to all, knowing pre-trip analytics, where your travelers are, how many executive traveling on the same plane, how many staying at the same hotel will become required during Covid and beyond 2024.

Managing Travel 3.0 defines The future of Booking Travel, Procurement and Expense Management including the following:

•  OBT that provides a platform of services including
• NDC (at ITS we call this the Next Distribution Channel)
• The New Digital Storefront and airfare display
• Private fares
• Community Sourcing / aggregate purchasing power
• Pre-Trip & Post Trip data analytics and consulting
• Meeting and Events module- Manage 50-5,000 attendees with two clicks
• Pay Now hotel rates
• API’s to meta hotel search
• Audit hotel rates / real time procurement
• Audit airfares / real time procurement
• Display of unused tickets
• Duty of Care
• API’s to PEO, ERP, Expense providers
• Receipt collection in PDF
• Bundled pricing option
• $0.00 booking & fulfillment fees

ITS has a Crystal Ball -

For the last decade ITS has been building the OBT (on-line booking tool) for cargo airlines, global airline alliances, and some of the largest commercial airlines in the world. Having a front row seat building corporate booking tools for the largest airlines has allowed the visionaries at ITS to see and build the NextGen Booking experience. Since Bob Crandall recognized in the 70’s “he who owns travel technology distribution will dominate market share”, is good lesson to think of today as we enter the next era of travel management. ITS has become the standard of how the airlines want to distribute their products using the new digital storefront and has been a proven strategy to build the TripEasy from the inside out. Airlines have a perishable product called airline seats and continue to increase their B2B models bypassing status quo distribution models in favor of creating more value to its customers and reducing the cost of distribution.

The Second Largest Controllable Expense

Many CFO - Mid-level Managers have retreated from the enormous benefits and savings gained in the modern era of Travel Management moving to a semi -consolidated travel program. The savings from a SaaS based travel program can be 15-25% of T&E based on status quo procurement, cost of booking, and trying to hit a moving procurement target. As many Travel Managers have found the lowest rate may not be the air or hotel rate negotiated, the Meeting rates continue to be undercut my the hotels themselves. Covid has reminded us that traveler safety will be more important than price and a new set of benefits are emerging every day that will focus on Duty of Care / Traveler Safety. TMC that own their own booking tools will be quicker to adapt and innovate new services, the industry is seeing those survivors quickly move to replace the existing booking tools.

Perhaps the greatest motivator for change comes when the economy tightens and the CFO and other C-level executives look for ways to reduce costs. Cutting payroll is usually the first step, but it generally does not take long to discover the huge need for consolidating travel, requiring pre-travel approvals, HR approvals and if the ROI of the trip makes sense. Travel is the second largest controllable cost of most companies, yet many do not have a handle on how to efficiently procure and control in a world of disruption.

The Cost of Doing Nothing

Status Quo can be a companywide disease, doing nothing only adds frustration and dissatisfaction trying to consolidate a travel program patching 3rd party tools together. It’s well known that the travel industry has been hit hard as thousands of employees from the largest TMC to the smallest have seen their job displaced. Many TMC’s simply will not be able to perform the service levels pre-covid, agents, customer service reps have seen their jobs disappeared and some TMC will not return. The brick and mortar travel agency you knew Pre-Covid is a shell of what it was and has become unrecognizable to most travel buyers today.

As we move into the NextGen TMC the differentiators should jump out of the site requiring new questions from travel buyers such as, how fast can you scale for a large groups, has the site been hacked, does a 3rd party host the platform, what is the security in place and speed performances. By spending 30 minutes asking the right questions many travel buyers can quickly do something vs doing nothing and create better user satisfaction and in many cases reduce travel cost by 20% or more.

ITS (Internet Travel Solutions), is a leading travel technology solutions company, based in Dallas TX. building custom booking & meeting solutions for airlines, cargo companies, global airline alliances under white labels. Having provided corporate, meeting and convention booking sites to airlines for over a decade, ITS has a wealth of online travel expertise bringing a combination of 40 years of travel and travel technology experience. When it became obvious that corporate travel wasn’t keeping up with the times, we knew it was our responsibility to do something about it. And just like that - the idea of TripEasy was born!