December 2009 - The ever-evolving role of the travel buyer may be undergoing its most significant metamorphosis yet as mobile technology, social networking and the interoperability of services increasingly empower travelers with the most current market data, choices and deals--potentially up-ending the prevailing decision-making process. Travel and procurement officials, who are not necessarily embracing these trends, see their positions transitioning as they seek to balance the benefits of the rates and services they negotiate with the lower-cost rates aimed at travelers.
"It used to be that the Internet was an incredible resource for people, but all the content out there was really invisible to machines. They couldn't read it, understand it. That's starting to change," said Gregg Brockway, TripIt co-founder and president, speaking at The Beat
Live in September. "Applications are starting to talk to each other up in the cloud on our behalf without us being involved. Lots of mobile apps, social networking and expense reporting solutions are starting to interact," influencing the behavior of travelers.
"Choices are being driven down to the traveler level, and how do you control that?" asked Cornerstone Information Systems CEO Mat Orrego.
"The corporate traveler and leisure traveler, in essence, have morphed into one being," said Cindy Heston, WellPoint strategic sourcing travel manager. "From a control standpoint, [travel managers] are not going to have control anymore."
However, according to Pegasus Solutions chief marketing officer Ric Leutwyler, "Travel managers will become very good influencers and let go of that need to always be in control."
Ron Tiu, Hughes Network Systems senior corporate travel manager, agreed: "A global program is basically about having the best balance between the travelers and the company's focus. The program has to be dynamic; you have to adapt."
Some corporations, like Google, already are successfully harnessing the traveler-centric approach to corporate travel. Google travelers are rewarded if they find cheaper rates than the corporation's benchmarks; essentially, they are incentivized to beat procurement at its own game. The company's proprietary online reimbursement and tracking system includes airfare/room rate caps set by Google global travel manager Michael Tangney, and if travelers book a fare or room at a rate that falls below the cap, Google puts into an account half of the savings for that traveler to use for future business travel. Bookings over the cap require review, unless past credits are used to offset the difference. A traveler might, for example, use banked funds for a premium-class ticket or luxury hotel room.
By doing this, the traveler seeks creative ways to earn points, according to April Bridgeman, BCD Travel senior vice president of strategic marketing and technology planning. "It does equal a loss of control in the way we thought of control before, but what are you ultimately trying to control: the traveler's behavior or your ability to achieve your objectives in the program?" she said.
Putting The Traveler In The Driver's Seat
Mobile technology "is changing how people behave," Brockway said, noting that 80 percent of business travelers carry smartphones. By 2012, he added, Morgan Stanley research puts the smartphone market at 2 billion. Gartner Inc. estimates that smartphone growth will be 20 times faster than growth in the personal computer market.
Smartphone usage places information for travel decisions literally in the palms of corporate travelers, and creates an environment where travelers can work and travel more efficiently than in years past and behave more cost-effectively as a result. With the introduction of mobile applications, travelers can access several components of the travel program on one platform. Tiu pointed to Rearden Commerce's Mobile Personal Assistant application, which allows clients via their phones to access such personalized real-time data as travel itineraries, alerts, restaurant reviews and company policies on one platform.
"I am trying to push mobile even just to have another tool to look at things," Tiu said. "When you get your itinerary, it comes through email, but the email folder is pretty much cluttered even if you save it. How many times do travelers call the travel management company about their itinerary, wasting the corporation's money? If you have a dedicated application or an area where it is always there, that is the biggest selling point."
"We see a scenario where people come off the plane and don't have a hotel or a car and purchase that at the airport," said Norm Rose, president of Travel Tech Consulting Inc. "Here is a device that is more powerful than our initial computers, so why use it for just quick Web-based searches? We are trying to communicate to the entire travel community that it is not just another touch point. It is an opportunity to inform you of new services that
you haven't even thought of before."
"As long as the mobile systems can tie back into some sort of reporting mode, then it should be fine," said Kevin Maguire, manager of travel for Intercollegiate Athletics for the University of Texas and former president of the National Business Travel Association. "When they don't have that, it's a problem because [determining] if you were out of policy now wastes time, which negates the cost savings by having [the traveler] do it."
Creating a mobile platform that mimics the online booking tool and incorporates all aspects of the travel program, including reporting, is ideal, agreed Tiu. "Mobile is just an extension of the travel program; it's just a moving portion enabling the same environment," he said. "I am trying to minimize the traveler from going outside the booking tool. Why would the traveler behave badly if the system is working?"
Working Social Networking
Also influencing behavior, and growing exponentially, is memberships in social networking sites. According to Gartner Inc., worldwide participation in social networks--such as Facebook, LinkedIn, MySpace and Twitter--is expected to increase from 118 million in 2008 to 800 million by 2012, Brockway said. However, travel managers admit they are lagging behind their travelers in this category particularly.
"Every corporate travel manager says the traveler knows more than they do about what he or she wants and how they want information. From that perspective, everybody in this industry has to kind of rethink their model," according to Heston. "It's a whole different world."
Embracing the wealth of knowledge that can be attained from reading travelers' comments about preferred suppliers, Brockway said, could be beneficial to travel buyers during negotiations. By doing so, managers also can address situations that affect travelers immediately as opposed to waiting for traditional, time-lagged traveler reviews.
"Social networking would help travelers and travel managers if they utilized a source that was like a comment board and a ratings system," agreed Maguire. "It gives us a basis to work with because if you call the hotel, they are not going to give you bad recommendations. They will always refer you to clients that had a good time there."
"The 300 million people on Facebook are 300 million procurement people," said consultant Ron DiLeo of In The Black. "They're making their own choices [about] what they want to buy, and there's got to be some discussion and dialogue on how to capture that in a positive way."
Privacy, Security, Compliance, Oh My...
However, many travel managers are concerned about security and privacy issues. TripIt's Brockway argued that if travelers are presented with a secure platform where they agree to share their own information, corporations need not worry about a breach of confidentiality. "How can travel managers engage travelers to not only participate, but agree to share their data so buyers can make their experience better and give [managers] more knowledge about what they're doing, yet not invade their privacy? By allowing the traveler to opt to participate to gain value," Brockway said.
"People are on social networks now more than they are on email," said BCD Travel's Bridgeman. "Our travelers have become rational consumers. They know more than a typical agent knows about their trip. That is a very big factor behind why managed travel has to rethink its boundaries."
If travelers are satisfied with booking through a mobile platform that houses all of these traveler-centric components, managers could monitor compliance via "bots" that alert them when travelers are noncompliant, Brockway said.
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"Mobile technology will enhance the booking environment, the travel process itself and bring the program into better compliance."
— Ron Tiu, Hughes Network Systems senior corporate travel manager
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Hughes Network Systems' Tiu believes mobile technology "ultimately will enhance the booking environment and the travel process itself, and bring [the] program into better compliance." He noted that "there should be no excuse if a traveler doesn't get approved for a trip in time: You can download the application and you can see the upcoming trips you need to approve. Why wouldn't you do that?"
According to Bridgeman, "There are already 2,000 travel-related applications for the iPhone; that's overwhelming. "Travelers want agencies to "tie core services together, and help them make sense of their endless options and some of the key things that they need to do to get through their business trip."
What's A Travel Buyer To Do?
"My fear is, with the proliferation of all this Web-enabled information, how am I going to ever keep as informed as [the traveler]?" WellPoint's Heston said.
Maintaining the importance of the travel procurement official is dependent on his or her ability to influence travel decisions in a manner that is appealing and friendly to the business traveler, Brockway stated.
"When I negotiate a contract, I negotiate like a traveler," said Heston. "I am more of an internal consultant to my organization and I should be marketing value, not marketing price."
"People can find amazing deals out there, and it puts pressure on our internal deals," Google's Tangney acknowledged at an Association of Corporate Travel Executives conference in October. "We use the information to say [to our suppliers]: 'Match it, or you're not going to be in our process.' "
"There is leakage from programs because people are buying what they think is the best deal on the Web," according to In The Black's DiLeo. "That's nothing new, but it's significant enough now that it is very difficult for any travel buyer to predict exactly what they can commit to. The entire business travel world is going to a market-based pricing system that is governed by people's behavior, and, frankly, that's what I see these social networks driving."
University of Texas' Maguire agreed, saying his role changed to more of a "salesman" within his organization. "You have to defend and encourage support for the decisions that you have made," he said. However, it is also important to make sure that travelers are aware that there are repercussions for not following the travel program and booking outside of corporate policy. "More and more companies are saying, 'these are the suppliers that you use. If you don't do what the policy says, you are not going to be reimbursed.' You are finding companies that are forcing the issue, but you still have to become a salesman of sorts and explain the decisions and rules with the suppliers," Maguire said.
Tiu also asserted that tough guidelines will help to maintain the travel purchaser's control over travelers' decisions without being unreasonable to the traveler. "The traveler, if they want to, can always find the means to bypass the program," he said. "It is about understanding what the company is expecting of you. If the traveler is not afraid of the company's travel policy and there is no repercussion for it, they will always make bad decisions."
As technology improves, this shift is inevitable, according to Cornerstone's Orrego. "The thing that I learn more and more is that you are going to lose control and it's going to be crazy, but in the end it's going to be better," he said. "There is going to be some loss of control, but there has to be craziness in the process of letting go and not worrying about your brand and how you control the end-to-end process because you just become part of that process."
