Posted February 7, 2012

Managed Travel 2.0

Managed travel is experiencing a major shift. Thanks to technological innovation and competition, leisure travel offerings are in many cases outpacing those in corporate travel, especially when it comes to price and traveler experience. As a result, business travelers are questioning the value of managed travel services, while corporate leaders are questioning the value of policy-based programs. 

Together, these changes are creating a new paradigm for managed travel. Travel organizations must respond by delivering value in new ways. Below are the key tenets from which Managed Travel 2.0 will emerge, redefining our industry for the next decade:

New Goals

Goals, not processes. Who cares where a traveler shops and books, so long as the company gets the transaction data and the traveler gets the best price? Corporate management demands results, but is increasingly agnostic about how to get there. 

Going forward: Travel managers focus more on delivering key outcomes and less on micromanaging the methods. Suppliers and online travel agencies make it easy for corporate travelers to get discounts on brand.com sites and deliver that transaction data to buyers at the right price, in a way that enables duty of care.

Budgets, not cost. Cost reduction, the major driver of most travel programs, is a false goal. Instead, companies should focus on getting a good ROI on their travel spend. But that's not yet analytically practical. The best alternative is to set reasonable travel budgets and then manage to them. 

Going forward: Travel managers shift their focus from policy compliance to travel budget compliance. To enable this, a new breed of business intelligence tools will support travel budget owners much more effectively they do travel managers today.

Safety and satisfaction, not savings. The tallest tent pole in a managed travel program, savings, is being displaced by two very different goals: traveler safety and satisfaction. Companies increasingly are seeing the value of keeping road warriors happy. Duty of care now is possible outside the rigid structure of a fully managed program. When you change the main goal, you have to change the model. 

Going forward: TMCs that enable these changes by coaching travel managers through them and providing technology to support them will find new revenue streams; those that inhibit change will face a deteriorating core.

Better Methods

Influence, not intimidation. The command-and-control mindset has far less clout with younger workers. More companies accept the need to win by influencing, rather than by punishing. Mandates have become obsolete. Forcing inferior experiences on travelers, especially when they know of better options, is not sustainable. 

Going forward: Gamification and process-point messaging (e.g., ProcureApp) emerge as powerful elements in travel program management, as do more commonsense programs that allow travelers more discretion in travel planning.

Open APIs, not walled gardens. Travelers are exploring many new ways to accommodate their travel needs. Social networks and mobile apps yield real benefits. Companies fighting to keep travelers fenced in with strict IT regulations and travel policies are on the losing side. Also, these connections provide significant revenue opportunity for TMCs, as connecting outside their own world yields more transactions to monetize. 

Going forward: TMCs and OBTs enable third-party apps to connect seamlessly and forego pushing their own proprietary tools as the lone offering for the traveler.

Collaboration, not contracts. Suppliers are sick of providing price concessions, then not getting the volume they bargained for. Buyers understand the profit needs of suppliers, yet there is no arbiter to find the efficient middle ground. 

Going forward: Smart suppliers will replace long-term contracts with dynamically adjusted pricing tied to the account's recently delivered market share and profit margin. Suppliers will fight over only those buyers who can move truly profitable business. New tools will support this collaborative relationship, including direct distribution's entry into managed travel.

Collectively, these changes will profoundly impact our industry. They are driven from external factors: the advancement of leisure travel tools, changing traveler demographics, increasing traveler expectations, the democratization of technology and the proliferation of mobile and social applications. It's up to us to take these influences and guide managed travel into a new, more progressive era. If we fail to do so, the changes will still take place, but we'll be in the audience, not on the stage.

Scott Gillespie is author of Gillespie's Guide to Travel and Procurement. Evan Konwiser was co-founder of FlightCaster and now is working as an industry consultant.

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