When hoteliers advertise booking direct as the lowest-cost option, and when front-desk agents tell travelers they cannot receive loyalty points because you booked through a third party, how do you address “What’s in it for me?” and bring your travelers back into the managed program?
Do you need to?
We recently looked at New Distribution Capability (NDC) and how these nontraditional booking options, driven by technology enabling the actual traveler to take control, could impact your corporate travel program and the future of business travel distribution.
The travel industry focus, in business and well as leisure, looks to customer experience at present. Particularly for millennial and Generation Z travelers increasingly making up the corporate traveler pool, loyalty is increasingly captured by the provider allowing the most seamless, personalized experience, not just reward points. And it’s the supplier’s intention to make that experience optimal directly on their websites. CapTrav recognizes this reality, sees the ever-increasing likelihood of travelers booking direct, and understands corporate risk associated with non-compliant bookings.
HOW DOES NDC AFFECT CORPORATE TRAVELERS?
With NDC, your travelers who have profiles and accounts with various suppliers are increasingly likely to receive personalized offers. These offers may be add-ons, such as seat upgrades, extra baggage, lounge access, meals, Wi-Fi: airlines aspire to market amenities directly to the traveler via NDC. For organizations concerned with compliance this reality may become unmanageable and have an impact on compliance, expense management, and risk.
Beyond add-ons, once personalized fare or rate offers are made to individuals, normalizing the lowest logical fare or best available rate becomes more challenging still. Already, managed programs combat fare/rate offers from third-party sites, industry disruptors, new apps or package offers, which may undercut the available corporate rate on an individual basis, but be heavily restricted or, more broadly, hurt overall contract-negotiated volume and savings.
To keep travelers in managed programs, the corporate travel industry is adapting on many fronts. GDS providers and TMCs focus on IT, making air, car and hotel booking experiences more seamless and anticipatory, so NDC options build for them rather than bypass them. Future airline and hotel contracts will lean further on amenities; corporate deals are likely to package upsell items, giving travelers a perks advantage when they go through their TMC. While some partner relationships strengthen, new challenges like GDS fees require workaround decisions. Still, most industry experts believe that the current 30-50% program leakage experienced by most organizations specific to air and hotel bookings is not likely to be mitigated by these new moves and, in fact, may become more severe as suppliers hold inventory for its supplier direct websites. The necessity to capture travel bookings no matter the booking source is becoming more critical as these realities continue to take hold.
WHAT TO EXPECT IN THE FUTURE WITH NDC
The coming years, with at least 90 airlines planning to use NDC by 2020 per IATA, are likely to be an uphill battle on the leakage front. Among open, work-in-progress questions, are whether NDC reservations can be changed/supported through normal channels, how travelers will differentiate, and how that data will get back to travel manager.
Significant among those open questions is whether a process is in place to seamlessly integrate the data for bookings made outside the GDS into existing risk management provider feeds. When looking at duty of care, leakage is the paramount obstacle. Your TMC can tell you where your travelers are—so long as your travelers booked through your TMC; companies without a TMC in place do not have even that reporting advantage.
Reimbursement policy can have significant impact on leakage, when travel can only be expensed if booked through the proper channels, but not all corporate cultures are suited to so strict a policy; it can also have impact on employee retention or even legal implications, particularly as travel policy, and correspondingly travel experience, is increasingly considered among HR perks by recruits.
To get your arms around NDC, corporate travel program leakage, and duty of care, refreshing your policy for current travel technology is one place to begin. A conversation with your TMC about their NDC plan is another. For companies not currently employing a TMC, before your travelers’ booking channels diversify further, your travel and risk management plan for the next five years should begin now. Internally, ask questions such as whether you will allow options such as AirBnB and last-minute hotel apps for business travel. While your company may not be promoting those options, how many individuals are currently being reimbursed for bookings made through such alternatives? The more sources you allow bookings with, the more you need to capture that data in order to maintain any duty of care.
CapTrav allows for all corporate travel tracking data, regardless of where your travelers book: allowing for unmanaged programs to obtain critical risk data and for managed programs to continue to track travelers who roam outside traditional channels. For questions on the solution best suited to your company, how to keep ahold of oversight and traveler tracking with an expanding NDC range on the horizon, contact us today.