The Devil Is In The Data: Part Four – The Problem with Supplier Data

by | Jun 30, 2021

Part 4: Supplier DataWe will focus on airline and hotel data in this installment for a few reasons:

  • Airline spend is typically the largest spend category in corporate travel programs so it should be a primary focus when considering the best data sources to leverage when optimizing a corporate travel program
  • Hotel spend is the most difficult to manage because it represents both the highest area of program “leakage”, is nearly impossible to normalize across disparate data sources, and presents the most challenging spend category with respect to a company’s duty of care obligations it has to its travelers

There is a long history of the challenges posed by the supplier types mentioned above in terms of the quality and robustness of the data provided to both TMC’s and clients.  These challenges go back well before my time in the industry to the invention of airline commission and back-end override deals, commissionable hotel rates, revenue return vs. revenue retained financial models offered by TMC’s to clients, and a host of other models.  While the purpose here is to lay the groundwork for the problem with supplier data when trying to optimize a travel program, the historical context is only mentioned to demonstrate for those who may read this and be surprised that the concept of data quality and robustness is a long felt industry problem that this is not a new concept for career travel professionals.

The Fox Guarding the Henhouse

It is not the goal of airline and hotel suppliers to take advantage of its clients by any means.  A lot of the issues faced in the industry were borne of client demand for data and information that the suppliers either don’t have access to or are not allowed to have access to under certain industry regulations.  That said, any procurement professional responsible for any corporate spend category understands that a successful supplier negotiation is reliant on good data and certainly data that the client is able to produce, review, analyze, and consider within the context of his overall business strategy.  By and large, in the corporate travel business, procuring airline and hotel deals is reliant on the data provided by the suppliers and this data can be both severely limited and in a lot of cases “cherry picked” either as a result of regulatory rules governing the use of data or to serve the best interest of the supplier.  Corporate travel is probably the only spend category where relying on the supplier to provide partial data that is not transparent in an effort to negotiate deals and discounts is considered best practice.  If I had a dime for every procurement manager turned travel manager whose jaw dropped after understanding this customary interaction, I’d have a lot of dimes!

The Problem with Airline Data

Developing a robust airline program within an organization relies on a number of complex factors – city pair routing, frequency, cabin class, advance purchasing habits, the ability for an organization to move market share from one supplier to another, and distribution costs.  The above criteria all play a significant role in how or if an airline supplier extends a corporate wide discount to a client.  For our purposes, it is only important to understand that obtaining this data is technically possible for those booking made by the TMC; however, a TMC is not at liberty to provide airline customer data directly to the airline.  Instead, the customer must approve in writing that the TMC may release company specific data through a data release authorization and the TMC, of course, only has that booking information that was actually booked through them. 

This data contains the specific airline data mentioned above only for the airline looking to consummate a deal; however, it will not reflect all other airline specific data (OA) that would be useful to provide additional transparency in the negotiation process.  The result is that a client enters an airline negotiation with the data it can put together – TMC reporting, expense, and credit card data, while the airline comes to the table with its own set of data.  The airline possesses the TMC data along with the “appropriate” comparative data from OA which is meant to help demonstrate how well the supplier prices versus the competition, where it would like for the client to perform better in terms of moving internal market share to them, and the “deal” they can cut based on this information which is not a comparison to specific airlines; rather, an aggregation that simply says “other airlines”. 

As airline spend is the largest spend category for most organizations in terms of corporate travel, buyers are typically relegated to trusting the data used to control this spend to third parties with no real way to come to the negotiating table with its own robust data set including bookings made outside of the TMC due to lack of critical data elements in expense and card reporting.  To say that the client is shooting in the dark in many cases is not an overstatement and to say that the client typically negotiates its airlines deals from a position of weakness is a certainty. 

In terms of the challenges posed with airline data, the above only scratches the surface.  An entire white paper can be dedicated to the issues and lost opportunities the client suffers as a result of poor data integrity and the “cherry picking” of information that sometimes finds its way into supplier negotiations.  

The Problem with Hotel Data

Few, if any, corporate travel category owners will dispute the notion that most programs suffer from a great deal of hotel leakage.  If travelers aren’t booking hotels through their approved TMC, they are booking through their favorite website, aggregator site, or using alternate housing options such as Airbnb and Vrbo.  When evaluating the spend leverage an organization has it can turn to its TMC for data and perhaps see a very good picture of approximately how and where 50% of the total lodging spend was used.  The remaining data may come from the hotelier itself who may (or may not) be helpful enough to provide hotel stay data based on the traveler’s email domain name extracted from the hotel’s reservation systems.  In other cases, data may come directly from the hotel through a traveler’s loyalty program under the assumption that the traveler has edited his profile when he left his last job which we have found rather unlikely.  Notwithstanding the issues discussed in Parts One, Two, and Three of this blog series, relying on the supplier to provide critical spend and negotiating data is only normal in the corporate travel environment yet still obviously not normal or a standard of best procurement practices.  As one of the most significant areas of T&E spend within organizations and the single biggest challenge to corporate duty of care programs, corporate clients shouldn’t and can’t rely on its hotel suppliers for comprehensive, real-time, and actionable data.  

An optimized corporate hotel program needs real time data to ensure duty of care and comprehensive data at its fingertips.  Hotel suppliers can provide neither and arguably shouldn’t have to provide it.

We developed CapTrav because we considered there must be a better way.

Keep an eye out for the next blog in this series, Part Five: The Problem with Capturing All Booking Data. 

And, in case you missed it, check out the other articles in this series: Part One: The Problem with Corporate Credit Card Data, Part Two: The Problem with Expense Data and Part Three: The Problem with Travel Management Company (TMC) Data.

Brandon Strauss

Brandon Strauss

Co-Founder

Brandon’s career initially focused on supply chain management consulting for mid-market organizations.  Brandon was fortunate enough to get introduced to some senior executives at WorldTravel BTI (BCD Travel) and helped create and manage the first end-to-end self-service booking platform for the company and the first generation of such service in the industry.  Over the last 17 years Brandon has served as a Partner, head of consulting, and co-founder of KesselRun Corporate Travel Solutions, a leading corporate travel consultancy and in 2018 co-founded CapTrav where he currently serves as President of the company.

CapTrav is the market leader in comprehensive corporate travel data capture. Because we collect all corporate travel data no matter the booking source, your program enjoys the ability to better leverage supplier deals, make smart business and policy decisions, and track all travelers in the event of an emergency.