2023 has already experienced unprecedented industry change. Sounds clichéd, yes? But the sentiment is unavoidably true. In 25 years, I have not seen so much industry change; complexity across the entire corporate travel supply chain that has a profound impact on operations, content aggregation, and supplier disintermediation. Added to this, staffing shortages for airlines, hoteliers, car rental companies, Travel Management Companies (TMC’s), and travel related technology companies persist with no end or solution in sight. And lastly, we live in a world with more consumer choice than ever before backed by aggressive messaging from new industry entrants trying to capitalize on the industry’s attrition and competitively vying for the fast growing small to mid-market client.
New Ways to Think About Old Challenges
An axiom in corporate travel that I accepted early on in my career is that no single person in travel knows everything about travel. The axiom is truer today than ever before as the perfect storm described above will leave a fundamentally changed industry landscape as its aftermath. As a result, we will be seeking innovative solutions and thought leadership for years to come.
While it’s still critically important to consider and plan for the basics – well communicated travel policy, automation to create efficiencies, benchmarked and well negotiated supplier contracts, oversight, and customer service – the way we think about achieving these goals must be reconsidered. Making demands of your suppliers for better service won’t make it happen – competition for new talent is fierce and everyone is lined up for the same small pool of human resources. Begging suppliers to continue to fully support outdated inventory management systems with content is a fool’s errand – the industry has had decades to fix content issues and suppliers are focused on building brand loyalty and mitigating distribution costs. Enforcing policy in the face of more consumer choice than ever before will no longer be driven by a convincing return on investment as content disappears and loyalty programs offset perceived savings.
It’s time to start thinking about new ways to address the challenges we face as an industry. The number one thing we are telling clients is: “leave your ego at the door”. It’s a hard message to deliver for sure but the idea is that we have to figure out how to best service travelers while optimizing areas of the program that are going to be very difficult, if not impossible, to optimize.
Almost without exception, our clients no longer have the same travel footprint they had pre-pandemic. Travel has come back a great deal and we expect a full recovery but patterns have changed. Most companies have shifted their views about the role travel plays in their organization which means priorities have also shifted. Each client’s situation is unique. In some cases, technology can solve some of the issues we face. In others, shared resources can alleviate the burden. We have seen more automation efforts across the entire corporate travel supply chain than ever before – automating expense, streamlining payment processes, simplifying supplier contracting and RFP efforts, and loosening travel policy to give travelers more choice. It makes sense to work with industry peers at other companies and within the industry. Find out what is working and what is not. We are talking to as many cross-functional travel adjacent peers as we can to find out what is important to them. We are encouraging our clients to review as many industry “disruptors” as they can, as many are here to stay and have great ideas.
Don’t Be Surprised When You’re Surprised
Only a month into 2023 and we are bracing for massive change with supplier content and distribution strategies. The first important concept to understand is that supplier deals in the corporate travel space do not follow traditional procurement rules. Unlike many traditional indirect spend categories, discounting and deals are not solely dependent on spend volume. Air, car, and hotel supplier contracting are heavily dependent on market share, volume data, and solid client relationships. Strong and transparent vendor partnerships are more important now than ever before. Travel Management Companies (TMC’s), suppliers, and corporate clients have to come together to develop the right strategy. Most airlines have already shifted some of this strategy dealing with corporate discounting and other incentive programs. More is coming. Corporate clients need to be prepared with as much data as possible and be realistic about the market share and volume they can deliver as supplier contracts surviving on a “wink and handshake” are no more. Modern retailing channels and technology limitations will assuredly cause companies to miss expectations, harming the relationships that have been built and sowing distrust. CapTrav is advocating for open dialogue with our client stakeholders to ensure everyone understands how the industry is changing and the impact it will have on their program.
How will changes to your travel footprint impact your current supplier contracts? What happens to your corporate discounts if you can’t find content in your online booking tool? What happens when you have to pay full agent fees plus a NDC surcharge because you can’t find your negotiated rate on your online booking tool? Do the fees offset negotiated cost savings? What happens to your contract if you fall short? What benefits do your airline and hotel partners perceive if you book directly on their websites?
These are just some of the questions we get every day and the answers are not always perfect or totally satisfactory. Now is the time to think both creatively and strategically about your program, how you can utilize or even re-purpose the tools you have, and where recent innovation and new thinking can plug the holes that every managed program will face in the coming months.