How will suppliers react to tools that automatically rebook lower air fares and hotel rates?
Business travel management is like the frontline of a battle between two very well-matched adversaries. Although many people like to portray the interaction between travel buyers and suppliers as a friendlier type of encounter, the reality is that both sides are engaged in a long-term war, with both keen to get the best deal financially.
What happens over the years is that one side or the other wins a battle that puts them in a stronger position but then the situation rebalances when something new comes along – a new weapon or a new general with brilliant strategic ideas.
At Business Travel iQ, we have been looking at price tracking technologies for some time as they have the potential to shift the balance of power. These technologies, and there are a number of companies that provide them such as Yapta and TripBAM, automatically monitor flight and hotel prices after booking and re-book if the price falls.
This has been highlighted this week by the announcement from Carlson Wagonlit Travel that it is rolling out its own price tracking service, powered by Yapta, worldwide following a successful trial in the US which saw clients save up to 2% of their travel spend. The rollout will take place over the next 18 months.
In a world where marginal gains can make all the difference between perceived success or failure, 2% of travel spend is a significant win.
Patrice Simon, CWT’s CTO, Strategy and New Product Development, said of the rollout, “This technology can save our clients up to 2% – that’s a huge sum of money for any company with a sizeable travel programme. Best of all, it’s largely automated, running in the background 24/7, delivering savings every single day.”
The travel management company believes that the potential for savings is higher in Europe, Asia Pacific and Latin America because of the “fragmentation of offerings”.
The company says its travel consultants currently manually rebook approximately one in 20 itineraries with the same flight or hotel at a lower rate and that fully automating the process will further improve that rate.
CWT is not the first to roll out such technology: American Express GBT launched its Air Re-Shop Expert tool last year, also powered by Yapta.
So what happens now? The wider adoption of tools like this is another step down the road away from corporate deals and towards dynamic pricing. If, as seems likely, more TMCs include such tools as a standard part of their package, suppliers will inevitably look at their corporate income stream and make decisions about the sort of deals they are willing to offer corporates.
The focus on getting a direct relationship with the business traveller is likely to intensify, as a result, as they try to claw back some of the lost spend.
Buyers may have won the battle with suppliers for now but for how long?