Jeroen Hurkmans: Are you in the driver's seat or just a passenger?

18 February 2015
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Jeroen HurkmansVice President EMEA/ APACAdvito
Supplier

Suppliers collect data to plan and price services in line with what travellers want. Travel managers need a strategy too


Last month the Institute of Travel and Meetings (ITM), the UK's travel buyer trade association, took the unusual step of publicly sharing its response to a supplier’s planned initiative.

Marriott announced plans to offer free WiFi from 15 January 2015 to all Marriott Rewards members who book either off or online directly with it. In other words, the benefit, which at present is confined to top-tier loyalty programme members or those whose corporate negotiated rate includes free WiFi, will in future be available to them plus those that book directly but not those who book via other channels.

No matter what the public or private reasoning behind the move, it will have a strong effect on corporate travel management, namely that travellers could receive a benefit for which they might not be eligible if they were to book via a company policy which asks them to use either their corporate OBT or TMC.

So what’s going on?

Marriott may be using the incentive to gain the low-margin leisure business which currently is coming from OTAs and tends to be price-led and brand agnostic. However, it is probably looking to incentivise travellers as a means of engaging them and gaining not only brand awareness and loyalty but, more importantly, information about the traveller.

Marriott’s apparent move to incentivise business travellers to divert from corporate travel policy has, not surprisingly, resulted in a lot of unhappy travel managers.

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However, it is important to point out that although this example has attracted a lot of publicity, it is not a case of one rogue supplier. Incentivising certain travellers in order to gain more engagement and information about them is nothing new.

Airlines have been practising this tactic for some time. Several years ago German travel managers and Lufthansa locked horns when the carrier tried to make corporate clients’ card spend data available as prerequisite to any corporate agreement. This would have given the airline full information about the corporate’s routes, carriers, booking classes and fares.

Last year KLM began to charge short-haul passengers fees to check baggage – €15 when paid in advance or €30 when paid at the airport. All members of its Flying Blue loyalty scheme, however, would be exempt from these fees regardless of tier of membership or number of miles earned. In other words, passengers were initially being rewarded simply for registering to join the scheme to engage directly with the carrier and sharing some personal information. This personal information allows the airline to engage with their clients. KLM’s loyalty programme gained 200,000 new members because of this initiative. It is worth pointing out, however, that after registering these new members and obtaining their data KLM changed the rules again. Lowest tier members are now charged for baggage, albeit at a discounted rate.

Some airlines have even partnered with technology companies to collect data from social media profiles of their customers. It's not just about the profiles themselves, but also to the activities of customers on social media.

The Marriott offer is also only available to loyalty programme members so the hotel group will be obtaining data in exchange for the ‘free’ WiFi.

And what does that mean?

As other business sectors such as retail have discovered, customer information is very valuable indeed. Knowing your customers means being able to engage with them, finding their sweet spot, influencing their behaviour and essentially to increase revenue.

Management information in corporate travel has long meant transactional data. In the digital world this is not enough. Suppliers recognise the value that customers’ personal data adds to designing future service offerings and, most importantly, pricing to maximise return.

Suppliers used to be driven by revenue per seat or average room rate. But today ancillaries are almost as important as the room or seat (F&B, parking, checked bags, seat assignments, etc). The name of the game now is total revenue per customer. To do this successfully suppliers need to be able to distinguish among their customers – segmentation through personalisation – and that requires data.

So what’s a travel manager to do?

Travel managers are now competing with suppliers to engage with travellers. And with suppliers’ efforts to obtain traveller data, they are likely to know corporate travellers’ likes and dislikes better than the corporate travel department.

Corporate travel managers work in organisations whose main business objective is usually not travel. Therefore they are unlikely to be able to develop the same sophisticated data capture systems. They are also frequently restricted by regulations regarding data sharing between employers and employees.

However, if corporates don’t do something to redress this balance, they’re going to lose control. They too need a data strategy but collecting and analysing information requires investment. This could be done through a simple private social network such as Yammer or Salesforce Chatter. Or it might be through engaging a specialist data company, through their travel management company or by collective action through an industry association.

The outside world is changing fast. Be proactive and take some action.  

Travel managers shouldn’t be occupying the passenger seat. They need to be the pilot.

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