Retailing Revolution

The past year has seen the beginnings of a tide change toward retailing in managed travel, particularly within air distribution as American Airlines drew a line in the sand regarding New Distribution Capability. The carrier in April began removing some fares from EDIFACT pipes and making them available only through direct or NDC-enabled channels.

Meanwhile, United Airlines expanded its continuous pricing offerings, which also are available only through direct or NDC-enabled channels.

Some carriers—and a few newer travel management companies—would like to put the nail in the coffin of the traditional 26-letter fare-bucket filing system, but the hammer is farther away than they would like.

Travel buyers should be cognizant of how industry offers are made via EDIFACT pricing, continuous pricing and dynamic pricing. With EDIFACT, the TMC, global distribution system or online booking tool is the entity putting the offer together. With continuous and dynamic pricing, the airline is in control. But not all airlines can offer the latter two types of pricing, because they need the right revenue management system tools to make that happen. Another element that comes into play is information about the traveler and their company to create the best offer at the time of search, but that will vary from supplier to supplier and from program to program.

“Delivery of airline retailing is going to be through NDC,” president of Travel Tech Consulting Norm Rose said. “The message is clear. You cannot get access fully unless you are NDC-enabled.” Three ways of getting NDC content are through consolidators, through the GDS NDC channel or the TMC becomes the aggregator, for example Spotnana, Navan or AmTrav, he said.

And yet, “I don’t see any airline moving away from filing fares in the next few years,” Spotnana VP of partnerships Johnny Thorsen said.

Meanwhile, IHG Hotels & Resorts introduced attribute-based pricing into its reservation tool in September. Now, a guest can choose pre-paid parking, food and beverage credits, or Wi-Fi at a discount upon booking, for example, rather than paying full price if they wait until arrival. But none of the buyers BTN spoke with for this report said that has affected corporate bookings or hotel negotiations—yet.

“Attribute pricing has some similarities to NDC,” Rose said. “I’m aware of a number of different efforts to connect the hotel supply at least directly into the travel management company or some sort of corporate environment, therefore bypassing the global distribution system. … So, the belief that the GDS is the way to access the corporate channel is what is being blown up right now.”

“Everybody is looking at distribution,” said a buyer from a technology company who asked to remain anonymous. “If NDC can be a disruptor on airlines, what can happen from a hotel or car perspective?”

Bundle Up, It’s Coming … But When?

Personalized bundles and a more consumer-like travel retailing experience was the promise of NDC, but that’s not fully there yet because some parts of the corporate travel ecosystem are technologically not ready.

“Concur is not ready, the TMCs are not ready in a lot of ways,” ITW director of global T&E Cathy Sharpe said, who is pro-NDC but has not yet turned it on and uses TripLink to capture direct bookings. “I don’t understand things like how our travelers are going to figure out they can’t make a change online without a lot of headaches. How are travelers going to understand they can’t do an open-jaw multi-segment trip? The benefit of having these packaged deals does not outweigh the confusion and stress that are going to be part of the changeover. When Concur comes out [with new booking capabilities] in February, I’m hoping that will be more conclusive in a lot of those areas.”

Some buyers have added basic bundles into their programs. ZS Associates travel and meetings manager Suzanne Boyan is using bundles from United through the NDC channel on Serko’s Zeno booking tool, namely for international travelers bundling bags from India but booking within the U.S., club access for principal managers, and economy plus for everyone else.

“It’s something the tools have never been able to do before, and it does get us one step closer to that leisure experience,” she said.

The tech industry buyer is looking at bundles with United, and diving into the data to see what the needs are. Many of their travelers have status, so they don’t pay for their economy plus seat upgrades or bags anyway. But Wi-Fi is big. “The bundles might vary,” the buyer said. “It won’t be for a seat and a bag, but more fare bundles that allow refundability instead of just flexibility. We’re also looking at lounge passes. If someone is going through Chicago and has a 90-minute connection, can a bundle automatically include a United Club day pass for them?”

Salesforce senior director of global travel Dorian Stonie does not yet have bundles in his program, either, but he will accelerate the promotion of them next year, after Concur pushes out its evolution. “Once that becomes available, we’ll be able to expand those capabilities and bundles and NDC,” he said.

Stonie did, however, offer an example of potential bundling for supplier shift. Loyalty programs can create problems when trying to shift share. Many travelers will not accept a middle seat with a carrier with which they don’t have status, he said. But, with bundling, it may be possible to fast-track status or a match to try that airline in a specific market. “If a sourcing manager is trying to move share, they can bundle in status upgrades or fast-track into that bundle. That would get travelers to explore new airlines or hotels,” he added.

A second anonymous buyer is looking at policy and data to understand what their travelers are expensing as airline amenities to inform the path forward with bundles. They would want Wi-Fi plus a seat in a policy bundle for anything over two hours, or a checked bag if the trip is over a certain number of days. Because the overall program is based on a direct-connect strategy and, therefore, recognizes a traveler’s loyalty status, “they should be able to personalize,” the buyer told BTN about participating airlines. “The potential is there.”

Personalization & Contextualization

When it comes to dynamic pricing combined with ancillaries, the question becomes whether people and corporations want bundles, a question that depends upon how they’re executed, Rose said. “I don’t think the current distribution environment gives enough insight into that passenger,” he added.

Suppliers don’t know the mission of the traveler, Rose said. For hotels, does a traveler want a larger room to host a meeting? Getting that info involves a lot of layers, especially in the hotel industry with various chains and franchise organizations. “You have to match the customer needs here, and it’s not a clean area,” he said.

For airlines, carriers know what a traveler did on their flights, but they don’t know what that person booked on competing carriers, nor do they know the mission of any upcoming trip, Rose added. “How are you facilitating the mission through the NDC content?” he said. “That is a disconnect now, a real challenge in gaining enough insight to have the offer resonate. There has to be a collaborative relationship between the airline and the corporation.”

That’s on the way, according to Thorsen. “In an NDC world, the airline … can know the traveler at the corporate and individual level, so what is the next level of potential innovation? To know more about the purpose of the trip from a corporate-value perspective.”

This is where we will see a lot of innovation and creativity, Thorsen added. “With NDC in an open, flexible environment, you can potentially create a second pricing engine that takes a look at what came from the continuous or dynamic pricing engine on the airline side, but then apply a given set of rules on top,” he said. “Those rules have the power to change the price without being approved by the yield management system of an airline. Now it’s the commercial and business relationship between the airline and the buyer if the price gets changed one more time. … What if an airline could generate the final price based on how loyal the customer is based on real-time data? ‘So far this year you’ve booked 65 percent of all your flights with me, so you get the warm and friendly deal.’ ”

Similarly, the travel policy should “live and breathe” in the technology, Festive Road managing partner Paul Tilstone said, but travelers currently go outside to see what they are entitled to. “We should have technology in the modern retailing world that services the travelers in an easy and convenient way that gives them what they need.”

An example, Tilstone said, is if a salesperson flies to San Francisco to make a sale. It closes and gets adjusted as sold. “That’s worth a lot of money,” he said. “Why wouldn’t a company want to reward them with a paid upgrade seat? … When you think about policy, it will become hugely dynamic, variant and easily changeable by user groups or personas. But we don’t have the technology capability at the moment.”

Planning Now for the Future

“In a world with products and services all over the place, it comes back to more than NDC. It’s that, plus distribution strategy, direct or indirect, business or leisure, channel differentiation,” said Tilstone, adding that it’s time for travel buyers to leverage all their travel data as well as traveler profiles.

Boyan is on the leading edge of that type of strategy, deploying Traxo and ARC subsidiary Traverse to handle direct booking data.

“Utilizing the Traverse link, it takes you through the exact path as for leisure,” Boyan said. “It adds the tour (corporate) code, negotiated benefits, bump protection, seat protection if the aircraft is switched, and it will ask if you want to include internet, which is $10 on the flight but $8 if prepaid. If canceled, all is refunded back to the card if I do that 24 hours [before the flight]. Or if I cancel and get an unused ticket within 24 hours, Wi-Fi is refunded, but the core fare isn’t, then I can reuse it. It’s a win-win.”

Tilstone agreed that such a model is emerging that would actually focus on direct bookings. “TripLink, Traxo, they used to be secondary, but now they need to be front and center,” he said.

With Traverse and Traxo in place, Boyan continues to look at other pieces in the ZS travel tech stack. “We’re looking at OBTs and what might make sense,” she said. “We’re prioritizing direct connects with the secondary source of GDS versus the primary source being the GDS. We’re really excited about the possibilities, but we haven’t made any definitive decisions yet.”

Boyan also is looking at third-party profile technology as a way to “future-proof” her program. “NDC came and shook the industry. What will be the next thing? We don’t know, but we need to be prepared. We think the profile piece can be an integral part of it. It makes us as a company as agile as possible.”

When it comes to retailing and tailoring the right experience—both for the company and the individual—a large part of the onus is going to be on suppliers to understand the customer and deliver to that, said the tech company travel buyer. They’ve got two things on their side: loyalty and, eventually, artificial intelligence.

“A business traveler right now is looking for someone to know them,” and that’s where AI can come in, said the travel buyer. “Business travelers are looking for us in corporate travel to know them and to anticipate [their needs]. I say this all the time, there is so much data, [suppliers] should know how I travel [and offer] the perfect trip.”

Salesforce’s Stonie agreed, citing AI advances in driving persona strategies and how a next-generation travel program puzzle begins to fit together.

“This is where NDC and advances in technology will incorporate intelligent supplier searches that will be able to factor in the benefits that we get through our programs,” Stonie said. “Especially for online booking tools, as they are able to integrate intelligent fare searches and factor in if a traveler is platinum, 1K or has no status. … Loyalty is going to allow us to tailor those services to those individuals and not just by enterprise VIPs and non-VIPs. Personas will be so important, and if you can adapt your program to those personas, then our travelers will want to use our services, not because we mandate it. It will increase compliancy, satisfaction and be perceived as a benefit.”