Travel Evolution is not just about Technology – Right?

I always thought technology drives most change and the travel industry is no different to any other business in this respect. I assumed that the reason for travel evolution being so painful was that new technology had been so scarce for so long that now it has arrived people are overdosing on it. However unlike the pharmaceutical business nobody has tested products, understood the correct dosage or learned how to deal with adverse reactions.

Already you can look back over the recent past and see all sorts of corporate travel wonder solutions that have not actually delivered in accordance with their hype. Many were unsuitable, unrealistic or simply did not work but they all looked damn good on paper. Apart from any basic flaw there seems to be something in the way of success and I think I know what it may be.

The plain truth of it is that whatever new initiatives come along they will only be embraced if the various key players in the supply chain want to make it happen. Like the old saying that you can take a horse to water but you cannot make it drink the same goes for managed travel programmes and compliance. You still cannot get somebody to change their mindset unless you force them or justify your actions and I see precious little of either going on.

You see there are many people, either through tradition or personal experience, who still view travel as a service experience rather than a commodity. And whilst there are different suppliers of varying quality, frequent flyer programmes and individual timescales and demands there will always be service choices needed. When you think of it most corporations are insisting their employees undertake personal risks and comfort challenges with very little research into safety and standards. How do you know the airlines you have chosen are safe and comfortable? Cheap yes…but. A question that could soon be asked by lawyers in regard to ‘duty of care’.

It is not just the traveller who still has a perception that service is important. You can often see this ‘malaise’ in some suppliers and a large number of TMCs. I suspect they are getting so frustrated that service is not being given a value by typical procurement that they will continue to reduce it to a minimum like the low cost carriers. Why bother creating a value and service differentiator if nobody is interested in paying for it.

For so long the travel industry has been built around giving good service and being rewarded for doing so. Travellers too want to know they will be safe, comfortable and that somebody will be there for them if something goes wrong. Those buyers who focus mainly on unbundling, constant cost reduction and commoditisation need to take note.

My answer to my own question is yes, technology is key to the future but only as an enabler not as a solution. Pick your target end solution that matches your company ethos and then look for the enabling technology. I have seen so many people commit to unproven technology to try and solve an issue they did not really have. What is more important is service and solutions and if you embrace the need for the former to deliver the latter then all you need to do is choose the technology to enable it to happen.

Travel Services – Buying is just the beginning.

I have encountered many of what I would call classic buyers in my career selling travel services. By that I mean very professional people who know exactly what they want and how to get it at the best rate. They are well practised in procedures and buying protocol and have a clear plan. Good stuff, but is it enough? I do not think so.

I think there are better deals to be done and improved return if two other abilities are learned and brought into play. They are presentation and selling skills. Buyers should know how to buy but there are often other considerations that come into play when buying a service like travel. For example unless you really are going to issue a mandate that is capable of monitoring and enforcing there is likelihood you could lose 20% volume from the programme. You will also probably be buying from people who are frankly not up to dealing with professional buyers. This brings me back to selling and presenting.

Most travel suppliers are becoming more and more cynical and suspicious about the ability of buyers to deliver volume negotiated in travel deals. They are now starting to hold back a little and only give the best package to those that convince them they can deliver volume where there mouth is. The most mutually successful deals I have seen are where buyers are able to ‘sell’ their ability to deliver in a way that has credibility. I once helped a buyer create their own volume delivery agreement which they gave to a delighted supplier and got a fantastic market leading deal.

The deal itself is the beginning not the end of the project. There are numerous ways people can get round a policy and I have seen them all. I could write a book about it! However many loopholes can be closed , or at least made harder, by the ability of the buyer to get to the right internal audience along with a strong sponsor and present their case. To me this is more important than the deal itself.

I have always tried to tell myself that to be successful I should out-sell the salesman and successfully communicate how clever I (the company) has been. After all if you have used you selling skills to get an exceptional programme you might as well you communicate the benefits to ensure everyone knows and acts upon it.

There is so much talk and activity around apps, social networking et al. perhaps if we used some of these fast developing tools to focus on compliance and rationales then companies would have greater control and diminished leakage. A better ROI than repetitive tendering and programme changes to keep a leaking travel bucket full.

What does a hotel brand really mean?

Does that seem a weird question? Probably so but what I am trying to say is, does the logo over the door actually mean, or importantly guarantee anything? Is it saying ‘This is a Hilton, Holiday Inn, Four Seasons or whatever and this means you should expect and get what that brand markets?

This question is borne from spending many years trying to truly understand and make sense of the hospitality industry. It is a vital sector yet commentators and industry bodies barely notice it when compared to say airlines. What does make it so very different? And why should anyone need to care?

I think the difference is ownership hence my original question. You see there are quite a few different ownership scenarios within a single brand. Because a hotel displays say Hilton over the door does not mean it is owned by Hilton. Very often it is owned by someone completely different but Hilton has the management or marketing contract to run it and is employed by the owner to deliver an agreed profit. They are an employee of the owner and have to act accordingly.

So what I am saying is that if you negotiate with a hotel chain you may not be speaking to someone who has absolute control over policy, inventory or pricing with all their properties. Hence you can find yourself in a position where various properties opt out of some commercial agreements which are good for the whole family but not for them. It is a bit like a global TMC who has to sacrifice profit in one location to deliver a good deal in other countries. Most TMCs have had to come to terms with this but I do not think hotels have.

The issue becomes even more convoluted when you are dealing with hotel consortiums. These are mainly pure marketing organisations where hotels (of a certain comparable quality) link their properties to an umbrella brand in order to take on the big boys and achieve global coverage. Again, this does not mean that such consortiums can tell these hotels what to do as far as pricing and inventory is concerned.

Probably still the most influential person in any hotel is its General Manage who can, and do, instruct their reservations office to close out heavily discounted negotiated corporate rates if they think they can sell for more. Even worse for the bigger corporations is when their travellers tell them that the hotel ‘price at the door’ is cheaper than that negotiated by their procurement department. Sounds familiar?

Another side effect of confused and disparate ownership is the woeful lack of management information you get fro the hotel industry. The only really useful thing IATA does for airlines is it provides a standardised language and reporting base that is essential for meaningful information. Hotels do not have this type of global format hence they all do things in different ways. You really would be shocked by how little they know about their customers and what they spend.

So what am I trying to say? I am advising all buyers to find out exactly what control/ownership of key properties a chain or consortium has. Maybe you should insist on key contract clauses like last room availability and lowest price on the day. Perhaps require countersignature by the GMs of the main hotels confirming they understand and support the contract. Finally, why not think of ways to make your oh so wise travellers become willing watchdogs by actively encouraging them to test the system. You know how they love it so!

By the way, I have mentioned a few hotel brands in this post. This has been purely for general illustrative purposes only and does not imply that I was refering directly to them.

Loyalty Cards – What value?

There have been a growing number of reports recently about airlines reducing the number of ‘ex gratia’ cards negotiable within corporate agreements and I have no doubt whatsoever this will increase in future. There are a few possible reasons for this trend.

These cards started as a way of keeping the loyalty of regular travellers by giving a range of benefits from comfortable lounges and ‘free’ flights to priority for upgrades. They became a major instrument for wooing business people away from their competition, and possibly company policy by making the travellers feel special in a rapidly comoditising market.

Some corporations hated them and went to great lengths to try and cancel out their allure. A few tried with little success to confiscate the travel element (miles) for company use. Others took a different view and used the attraction of these loyalty clubs to underline and support the use of their chosen policy carrier. It was then that such awards became a significant beneficial component within corporate deal negotiations.

So all of a sudden airline loyalty clubs became valuable to corporates and a tool to sweeten a change in policy. This whole change thing became a great deal easier if you were able to hand out membership cards with substantial benefits to key travellers. As important were the top tier cards which appealed to status conscious senior executives. These Platinum/Black/Premier cards were usually allocated in very small numbers and linked to the company’s volume potential. Often you would see joint CEOs scrapping like alley cats as to who should get ‘The Card’ and TMCs being pestered to broker more of them.

Much of the above still happens now but the mood of the airlines is changing for a number of key reasons. Firstly the number of cards at high status (gold etc) has grown alarmingly causing lounges to become too full for comfort. The cost of these lounges and other benefits has risen correspondingly whilst their exclusivity has declined. I have been in some lounges which are busier and noisier than the seats outside them.
Equally there are fewer seats available for purchase with loyalty points which can cause problems.

The airlines in their quest to reduce distribution costs are now looking very closely at the value, and importantly, the cost of these schemes. They have gone from seeing these clubs as less of a marketing ploy and more of an out of control overhead. As a result they have identified the value and put a budget cost against it. This means that every time an airline salesman gives a card their budget gets debited accordingly. They now have to manage this cost in the same way that they do discount pricing and other overheads.

This state of affairs has reduced the number of cards being awarded within deals. Incidentally the same thing works within the airlines themselves. Senior airline management are having their own travel cards downgraded too and they are probably just as aggrieved as the corporate buyer. The problem is that if you take something away from someone it has at least twice the effect as giving it to them in the first place. What you never have you never miss!

I guess what everybody will have to realise is that if you drive mainstream airlines to behave like, and compete with low cost carriers you will see the continuing decline in such ‘luxuries’. Also, if you manage to finally be successful in mandating policy to your travellers then the need for such loyalty inducements disappear anyway.

Global Travel Programmes – Delivering?

It has been quite a few years now since the advent of globalisation, or should I say attempted globalisation, became the trend. TMCs amalgamated, acquired and re-launched just so they could offer a solution that crossed all geographical boundaries.
Maybe now is the time to asses whether the global travel programme strategy delivered what it should have and if all the stakeholders got what they wanted or perhaps, in some cases, feared. It is a huge subject which won’t be fully covered by my few paragraphs but I really do think it worth some scrutiny and debate as many companies are still considering taking this route.

Was it worth telling so many overseas offices to leave their existing suppliers and TMCs for the much expected global good of the company? Did those companies really gain global benefits and what price did it cost in terms of disruption, relationships and country budgets? Frankly, was it worth the hassle and, if so, can that worth be truly quantified to everyone’s satisfaction. Is there a case for scrapping the concept or is the dream of global control, buying power and service worth continuing with? Here are my initial observations both for and against.

I would argue that from a straightforward procurement perspective the case for globalisation is very weak. This is simply because, like many corporations almost all airline suppliers do not operate the same way and are almost quaintly traditional in their thinking. If you squeeze airlines they will admit that each country has their own cost centre and even head offices have to ‘sell’ a global deal to them. In almost all cases individual global locations can veto deals on the basis that it will create low fare precedents for insufficient regional benefits. Why should my country give a silly deal that will hurt my pricing strategy and bottom line even if it does benefit offices in another continent? This will only be solved by cross subsidisation or immoveable directives.

Interestingly enough TMCs have responded to the challenge much better and have found differing internal ways to solve the problem. They too have a different range of challenges particularly in the areas of common fees, fares, services and product ranges. Different markets have varying capabilities of GDS, M.I, market sophistication and standards and to expect the same services to be available in London as in Laos is simply unlikely and possibly unwelcome.

From a corporate perspective I think there is the same age-old issue between buying a commodity and a diverse service. This one really has to get cracked and I can count those that have succeeded on one hand, with a finger or two to spare. Everyone needs to agree the expected benefits, communicate them and benchmark results. Easier said than done as corporate head offices spending most time looking at what should be the compelling concept rather than the nitty gritty deliverability and cost both financial and practical.

In summary, if it is all about negotiating power I have severe doubts. If it is about measurement of what everyone is doing then O.K. but it may not be popular. If it is about provision of global support at times of crisis like war or volcanic ash then it is worth its weight in gold. Finally, if it is positioning for a future time when suppliers buy into the programme and global subsidiaries do what they are told (for whatever reason) then go for it now.

p.s. I define a global programme as one which covers a corporation in all their operating countries. This is entirely different to a Strategic programme which only covers two/three of an organisation’s main or driver markets. If you look at most companies you will find 80% plus of their travel comes from these two or three areas. I wonder sometimes why some find a need to spend time on the hugely fragmented 20%.

Strategic deals work well, especially between UISA/Europe and I have seen sizeable gains made by savvy organisations. Most airlines can cope with giving deals where there are good new business prospects at both ends of a route.

More dispensable than I thought!

My old firm HRG has just announced its results and I must say I am impressed. It seems they can and have managed without me quite well. And there was me thinking I was indispensable.
We always dared to believe in the seismic change to delivering on value rather than headline price and it seems to have actually worked in that their clients must have realised that a superficially low price has no longevity.
Mind you there may have been a few casualties along the way as their client retention rate is not as high as it was and there seems not too many barnstorming new signings for a global company. I guess my prognosis must be that whilst a strategy of being ‘the customer’s consultant’ is the right way to go and clearly successful it is still work in progress against those that want a quick, traveller visible, upfront buck.
Another thing that is remarkably slower growing than I expected is their high tech range of Spendvision products. I thought profits from this business would be rocketing as it delivers exactly what corporations say they want i.e. the definitive end to end solution. I have seen it and it is damn good but I suspect some corporations do not want an initial cost for the benefit of long term gain. The world seems more about now and not the future when it comes to business travel.
One of the greatest areas for opportunity for them is their government business. They currently have the British Ministry of Defence and Foreign and Commonwealth Office which are mega in size and both about to cut back in expenditure however what they are still fighting for is much of the vast Government business. In my opinion this business has been procured and operated so very badly that HRG, with their track record, could seriously increase their share.
So my message to my old colleagues is well done. But kind of wish you were missing me a little more!

Is Government Buying Wisely?

Being part of the European ‘nanny state’ must have its advantages…..although I can’t quite think of even one at this time. Most definitely government travel buying, or for that matter any kind of state procurement is not one. The conditions, deadlines, red tape, mandatory declarations and disclosures are such that the likelihood of a smart or mutually worthwhile deal is small.

Until I got involved in the process I have always been perplexed as to why, if there are so many procedures and rules government projects always end up costing much more than the original contract. In the UK you only have to look at the Channel Tunnel, the Millennium Dome and Wembley Sport Stadium as examples of this. Why is this I thought, and then I got involved in a major UK government travel tender myself and saw what I think could be the key contributors to cost and timing failures. I will share my experience and subsequent assumptions with you but I must state at the outset that these are my own personal thoughts and not those of the company I worked for at the time.

If you are a private company you can set your own tender schedule and process. In government you cannot. There is a strict procedure in relation to timelines, disclosure, format and bidder selection you must keep to. On the surface this might seem highly laudable but in actuality it becomes restrictive, eliminates flexibility and costly in unnecessary administration and process. It also works on the basis that you know exactly what you want to buy as this has to be declared and published at the outset. Unfortunately, such is the size, mix and variety of such contracts that this essential is unknown and is probably a part of why the business is out to bid in the first place.

So what are these restrictions I am talking about? Here are some of the key ones as I perceive them:

1/ you have to publish all details of the contract and bid process in advance across European and give all equal opportunity to bid. You cannot be seen as individually selective or discriminatory in any way even if you are wasting your time or that of bidders who stand no chance of success.

2/ At this stage you must declare exactly what you are putting out to tender and you cannot easily change it even if you do not really know if it is accurate or not.

3/ the system seems to prevent any informal or individual dialogue with potential suppliers without giving everyone equal opportunity so there is no way building understanding, knowledge or relationships in order to improve/modify the brief.

4/ Everything has to be done by the book on a ‘one size fits all’ basis even though these contracts are some of the most diverse one is ever likely to come across.

5/ Government bodies seem incapable of aportioning or sharing out costs and savings amongst themselves which means that pricing is a nightmare and the potential of negotiating a fair and equitable financial package is minimized.

If you put some or all the above together you end up in a no win situation as the buyer has had to follow an entirely unhelpful process ending up with an oversimplified deal full of loopholes. The seller has to find some way of picking up the pieces while making a profit and minimising negative exposure.


At the beginning of this piece I mentioned that, in my eyes, most government contracts end up costing far more than the original contract agreement. I personally think it may be as a result of my point in the previous paragraph. What can end up happening is that the supplier goes in at a rock bottom unit price but then builds in a whole raft of necessary caveats in case the core buyer RFP is wrong ,which of course it is. The buyer is not able to hold contingency funds or apportion out costs internally so they have no way of dealing with it. The end result is that the government has an embarrassing overspend and the supplier makes their money out of charging caveats built in for ‘out of scope’ activities.

I write this for two reasons. Firstly I think it is wrong that any government should have to ignore sound commercial tactics and hog tie itself with bureaucracy when buying. Secondly, as a tax payer, it is my money they are wasting.

Who should buy travel? (Part one)

This debate has rumbled on for a very long time and I expect it will continue particularly at this time of financial and strategic difficulty. Suppliers have to earn more and corporations have to pay less to achieve their recovery strategy so it has never been more important that the function in the middle of the pricing debate gets it right. If they don’t we will end up either with less products or fewer customers or perhaps both. The key reason for there being an impasse in this debate is there is no right answer for all the stakeholders. It very much depends on the flexibility, specialist knowledge and skills of individuals concerned.

It is not an easy subject to comment on without rubbing someone up the wrong way and getting called biased to one particular part of the supply chain. Although I was very much a TMC man I now feel I can look back more objectively and hopefully put forward some valid considerations to be taken into account. For example I do not believe this activity should be outsourced to a TMC in the current climate as they will be viewed sceptically by the suppliers and not have sufficient mandate within the corporation. It also has the potential of removing ongoing control of the programme, especially within large organisations and their global subsidiaries.


To understand the challenge and make an informed decision you have to know the key issues. I believe many of you know them so I hope you will bear with me while I ad my thoughts on them. Rather like buying most things the secret is to get the correct blend between quality of product and price. In the travel arena this is easier said than done especially when the product is either a commodity or a service and more likely both. In this environment the corporation needs to look closer at a) what exactly they want to buy and b) how they are going to manage the programme to maximum gain when it starts. A decision has to be made as to who in the company is suited to doing both jobs or if the project should be split into two parts. This is where it mainly goes wrong as one task naturally blends into the other.

If you put the TMC and outside consultants aside for a moment that really leaves just two functions which are procurement and the travel manager. One view is that a buyer is expert at buying a commodity and a travel manager is much better at controlling a service. Having seen both in action more times than I can remember it is very rare indeed to find one person who can lead both functions successfully as the skill –set is so different.


So there we have it. When a buyer says it should be their job they are probably as wrong as the travel manager who says it should be them. In my opinion there are only two alternatives. One is that you go out and find that rare breed of person who can both buy professionally and manage a complex service orientated project. After all travel is a commodity when you buy but turns into a service when you use it. The second option (and best in my opinion) is to form a triumvirate of a buyer, a travel manager and a leader who should be a senior board member with a strong mandate from his colleagues. All three should work together from concept to strategy to buying to delivery. This liaison should not stop at delivery but move forward to ensure disciplines and benefits are achieved.
What about the suppliers? Who should be negotiating what with whom?
I will put forward my views in part two but I can say now that I think it works pretty badly in general!