Recognized as a technical visionary and author, Richard Eastman, President of The Eastman Group, Inc. often writes about his views on current events and topics regarding the travel industry and the world around us. These comments are sent to a select group of individuals known to Mr. Eastman. Thus, Off-The-Wall Comments (OTWC) are reflectons of his opinion and interpretation of events in the travel industry.
“If It Ain’t Broken, Continue to Improve It!” … says the headline on the BTC News Wire last month . Kevin Mitchell, writing on behalf of the Business Travel Coalition, questions the travel technology sophistication of British Airways’ Richard Tams speaking to a group in Abu Dhabi that week. In his reflections on Mr. Tams, Mr. Mitchell asked readers to view the Business Travel Coalition, Inc. Blog. And two weeks earlier on May 7, 2011, BTC News Wire released an article “How Hidden Fees Can Increase Managed Travel Cost”; also authored by Mr. Mitchell. Both of these releases seek to sustain a distribution paradigm that is failing.
Let me preface these comments by saying that I know Kevin Mitchell casually … have met and talked with him a number of times. He is personable, astute, and highly focused. Unfortunately, the focus of his effort … and those of BTC … are skewed and often distorted by invalid assumptions and incorrect analysis. This “Off-the-Wall Comment” attempts to address some of these issues.
The Eastman Group's Richard Eastman authored this guest column in response to United Airlines' move with an unknown number of travel agencies to require them as of July 20 to process all credit card transactions using their own merchant accounts. Affected agencies, United said, "will need to process any transactions with those cards under your own merchant agreement(s), if any, and settle in cash with United" using ARC's cash settlement process.
This may be the beginning of the end; the end result of many years of commoditizing the airline seat.
Basically, what is an airline seat? It's transportation from Point A to Point B. Virtually everything thing else appended to that seat is some sort of "value-add."
Hotel distribution is forging to the forefront of corporate travel management scrutiny as hotel costs now rival or exceed air travel budgets in most big corporations.
Yet managing hotel distribution costs is proving quit challenging when compared with air travel cost oversight. The vast majority of corporate travel managers have backgrounds linked solidly to the Global Distribution Systems (GDS) business model. The GDS is the ?tool of the trade? around which the industry books, measures, tracks, and audits corporate travel expenditures. Essentially, from a corporate travel manager?s perspective, the hotel booking dilemma is almost directly inverse to the challenges of buying and managing air travel costs.
OK ... you?re a travel manager overseeing a couple million ... or a couple hundred million ... of travel spend for a major company. So, what?s the single most important aspect of managing your hotel spend? And how do today?s existing and evolving hotel distribution structures impact this management task?
Make a note ? jot your answer down before you read on. It?s actually a pretty simple answer ... but understanding this key element of hotel spend is essential to managing corporate travel spend and the inherent risk/cost of planning around a linear extension of the distribution tools you use today; particularly in corporate America.
While some of the issues raised by BTC Chairman Kevin Mitchell?s essay "Revolution In Canada" are valid, the "us-versus-them" approach hurts business travel managers and their corporations because it ...
(a) fails to deal with the real issue of the societal
transformation confronting travel managers/executives,
(b) distorts the economic realities of both the past business processes and future needs of travel manager/executives,
(c) creates a schism between buyers and providers that is costly to both, and
(d) demeans the role of travel executives who buy and manage the travel needs of corporate employees.