Virtually unknown a few years ago, online corporate booking systems have suddenly become the fastest-growing segment of the Internet commerce travel market.
By 2005, business-travel sales generated on managed corporate booking systems will grow nearly eightfold, to $33 billion, according to a report to be released today by Jupiter Research, a leading authority on e-commerce trends.
Even with this sharp growth, online booking will still account for only a small portion of the total that American companies spend annually on business travel (about $185 billion in 1999, according to the Institute of Business Travel Management). But the projected steep increases from the $4.4 billion booked through in-house corporate booking sites last year suggest that a major cultural change has begun for the way business travellers manage and arrange their lives on the road.
Two years ago, in discussions of the potential for Internet travel booking, nearly all of the attention was focused on the robust growth of commercial Web sites like Travelocity .com and Expedia.com
, which specialize mostly in leisure travel bookings.
The story then was that Travelocity, Expedia and other commercial sites, as well as airlines` own Web sites, were gaining market share as more people went online for lower fares and greater choices. Jupiter and other e-commerce authorities projected then that this market would expand to about $28.5 billion in online bookings in 2005, compared with $11 billion this year and $6.5 billion in 1999.
In the interim, however, business travel costs were going through the roof. To address the problem, big corporate travel management companies like American Express, Navigant International and Rosenbluth International, along with travel technology companies like GetThere Inc. and others, marketed Web-based travel technologies. These custom booking engines are usually managed by an outside travel company on behalf of a specific company that can design the technology to enforce its in-house travel policies.
The thrust of these so-called managed booking engines is an effort to reduce costs by allowing corporate travel managers to broker overall discount deals with airlines, hotels and other vendors, in exchange for sending more bookings their way. The technology can also reduce travel-agency management fees by encouraging employees to book their own flights and hotels, though with less freedom of choice because of the need to channel business to airlines, hotels and other vendors with whom a company has negotiated arrangements for volume discounts.
“Up until the last year or so these booking solutions were not that prominent,” said Heidi Kim, the lead analyst on the new Jupiter Research report, which predicts that with business travel costs rising sharply, companies will become more aggressive in encouraging their employees to make travel arrangements on an in-house Web site. Now, because corporations can immediately shift big chunks of business online once they decide to go that route, “we predict that the business travel online opportunity is going to be even bigger than the leisure travel market,” she said.
Right now, all research in the subject shows that the perception of personal choice and control over arrangements on the road is extremely important to business travellers. Furthermore, most business travellers are accustomed to booking off-line, either through a secretary or a company travel assistant, or by telephoning the company travel agency and discussing options for flight times, hotels and other services.