In the wake of the recent elimination of commission announcements by major airlines in North America, travel agents are left hanging by a thread as their livelihood has been shaken up. The question on everyone`s lips is what`s next after zero commissions? Scott Gutz, CEO & President for e-Travel North America may have the answer.
One company that has long maintained that the future of corporate business would be driven by online booking is e-travel
. “As early as 1995, when technology began to take hold, travel suppliers started exploring use of the Internet for lower-cost and more efficient distribution models, and a downward trend in commission cuts began in earnest”. Scott comments. His proposition is that in order to profit in light of the potential loss of revenue, agencies must look to the online travel industry.
e-Travel recently evolved within Amadeus
, creating an entity that offers online travel services for all potential e-commerce channels: corporations, airlines, agencies and more. Powering more than 3,000 travel Web sites and serving more than 230 corporations in over 20 different countries, e-travel is a leading global player in online travel technology. e-travel strives to provide online agencies with all the technology and tools necessary possible to create meaningful shopping experiences for the customer.
Scott sees the ability to evolve in any business as being absolutely essential. “The travel industry has gone through great change in the past few years - and even the past few months - and those companies that innovate and adapt are those that will succeed”, he comments. In order to survive the current climate, Scott advises agents to find ways to offer more services to their customers and improve the traveler experience. “In many instances, agents` roles have evolved to that of technology and process consultants, guiding their clients to maximize the benefits offered by travel solutions such as online booking”.
Although at present the zero commission announcements are mostly limited to North America, Scott predicts that we are likely to see many of the same trends repeat themselves around the world. “Air Canada already moved commissions to zero for the U.S., Canada, Puerto Rico and U.S. Virgin Islands. British Airways reduced commissions on short-haul domestic flights at the end of March. So while it may take a bit longer, there are definite signs of this trend going global already. There is an obvious need to run businesses better given the current economy, which is greatly affecting airlines worldwide”.
Furthermore, he foresees a pattern spreading to other areas of the travel industry.
“Already we have seen all major car companies eliminate commissions. As more hotels pursue the online channel, it`s just a matter of time for them as well. The percentage of hotel bookings made via corporate booking tools is rising and several hotels have announced plans to develop internet booking sites”.
looks to the future with excitement, noting that as with many large-scale changes in the way a business, or even an industry, operates, there is opportunity for progressive companies, but he insists that agencies must adjust their business model.
According to Scott, the answers are in the internet and although sympathetic to the change that has been signaled, he views the internet as an enabling tool for new business models to embrace this change.
Scott proceeds to highlight the advantages and value of online travel services, explaining that “online services allow agencies to unburden their staff from executing tasks, such as travel booking and fulfillment, that are better performed in an automated fashion. The efficiencies created result in savings to corporate travel departments”.
He adds that “online tools improve the quality of information agents receive regarding their customers` purchasing habits and trends, and also facilitate better communication with customers, partners and suppliers. Finally, agencies can expand their service offerings by becoming integration partners, and profiting from their knowledge about managing information online and maintaining their customers` online presence”.
Regardless of the connotations of the recent announcements, Scott maintains his optimistic stance, advising that agencies can still generate revenue. “This is a new economy and to be effective travel agents need online booking to sustain a competitive advantage”.
Scott explains that online services enable staff to be allocated to a higher level, dealing with more profitable services. They can increase bookings due to the efficiency of a self-service system, thus managing more transactions more efficiently, in a very scalable way that adds virtually no cost to their bottom line. As a result, they can serve more customers, and increase profitability on those transactions at the same time.
The internet certainly seems to make sense, simplifying the corporate travel distribution process, thereby increasing the opportunity for agencies to add value and generate revenue by offering a more skill-intensive set of capabilities.
From the purchasers perspective, online travel should present the best available options for their needs. “The search capability that e-Travel offers presents itinerary options that meet the travellers` needs while staying within corporate policy - the best of both worlds. Web bots, or fare-scraping engines, are also emerging as possible supplements to existing fare search capabilities” Scott reveals.
Although the online travel is clearly a powerful and effective instrument, the internet does not account for a large percentage of airline ticket bookings and it certainly has its limitations in terms of service and complicated itineraries. I asked Scott for his opinion on the matter. His response was that “while airlines are incorporating various capabilities into their sites, the infrastructure still falls far short of providing what corporate travellers require, including prompt service and specialized service based on the unique needs of each corporation. Scott admits that online services such as e-Travel help, but the role of the agency here is still very important”.
In the near future, Scott predicts that we will see tight integration between agencies and online travel management systems, as well as global distribution systems and Web travel sites. “At e-Travel we are concentrating on delivering the best product so our customers realize the greatest success. That translates into providing a superior booking engine, the highest level of security and overall reliability”.
“Additionally, travel purchasing responsibilities are quickly shifting to corporate procurement managers, so I expect to see a greater integration of travel assessment and buying into the e-procurement channel. The online booking channel will continue to be one of the places that corporations look to save money”
The race is now on on and in order to stay in the game, corporations must look to the online market. As Scott pointed out, the recent zero commission announcements could be the beginning of a global trend spreading throughout the industry. Much work needs to be done and e-travel are one company who have identified the urgency of the situation and are currently helping their customers drive adoption of online travel services through customized programs.
Look out for e-travel announcements on increased distribution channels, global customer announcements, and innovative offerings with their partners.
e-travel firmly believe that they can deliver their product to market more quickly than their competitors. Boasting an international merging of their development resources for corporate and leisure travel, and unmatched resources utilized by talented professionals.
Scott is greatly excited about his expectations for the company and its prospects in this technological age; “This is one of the most exciting times in our history”