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1 White Paper Online corporate booking tools: Company customs and practices for coordinating and administering their commercial This report is protected by copyright Published - any full or partial by Concomitance reproduction is subject to prior authorisation of 1

2 Contents Introduction ) Growth of experience in the use of Online corporate booking tools... 4 Online transactions are now predominant in the indirect booking channel mix Online tools determine the overall structure of professional business travel management processes ) Parties involved in the life cycle of an Online corporate booking tool ) Commercial agreement coordination and the administration phase in OBTs... 6 The cycle of commercial in OBTs has two main strengths... 6 Observation: the initial introduction of is more consistently managed than their coordination ) Online corporate booking tools: Priorities in the different coordination and administration phases of commercial... 8 Focus on the initial management phase of commercial... 8 Focus on the ongoing management phase of commercial Special point regarding control ) Processing commercial and relations with transport operators, hoteliers and vehicle hire companies Tasks implemented Display policy to coordinate commercial Commercial agreement coordination techniques Contractual framework Conclusion Several lessons can be learned Multiple issues for companies Issues for travel management companies and software publishers Issues for suppliers

3 Introduction Online corporate booking tools (OBT) are increasingly used in the business travel industry and now account for more than 50% of all transactions on the French market, representing a five-fold increase in less than six years. In addition to the usual indicators linked to the rationale for using them and the rate at which they are adopted, there is an emerging issue with online tools: the need to improve skills in their use so as to optimise business travel expenditure and company purchasing policies. This involves improving the configuration of company travel policies and rules for displaying and coordinating commercial ( signed with suppliers and distributors) in the tools used by companies. These factors affect the performance of company purchasing policies and hence have a direct impact on their profits. AFTM and the Concomitance firm have conducted a survey on the use and practicalities of a selfbooking tool, the overall objective being to provide a clear view of the practical use made by companies of their online booking tool in optimising their travel purchases and to clarify the role of the parties involved (travel management companies, software publishers, suppliers and in-company teams) in coordinating and administering it. This survey was conducted among 53 companies with the persons in charge of travel budgets (Finance Directors, Purchasing Directors and Travel Managers). What they have in common is a booking tool, either online or offered as a package deal by a travel management company (TMC) or by an independent supplier. Among other factors, the companies were graded according to the length of time they have used their tool (more or less than 5 years). This criterion was frequently a decisive factor in the survey results. 3

4 1) Growth of experience in the use of Online corporate booking tools With the growing use of the Internet and communication tools, over 50% of company travel purchase transactions are now made online. This is currently one of the areas where the proportion of virtual transactions is making its mark in B2B relations. Online transactions are now predominant in the indirect booking channel mix 61% of the companies interviewed stated that their practice is to make mixed bookings, both online and offline (OBT bookings, followed or preceded by booking through an agent). Despite this, the proportion processed by online channels is greater overall than the offline proportion. An exception, however, is the hotel business, where over 63% of bookings are still made directly. (Cf Concomitance White Paper on "practices and expectations of French companies for optimising their hotel expenses", May 2011) Proportion of online bookings by suppliers vs. off-line bookings 62% 72% 63% Online Offline 50% 50% 38% 28% 37% Air travel Rail travel Hotel Car hire Online tools determine the overall structure of professional business travel management processes In addition to simple online booking, online tools offer "end to end" type solutions and can interface with market tools before and after the booking: approval tools for business travel orders, expense report management tools, etc. From this point of view, they play a central role in the overall or partial coverage of the business trip value chain. Note that on the French market, the "pre-trip" component (approving business travel orders and booking) is covered more fully than the "post-trip" component (expense report approval, integration into the accounting system), mainly for reasons linked to the complexities of the interface with existing administrative and accounting information systems. Another factor to explain this phenomenon is that payments for services are usually checked before rather than after a business trip. 4

5 What online tools cover as a function of the length of time the OBT has been in use 100% 100% 35% 38% 25% 11% 8% 19% 30% 31% Entering and approving business travel orders Online booking Entering and approving expense reports Paying expense accounts Integrating and paying invoices OBT introduced less than 5 years ago OBT introduced more than 5 years ago The survey reveals that the optimum use of an online booking tool depends on the history of its implementation. Indeed, companies that introduced an OBT more than five years ago use it more widely in all phases of the business travel process: In the pre-trip phase (before the trip) for entering and approving business travel orders and for booking In the post-trip phase (after the trip) for entering, approving and paying expense accounts From this point of view, online tools are essential for fully automating the value chain. 2) Parties involved in the life cycle of an Online corporate booking tool All parties (in-company teams, travel management companies, OBT publishers and external consultants) are involved throughout the life cycle of a self-booking tool, but to a greater or lesser extent depending on the different phases of the tool's life-cycle. 5

6 Business travel/purchase policy Presence of the various players in each phase 68% 77% 68% 38% 45% 15% 26% 25% 23% 21% 21% 4% Choice of OBT Launching of the OBT Coordination and administration of the OBT TMC External consultants OBT publishers In-company team They all support companies in their choice of OBT and in its use, but also in the phases of its configuration process (coordinating and administering the OBT) It is interesting to note the predominant role of travel management companies. These enjoy a position of professional expertise among companies throughout the value chain and from this point of view increasingly tend to provide integrated solutions before and after booking. 3) Commercial agreement coordination and the administration phase in OBTs The way commercial are configured, displayed, coordinated, updated and controlled emerges specifically in this phase. Commercial agreement lifecycle in OBT has two key moments: Configuring commercial and the rules for displaying and coordinating them in the OBT Initial management phase of Updating commercial Monitoring and checking commercial Ongoing management phase of TMCs, software publishers, in-company teams and travel suppliers 6

7 The initial management phase establishing commercial in the tool: After choosing the tool and determining the commercial, this phase consists of implementing the, generally on the basis of a configuration book. This involves tasks mainly linked to configuring the tool with display management rules and data as determined by the commercial and the business travel policy. There are three main aspects: configuring display modes and search engine price filters (done by the companies themselves in 98% of cases); specially configuring the commercial (94% of cases); configuring the coordination of commercial (77% of cases); Ongoing management phase of After the tool has been configured, this phase corresponds to the "life" of the various throughout their term. This phase includes two main tasks: updating the and coordinating offers (updating/re-updating contracts (79% of cases), ongoing price promotion or special offers (66% of cases) and communication/awareness raising among end users (60% of cases); Monitoring and checking and updating prices (64% of cases). Observation: the initial introduction of is more consistently managed than their coordination Companies seem to devote more attention to the initial phase of introducing commercial than on their ongoing management. In practice, the original configurations are frequently kept throughout the term of an agreement and a lower priority is given to tasks linked to promoting prices or special offers, raising communication and awareness among travellers, and monitoring and checking. In 43% of cases, service contracts are signed for coordinating and managing commercial. These service contracts are particularly significant as the tool covers the entire value chain. For companies with a service contract in place, two types of contract should be distinguished: Single service contracts with the TMC to supply agency services and technical tools (47% of cases). Note that this type of contract is even more present (53%) among companies that introduced an OBT less than 5 years previously. Accordingly, these are the ones that make the most use of travel management company services. In 53% of cases, the service contract with the agency is a special contract with the OBT publisher. 67% of the companies with this type of contract introduced an OBT over 5 years ago. 7

8 4) Online corporate booking tools: Priorities in the different coordination and administration phases of commercial Parties involved in the agreement coordination and management cycle Initial management phase of Ongoing management phase of 54% 50% 51% 50% 46% 56% 50% 47% 40% 36% 35% 29% 31% 29% 29% 34% 25% 18% 21% 18% 4% 0% 0% 12% 3% 9% 6% 6% Configuring Configuring the search engine display Configuring the coordination of Updating/re-updating contracts Promoting prices or special offers Communication with end users TMC External consultants OBT publishers In-company team Monitoring the application of (reporting) Focus on the initial management phase of commercial Travel management companies are more in evidence during this phase, as they are involved in over 50% of cases. It is interesting to note that these different tasks are not necessarily accompanied by the signing of a service contract. This state of affairs may turn out to be difficult to manage, particularly if there are costs involved in implementing these tasks. This is particularly the case for travel management companies, with which there are less contracts than with software publishers. The company may end up in a situation where the lack of a particular contractual framework can waste time and reduce efficiency in ensuring that its commercial are properly configured. Furthermore the table above shows that there may also be an overlap 8

9 between various service providers and in-company teams. This could have an adverse effect on the progress of this initial phase. The importance of tasks in the initial management phase of the (scale from 1 to 4) 3,74 3,65 3,37 Loading commercial Search and display configuration Configuring the coordination of Loading commercial : With regard to this configuration, 54% of companies stated that they use travel management company services, 36% use software publishers and 18% also use their incompany teams. When an OBT is configured by a travel management company, few companies have a special contract (service level agreement or SLA): 36% as opposed to 55% when the software publisher carries out the task. Search and display configuration: 50% of companies stated that this configuration is done by travel management companies and 40% assign it to the software publisher, while 29% stated that they also use the in-company team for this purpose. Note that the longer companies have used OBTs, the less they assign this task to third parties. There may be special contracts for search and display configuration. Note that when this job is done by travel management companies, only 32% of companies stated that they had a special contract, as opposed to 52% when the software publisher carries out the task. Configuring the coordination of : For 51% of the companies, this job is done by travel management companies, while 35% use software publishers for the task. When this configuration is done by travel management companies, 40% of the interviewed companies have a special contract, as opposed to 45% when the software publisher carries out the configuration. 9

10 Focus on the ongoing management phase of commercial Travel management companies are also predominant in this phase, but less so than in the initial phase. As in the previous phase, relatively few contracts are signed, particularly for promoting prices or special offers and communicating with end users. Although essential, these activities are not prescribed by a systematic framework; we also noted some overlap between the various service providers and the in-company teams, which adversely affects ongoing contract management. In this context, questions can be raised about the level of importance of "ongoing price promotion or special offers", which comes last among items related to coordinating and administering commercial. Clearly the in-company teams tend to deal with aspects related to communication and controlling the application of the. Importance of tasks in the ongoing management phase of (scale from 1 to 4) 3,69 3,17 3,44 3,62 Updating/re-updating contracts Ongoing promotion of prices or special offers Communication with end users Monitoring the application of (reporting) Updating/re-updating contracts: This is the most important task in the ongoing management phase. It is particularly important for companies that have used an OBT for over five years. 50% of the companies use travel management companies for this task, while 31% use software publishers. When travel management companies update the contract, only 35% of the companies stated that they have a special contract, as opposed to 45% when the task is assigned to software publishers. Companies have more contracts with software publishers than with travel management companies for this task too. Ongoing promotion of price or special offers: 46% of the companies use travel management companies for this task, while 29% use software publishers or their in-company team. This task is the least governed by specific 10

11 contracts. When carried out by a travel management company, 29% of the companies sign a contract, as opposed to 35% when software publishers do the job. Communication with end users: Quite logically, in-company teams usually do this job (53%), rather than travel management companies (34%). It is seldom governed by a special contract. Indeed only 14% of companies have signed a contract for this with their TMC. Monitoring the application of (reporting): For 50% of the companies, this job is done by travel management companies, while 47% assign it to their in-company teams. When travel management companies do the monitoring, 56% of companies sign a special contract. Special point regarding control 47% of the companies stated that they had established a process to control the configuration and monitor the (63% for companies with tools installed over 5 years ago). Note that for companies that introduced a tool more than five years ago, the auditing of databases, price promotions and configuration rules changed to 56% and 38% respectively. 56% Control methods used 32% 38% 26% 36% 34% 15% 15% A u d iting p r ice d a tabases a n d the loading o f p r ices A u d iting the p r o m o tion o f p r ices a n d the tool c o n fig u r a tio n r u les Companies with a tool in place for more than 5 years A u d iting the c o o r d inati o n r u les o n the s ite ( d isplaying a t c r u c ial m o m e n ts a n d the c o n tent d isplayed ) A c c o u n t r e v iews w ith s u p p lier(s) All companies Paradoxically, the establishment of control methods is not being accompanied by the introduction of performance measurement indicators, since only 21% of the companies (31% for those which introduced a tool more than 5 years ago) stated that they set up indicators with their suppliers. 11

12 Nature of the indicators used Compliance with business travel policies Performance of supplier Efficiency of communication using the tool 82% 64% 64% 64% 55% 18% Identification of offers which comply and do not comply with the travel policy Monitoring travellers who comply/do not comply with the business travel policy Monitoring reasons for noncompliance Monitoring the rate of implementation of the / Monitoring the level of compliance with the agreement for a favored supplier Percentage of bookings from favored suppliers in relation to all eligible bookings online Monitoring the efficiency of messaging among travellers (click rates, log monitoring, etc.) Three groups of indicators emerge: - Compliance with the business travel policy - Performance of by suppliers - Efficiency of communication about the tool. This last indicator should be considered in the light of the communication policy and awareness rising among employees, along with the promotion of prices or special offers, for which booking tools used by the general public have long ago developed sophisticated tracking techniques. 5) Managing commercial and relations with transport operators, hoteliers and vehicle hire companies Another basic aspect of the coordination and management of commercial is an understanding of the different interactions with suppliers other than travel management companies and software publishers. Tasks implemented At each stage in the cycle, the corresponding tasks are carried out by most of the companies (either by themselves or through travel management companies or software publishers). This applies regardless of the type of supplier with which they have a contract (airlines or rail travel companies, car hire companies, hotels). 12

13 Note: when companies have signed a service agreement with their travel management company or Online corporate booking tool, even more of them do these jobs or arrange for them to be done (20 more points on average). Tasks carried out (regardless of the supplier) Initial agreement management phase Ongoing management phase of 60% 54% 63% 67% 57% 69% 74% Configuring commercial Search and display configuration Configuring the coordination of Updating/re-updating contracts Promoting prices or special offers Communicating with end users Monitoring the application of (reporting) Display policy to coordinate commercial 60% of the companies stated that they had a policy for displaying their commercial (70% when the tool was introduced over 5 years ago). Note that this figure increases to 74% when they have a service contract with their travel management company or a software publisher. When companies have a display policy, the latter varies according to the different suppliers. The companies interviewed stated that the policy is applied to the following extent: 100% for air travel, 78% for hotels and 66% for rail travel and vehicle hire respectively. As with other aspects of the coordination/management of, establishing a service contract contributes to the maximum use of the tools. Price promotion functions are all used overall, with the following in particular: - Systematic display of favoured suppliers; - Display by price preference. "Best Buy" type displaying is widely promoted on these tools. 13

14 66% 59% Price promotion functions 56% 44% 31% 28% Systematic display of favoured suppliers Display according to the travel policy (e.g. from less expensive to more expensive or by order of supplier preference) Systematic display of different prices and conditions Displaying offers complying and not complying with the travel policy Displaying GDS and non-gds offers (web fares, low-cost) Displaying a reference price or a price ceiling (from the "best buy" synthesis of the best prices) Commercial agreement coordination techniques 43% of the companies stated that they had an established coordination technique or process for promoting their commercial/supplier. If we break down the online tool booking process into 5 phases, we can see a particular emphasis on two moments: during the search for a price offer and at the moment when the prices are displayed. Note that the longer the tool has been installed, the more the companies have built a learning curve on the right moment(s) to promote their. In addition, displaying is widely favoured above other most used techniques. In general, this hierarchy is consistent with whether the tool has been in use for more or less than 5 years. 14

15 Main coordination policy phases 83% 29% 33% 33% 12% 37% 67% 59% 18% 50% Home page During the trip enquiry During the price offer search (wait display) When the prices are displayed -5 years +5 years When the summary/selection confirmation appears 74% Techniques used in the coordination policy 22% 22% 13% Display Pop-up Sending an to the traveller Banner Contractual framework 51% of the companies interviewed stated that defining the configuration, coordination and monitoring criteria for commercial is subject to special negotiation with their suppliers (61% if a service contract has been signed). Note that formalisation by contract is the most widespread option (34%). This figure increases to 44% when the OBT has been installed for more than 5 years. Accordingly, suppliers have adopted a policy of applying contractual frameworks to their commercial, faced with the difficulties to understand their effective role, interactions between clients, software publishers and travel management companies, and in the absence of reliable quantitative data. 15

16 Presence of commercial in the OBT Contractual details 49% 78% 34% 56% 17% 15% Yes, but not in writing Yes, with contractual conditions (entered into the contract in writing) No Obligation to display negotiated prices Obligation to promote negotiated prices Other This requirement is manifested in precise arrangements with an obligation to display negotiated prices in 78% of cases and an obligation to promote negotiated prices in 56% of cases. The "other" column refers to criteria such as for example the fact of appearing as the sole supplier for a particular axis, or promoting the display of a particular price category. Note that suppliers are trying to ensure that the contractual framework for coordinating the tool reflects the structure of their agreement as accurately as possible in terms of prices and remuneration mechanisms linked to the optimisation of their contract. 16

17 Conclusion It must be noted that when assessing the company satisfaction ratings with regard to the commercial agreement coordination and administration tasks carried out, there is room for improvement in numerous areas on all the items analysed. Level of importance of the tasks vs satisfaction level (Scale from 1 to 4) Initial management phase of Configuring commercial on the OBT Search and display configuration Configuring the coordination of on the OBT 3,7 3,0 3,7 2,8 3,4 2,9 Importance Satisfaction Ongoing management phase of Updating/re-updating contracts Ongoing price promotion or special offers Raising communication/awareness among end users 3,7 3,1 3,2 2,7 3,4 2,9 Monitoring the application of (reporting) 2,9 3,6 Several lessons can be learned Roles overlap between the various parties involved (client, OBT and TMC) and the respective areas of responsibility are seldom placed in a contractual framework. There is a low level of familiarity with the tools and their functions from a commercial point of view. Coordination and administration of are still insufficiently controlled and seldom governed by a contractual framework. Without attempting to be comprehensive, we can identify a number of impending issues for each group involved. Issues for companies Improving the definition of the roles and distribution of functions between internal and external parties 17

18 This can be achieved by improving supervision of the areas where service providers are involved (TMCs, software publishers) and by applying a contractual policy across the board. This type of approach should have a direct effect on the rate at which are marketed and should clarify relations with service providers. Improving understanding of the tools and their functions for coordinating and managing commercial. 34% of the companies stated that they did not master the introduction of a commercial agreement display policy, while 42% do not master the technique/process of coordinating their. This can be improved by introducing training and systematic information on the development of the tools and their functions, particularly for primarily in-company tasks (communication with travellers and/or awareness raising among them, or monitoring the application of for example). Improving control over the coordination and administration of, both online and offline. 42% of the companies declared that they had not introduced comparative reporting between these two booking methods. This can be improved by extending control methods in practice and establishing systematic performance indicators. Issues for travel management companies and software publishers Improving the definition of their roles and the tasks allocated to them, in particular with regard to the clients' tools. Clarifying certain functions by putting the management and coordination of into a more tangible perspective. This can be achieved by defining performance indicators and benchmarks on best practices. Improving the definition of the type of reporting particularly when are distributed both online and offline (75% of the companies depend on information coming from travel management companies and from software publishers when they have a direct contract with the latter). Issues for suppliers Improving understanding of the relationships, decision-making systems and phases in existence between the various parties involved. This will allow them to grade their organisation, in particular between the commercial section and the technical support provided throughout the term of their contract. Improving control over the coordination and administration of their, particularly by establishing contracts and monitoring specific to all market tools. Indeed, numerous suppliers have piecemeal information on the online and off-line components. Moreover, they have no view of what has been configured and how their are coordinated. 18

19 About AFTM The French Association of Travel Managers (AFTM) is the largest travel management organization in France. AFTM is a non-profit organization created by a group of leading French corporate travel managers to enhance the professional status and promote the role of Travel Managers. The organization strives to help acclimate newcomers and obtain professional recognition for the corporate travel industry. AFTM also seeks to train those who will be responsible for coordinating corporate travel for major French, European and international companies. AFTM has established a strategic alliance with the Association of Corporate Travel Executives (ACTE), the leading non-profit business travel organization serving 102 countries worldwide. About Concomitance Concomitance is a service company specialised since 2001 in research, advice and performance development in the areas of marketing, trade, sales and client relations. Concomitance has teams specialised in several sectors such as telecommunications, travel and business travel, banking, distribution, etc. Since its beginnings, Concomitance has been conspicuous in its capacity to translate commercial and marketing issues into immediately effective action plans easily understood by all parties involved. This capacity is a direct outcome of Concomitance's DNA: thanks to the accumulated business experience of its consultants, Concomitance can produce and share recommendations with its clients in step with the maturity of their organisation. 19