Welcome to the CWT Travel Management Institute research series

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3 Welcome to the CWT Travel Management Institute research series The CWT Travel Management Institute conducts in-depth research into effective travel management and meetings and events (M&E) practices to help clients worldwide derive the greatest value from their travel and M&E programs. Drawing on the global resources of Carlson Wagonlit Travel (CWT), the institute provides a regular flow of business intelligence and best practices, offering actionable insights into the eight key levers to effective travel identified by CWT. The research presented in this report focuses on how companies can optimize booking processes and provide the right services and assistance to travelers. Other original research publications include: Meetings and Events: Where Savings Meet Success (2010) Room for Savings: Optimizing Hotel Spend (2009) Playing by the Rules: Optimizing Travel Policy and Compliance (2008) Global Horizons: Consolidating a Travel Program (2007) Toward Excellence in Online Booking (2006) In addition, the CWT Travel Management Institute publishes white papers, case studies and articles on industry issues. Eight key levers to effective travel management 1. PROVIDE THE RIGHT SERVICES AND ASSISTANCE TO TRAVELERS AND OPTIMIZE TRANSACTION PROCESSING 2. Tackle hotel spend in a disciplined and professional manner 3. Continue to drive air and ground transportation savings 4. Increase policy compliance and optimize demand management 5. Further consolidate travel programs 6. Address security needs and corporate social responsibility 7. Integrate meetings and events into the travel program to control and optimize the related spend 8. Develop executive dashboards and actionable performance measures

4 Contents Introduction...3 About this research...7 Key findings in brief...9 Key findings explained 1. Online booking tools bring proven benefits when implementation is tailored to each company s specific context To find the right service configuration, savings and program objectives must be carefully balanced with the needs of travelers and travel arrangers A wide range of services enhance the traveler experience, helping to boost well-being and productivity Improvements in travel and expense management can bring considerable cost savings, while increasing policy compliance and reducing fraud...95 Conclusion Glossary...116

5 Introduction As business travel spend increases along with the global economy, travel managers need to keep focusing on their two most important objectives: driving savings while keeping travelers safe, productive and happy. The services a company provides to its travelers play a key role. A return to growth and rising business travel Business travel has always been closely linked to the global economy: any major event that affects GDP makes a similar impact on travel spend, as seen after 9/11 and during the recent economic crisis. Now that the global economy has pulled out of recession, business travel should grow steadily over the next few years. Forecasts show annual growth of approximately 4.5 percent for GDP and 7.4 percent for international business travel (including tourism), according to the International Monetary Fund 1 and the World Travel and Tourism Council. (See Figure 1.) Figure 1: 7.4 percent annual growth is forecast for international travel spend ( ) US$ billion at current prices Business travel and tourism spend Annual growth (%) 2, ,030 1,115 1,204 1,294 1,388 1,488 1,595 1, ,500 1, Asia Pacific Latin America North America Europe, Middle East and Africa Sources: World Travel and Tourism Council, CWT Travel Management Institute What these spend figures do not show is the link with prices and travel. In 2011 at least, price increases are expected in all areas of travel, with the exception of car rental in some markets, and travel managers will continue to face pressure to contain costs as companies ease restrictions on travel. 1 World Economic Outlook, International Monetary Fund (April 2010) 3

6 At the same time, there is growing awareness of the need to balance cost savings with traveler well-being, providing the right services to ensure convenience, comfort and safety for employees. This is reflected in a survey of CWT clients, 2 which shows a mix of travel management priorities for 2011, ranging from cost-driven items such as optimizing online adoption (ranked second out of 11) and enhancing the traveler experience (ranked fifth) to addressing safety and security (in eighth place). The top ranking item, improving compliance, brings improvements across the board savings, service and security by ensuring travelers use the recommended suppliers and processes. (See Figure 2.) Figure 2: Travel management priorities for Improving traveler compliance Optimizing online adoption Driving air and ground transportation savings Optimizing hotel spend Enhancing the traveler experience Optimizing the travel policy Developing key performance indicators Addressing safety and security needs Further consolidating the travel program Tackling meetings and events Making the program more environmentally friendly Sources: CWT Travel Management Institute 2 Travel Management Priorities 2011, CWT Travel Management Institute (2011)

7 When designing a travel management program, companies must make a number of trade-offs to satisfy different requirements. For example: Local vs. global content. Companies need to consider local and regional contexts when deciding on content and processes. One of the questions, for instance, is whether a single, global online booking tool (OBT) is the best choice, given that a multitude of country-based or regional OBTs can often provide more complete content (e.g., access to national rail offerings and local support). While major OBT providers are developing a strong rail offering in larger markets, they have yet to do so in some smaller markets. Streamlined vs. high-touch service. To boost cost-savings, companies can look carefully at eliminating superfluous services and ensuring that core services are provided in the most efficient way. Here an important issue is whether or not the cost savings provided by streamlined service provision can offset the potential leakage (booking outside the preferred channels) and associated risks for safety and security if travelers resist change and continue booking through local travel counselors. Cultural expectations and local languages are often sticking points when a decision is made to consolidate service internationally and limit service to one language (usually English). According to CWT research, 3 when highly aligned processes and simplified services are introduced as part of global program consolidation, companies can save up to 20 percent of total travel spend. Online vs. offline booking. Many companies simplify service provision and put a strong emphasis on online booking, but this model is not suitable for all companies. First, satisfaction rates are invariably better for offline than online booking, and second, some companies have a corporate culture or travel booking requirements that disqualify a very high share of online bookings. This report aims to help companies with the following questions: How to find the right balance between online and offline services? What is the impact on cost savings and traveler satisfaction? What are the criteria for selecting an online booking tool? Should companies buy directly from online booking tool providers or through their travel management company s reseller agreements? How to find the most relevant service configuration? How can a company balance savings, program objectives and traveler satisfaction? How to best manage simple and more complex bookings? What are the key criteria for designing a service configuration or a request for proposal? What kind of service level agreements should a company negotiate? What services and features do travelers and travel arrangers expect, and which add real value (e.g., end-to-end service, VIP service, unused-ticket management, mobile services and social networks)? Which services are essential and which are simply nice to have? How do companies manage expenses? Who handles expense management internally? Which types of suppliers are preferred? What are the synergies with travel management? What are the best practices? 3 Global Horizons: Consolidating a Travel Program, CWT Travel Management Institute (2007) 5

8 About this research Objectives This CWT research has four main objectives: 1. Identify key ways to optimize transaction processes 2. Define the appropriate service configuration, optimize the request for proposal process and set appropriate service level agreements 3. Identify the services that improve the traveler experience 4. Define an effective strategy for expense management Methodology CWT combined several research techniques: Surveys A detailed questionnaire on business traveler services, answered by 204 travel managers worldwide An online survey of travelers and travel arrangers worldwide on their preferences and behavior, answered by 2,439 travelers and travel arrangers from 15 companies A detailed analysis of 152 CWT global or regional clients and 322 local clients to determine the maturity of companies travel programs and room for improvement in terms of savings and traveler safety (CWT Diagnostic) In-depth interviews Interviews with more than 40 experts from corporations, expense management companies, global distribution systems and online booking tool providers Quantitative analysis An analysis of CWT transactions worldwide to observe the evolution of online adoption by industry and by region An analysis of a company s top 15 routes to see the differences in performance between online and offline booking (advance booking and impact on average ticket price) An analysis of CWT transactions worldwide to determine the share of point-to-point vs. multi-segment trips Case studies 1. How a leading biotechnology company increased cost savings and traveler satisfaction by introducing a full-service center configuration (Page 55) 2. How a global reinsurance company reduced transaction fees by 10 percent, achieved 90 percent online adoption and boosted compliance through a standardized service center configuration (Page 57) 3. How a global technology company made savings of 42 percent on travel management costs and 99 percent booking accuracy by

9 implementing a global travel policy and a network of multinational service centers (Page 59) 4. How an energy services firm improved its unused-ticket management, raising the redemption ratio by 50 percent (Page 93) This research was carried out from September 2010 to April 2011 and involved a wide sample in terms of company size and industry, travel managers scope of responsibility and travelers home region, as shown in Figures How a European multinational made its expense management more efficient by introducing an automated system (Page 104) 6. How a large global conglomerate worked with its TMC to fully outsource expense processing (Page 106) Figure 3: Breakdown of surveyed travelers By sector By region Other 31% Retail 23% Europe, Middle East and Africa 16% Asia Pacific 15% No response 4% Engineering and technology 3% Banking and financial services 3% Consulting 17% Consumer products and services 4% Aerospace and defense 9% Healthcare, life sciences and pharmaceuticals 10% North America 65% Based on a survey of travelers (2,439 responses) 7

10 Figure 4: Breakdown of surveyed travel managers By sector Banking and financial services 13% Other 45% Healthcare, life sciences and pharmaceuticals 6% Telecommunication equipment and services 6% Industrial manufacturing 5% Retail 3% Automotive and transportation 4% Media and communication 3% Chemicals 4% Government and public sector 3% Consumer products and services 4% Computer hardware, software and services 4% By region of headquarters ation Asia Pacific 4% Latin America 7% No response 14% Europe, Middle East and Africa 45% North America 30% By geographical scope of responsibility Regional 18% Local 38% Global 44% Based on a survey of travel managers (204 responses)

11 Key findings in brief This CWT research highlights best practices in four main areas: 1. Online booking tools bring proven benefits when implementation is tailored to each company s specific context. According to travel managers estimates, just over half of all bookings (52 percent) are made online in companies that have implemented OBTs, and some companies achieve much higher adoption rates. Clearly, the type of trips being booked plays a key role, as simple point-to-point travel and domestic travel are typically more suited to efficient online booking than more complex itineraries, and the proportions vary between companies (45-64 percent in a sample of companies). Online adoption is also driven by factors ranging from the macro-economic context to travelers willingness to use an OBT and the company s ability to successfully institute internal change. In particular, travel managers introducing OBTs need to explain how online booking fits with their travel program and underline the benefits compared to using consumer travel sites, which inevitably offer more choice. (Many travelers are dissatisfied with the range of travel options and fares on their OBT and 41 percent say OBTs decrease the level of service they receive, indicating room for improvement.) High adoption is not a goal in itself, however, and performance varies in terms of each company s ability to maximize the benefits of online booking. On average, OBTs increase program compliance, increase productivity and minimize costs, not only through more efficient, convenient processes but also lower ticket prices. Surveyed travel managers estimate that ATP is 7 percent lower when booked online than offline, and a sample analysis reveals savings of 6 percent in one organization, reaching 24 percent on one city pair. This said, online booking becomes less efficient if a high proportion of transactions involve errors or queries that cannot be handled through automation. Companies can also dilute the benefits of OBTs if, for example, the repeat trip feature on OBTs prevents travelers from obtaining the lowest available fare with an alternative supplier at the time of booking. Last but not least, companies need to carefully consider the trade-offs involved in sourcing a single OBT or best-in-market OBTs regionally or locally, as well as whether to source directly or use reseller agreements. A multiple OBT approach is chosen by more than 90 percent of CWT global clients despite the higher costs, to ensure the best possible fit with travelers needs in specific countries. 2. To find the right service configuration, savings and program objectives must be carefully balanced with the needs of travelers and travel arrangers. In general, travelers value simple, fast booking and 24/7 access to service far more than other features such as service in their native language or the quality of technical support, although needs vary between organizations (e.g., some populations of travelers may require special VIP service or end-to-end trip management). 9

12 In terms of booking services, the features that count most are the ability to book when it suits travelers, obtain the lowest rates and make all bookings through the same channels. At the bottom of travelers priorities are items such as access to other travelers advice, pre-trip information and the quality of advice obtained, which suggests that travelers already know what they want when booking. When switching service configurations, travel managers should consider a whole range of criteria, ranging from the need for local content and service support to their company s ability to manage change. The main available configurations (on-site, fullservice, standardized and multinational service centers) each serve different priorities that should be discussed with the travel management company, along with service level agreements. For best results, companies should ensure they have an effective travel policy in place with measures to reinforce compliance. The savings available to companies vary with the starting point but can reach 20 percent of operational costs (i.e., percent of total travel spend), mainly due to more efficient processes and lower operating costs linked to service center location. 3. A wide range of services enhance the traveler experience, helping to boost wellbeing and productivity. Among those that stand out for travelers are easily accessible information, user-friendly technology that facilitates trip planning, and 24/7 assistance around the world. Seven important services are particularly worth exploring: Web-based traveler portals that provide easy access to practical tools and information (e.g., destination intelligence for safety and security purposes); traveler profile tools that make booking more efficient while helping to improve compliance; numerous mobile services that are highly valued by travelers wanting to save time and stay informed while on the go; highly-valued emergency assistance and risk management services; social media, which are likely to be used more commonly in business travel in the future, compared to the small minority of travelers who use them at the moment; VIP and end-to-end services that may be required for specific segments of travelers; and unused-ticket management solutions, the best of which are fully automated. 4. Improvements in expense management can bring considerable cost savings, while increasing policy compliance and reducing fraud. It follows that expense management is a major focus area for companies, especially in view of the recent economic downturn and increasingly strict regulation on corporate governance. Three main areas need to be tackled: policy (including which expenses are acceptable, how to pay and how to file claims), processes (many of which can be outsourced), and systems (either Webbased or hosted, and ideally automated and integrated into other IT systems). Companies can often gain in efficiency and flexibility by reorganizing the way these tasks are handled. For example, an automated expense management system can reduce the cost of processing expense claims by more than percent, according to industry experts. Efficiency gains and cost savings can also be made through in-house shared services or outsourcing, and/or the use of low-cost locations.

13 1. Online booking tools bring proven benefits when implementation is tailored to each company s specific context. To reap the full benefits of online booking, companies require a tailored strategy and thorough implementation plan. Online booking tools (OBTs) are used increasingly by companies wishing to minimize costs while providing convenient booking features for travelers. Many factors influence online adoption, from the macro-economic context to organizational culture, but high adoption rates are possible, particularly when a comprehensive implementation strategy is implemented. Companies also need to carefully consider the trade-offs involved in using a single OBT or best-in-market OBTs regionally or locally, as well as whether to source directly or use reseller agreements. Benefits of online booking When implemented in the right way, corporate online booking tools enable companies to generate significant savings while offering travelers convenient service features. This CWT research confirms a number of benefits: Lower transaction costs. Transaction costs typically represent 3-5 percent of total travel spend. Within this budget, simple, touchless online transactions generally cost half as much to process as manual offline bookings, while the cost of assisted bookings comes about halfway between online and offline Figure 5: Transaction costs are significantly lower for online bookings High case Low case Online transaction Assisted online transaction Based on CWT client transactions for North America Offline transaction 11

14 transactions. In some cases where assistance is required more than once, however, the cost may be higher than for offline bookings if per-touch charges are applied, given that companies must also pay an OBT fee. Travel managers rank booking cost optimization top of the list of factors driving online adoption, followed by service features that enhance the traveler experience (24/7 availability and ease of booking), as shown in Figure 6. Figure 6: Travel managers say optimized booking costs are the main driver of online usage Booking cost optimization Factors driving online usage in order of importance Average ranking /7 availability Ease of booking Increased compliance with travel policy Speed of booking Standardization of travel management across regions Respondents (%) 100 Least important Most important Based on a survey of travel managers (103 responses)

15 Lower average ticket price (ATP). Previous in-depth CWT research 4 indicates that the ticket price is on average 5 percent lower when travelers use online booking tools instead of contacting a travel counselor, and savings can sometimes reach 15 percent from combined savings on airfares and booking fees. In the current survey, travel managers say the average air ticket price paid through online booking tools is 7 percent lower on average, while close to a third of respondents (or 45 percent when excluding don t know responses) believe it is more than 8 percent lower. An analysis of transaction data for a global company s top 15 city pairs used by its global headquarters in Paris shows a reduction of 6 percent in ATP. (See Figures 7-8.) Figure 7: Travel managers say online booking reduces the average air ticket price by 7 percent on average Travel managers (%) 40 Estimated savings on airfares through online booking Average: 6.7% 1, No savings 3 <2% % 4-6% 6-8% 8-10% >10% Don't know. Based on a survey of travel managers (112 responses) 4 Toward Excellence in Online Booking, CWT Travel Management Institute (2006) 13

16 Figure 8: The average air ticket price paid by a global company on its top 15 city pairs from France is 6 percent lower when booked online Difference in average air ticket prices (online vs. offline) Average: -5.9% Route A B C D E F G H I J K L M N O. Based on tickets between France and a company s top 15 destinations in economy/coach class in 2010 A key reason for the lower ATP is that travelers are more likely to choose cheaper fares when they see a range of options on their screens and experience visual guilt. They may also access cheaper booking classes by booking earlier, although the impact of online booking on advance booking appears rather limited: nearly 35 percent of surveyed travelers and 20 percent of travel managers say OBTs do not lead to earlier booking. (See Figure 9 on Page 16.)

17 Improved compliance with the travel policy, bringing savings. In the CWT survey, just over half of travelers (52 percent) agree that booking online forces them to be more compliant with the travel policy, and previous research 5 also shows that companies using OBTs have higher levels of compliance with preferred airline policy and a greater share of restricted fares than other companies. Improvements in both these areas can bring substantial savings. This is true both in mandated and non-mandated policy environments, as online booking tools can be configured to display preferred options, flag out-of-policy alternatives, provide policy reminders or refuse non-compliant bookings. Efficient booking processes. OBTs can save travelers time when booking through standardized, well-designed processes, and can add convenience by being available 24/7 and offering relevant information (e.g., on travel options that comply with the travel policy). Surveyed travelers tend to acknowledge these benefits: for example, 54 percent of respondents say that booking online is faster than contacting a travel counselor (vs. 23 percent who say it is not), while 46 percent say booking is simpler and requires fewer iterations (vs. 28 percent who say the opposite). It is worth noting, however, that 41 percent of travelers say online booking decreases the level of service they receive. (See Figure 9.) 5 Playing by the Rules: Optimizing Travel Policy and Compliance, CWT Travel Management Institute (2008) 15

18 Online booking: numerous benefits Figure 9: Travelers and travel managers acknowledge the benefits of online booking Travelers More appropriate for simple bookings Forces me to comply with the travel policy Faster than offline booking Average score Simpler and requires fewer iterations Reduces the level of service I receive Generally helps me to book cheaper fares/rates Reduces the content I have access to Forces me to book earlier in advance Respondents (%) Completely disagree Completely agree Travel managers More appropriate for simple bookings Generally helps travelers to book cheaper fares/rates Forces travelers to comply with the travel policy Faster for travelers than offline booking Simpler for travelers and requires fewer iterations Forces travelers to book earlier in advance Reduces the level of service travelers receive Reduces the content travelers have access to Average score Respondents (%) Completely disagree Completely agree Based on a survey of travelers (2,106 responses) and travel managers (110 reponses)

19 More often than not, survey respondents say the benefits of online booking tools far outweigh the limitations: 65 percent of travel managers and 52 percent of travelers say yes, by far or yes, somewhat. (See Figure 10). Figure 10: Travel managers are more enthusiastic than travelers about the benefits of online booking Travelers views on whether OBT benefits outweigh the drawbacks Don't know 11% No, not at all 8% Yes, by far 13% No, not really 29% Yes, somewhat 39% Travel managers views on whether OBT benefits outweigh the drawbacks No, not at all 7% Don't know 12% Yes, by far 27% No, not really 16% Yes, somewhat 38% Based on a survey of of travelers (2,120 responses) and travel managers (192 responses) 17

20 Growing use of online booking tools Given the benefits, it is hardly surprising that more and more bookings are being made online, as noted by 70 percent of travel managers and 53 percent of travelers in companies that implement OBTs. On a scale of 1-10 (1 being a strong decrease and 10 being a strong increase), the average scores are 7.5 for travel managers and 6.7 for travelers. Interestingly, there are two peaks in travel managers responses: one around 5 (online booking remaining the same over the past few years) and a slightly higher peak around 10 (a strong increase), as shown in Figure 11. Figure 11: Travel managers and travelers note an increase in online booking over the past 3-5 years Perceived evolution in online booking Travel managers (%) Average: Strong decrease No change Strong increase Travelers (%) Average: Strong decrease No change Strong increase Based on a survey of travel managers (115 responses) and travelers (2,266 responses)

21 Today, OBTs are used for just over half of all bookings on average, according to travel managers. (See Figure 12.) Figure 12: Online adoption reaches 52 percent on average, according to surveyed travel managers Respondents (%) 30 Average: 52% Don t know <30% 30-50% 50-70% 70-90% >90% Online adoption (% all online and offline bookings in companies that use OBTs) Based on a survey of travel managers (119 responses) In the future, online booking should grow further, according to 84 percent of travel managers. Most travelers, however, say their use of online booking will probably remain the same (56 percent, compared to 14 percent of travel managers). These opinions are shown in Figure

22 Figure 13: Most travel managers believe online booking will continue to grow, whereas travelers expect usage to stay the same Estimated future evolution of online usage Travel managers (%) Average: Strong decrease No change Strong increase Travelers (%) Average: Strong decrease No change Strong increase Based on a survey of travelers (2,265 responses) and travel managers (116 responses)

23 There are wide variations in online usage levels between different countries and industries, however. For example, Australia s online usage is nearly triple Spain s (44 percent vs. 14 percent). Moreover, according to a CWT analysis of 70 million transactions, high-tech companies have been faster to adopt online tools than those operating in energy and utilities, chemicals or the public sector. For example, usage reaches 61 percent in electronics companies, compared to 17 percent in the public sector and 34 percent on average across all industries. (See Figures ) Figure 14: Online usage varies considerably between countries and industries OBT usage by country (% all transactions) Australia United States Canada France Germany United Kingdom Sweden Spain Based on CWT transaction data 21

24 Figure 15: High-tech industries lead the way in online usage Electronics Agriculture Hospitality Construction Telecommunication equipment and services Computer hardware, software and services Food and beverage Engineering and technology Consumer products and services Business services Healthcare, life sciences and pharmaceuticals Industrial manufacturing Media and communication Retail Consulting Metals and mining Banking and financial services Aerospace and defense Automotive and transportation Energy and utilities Chemicals Government and public sector (incl. not for profit) Other Average Based on 70 million transactions Online usage by industry Online usage (% all transactions) 61 These variations are partly explained by external factors such as Internet usage and the economic context, as well as corporate culture: Internet usage. The extent to which a country s population goes online impacts travelers readiness to use online tools, as well as the maturity of the service offering. Figure 16 shows the correlation between online booking and Internet usage in different countries. In this way, the growth in online booking is part of a wider online trend in all areas of business and people s private lives.

25 Figure 16: Online booking usage correlates with Internet usage Online booking vs. Internet usage by country Internet usage June 2010 (%) Norway United Kingdom Finland New Zealand Germany Singapore Australia United States Hong Kong Latvia Switzerland Ireland Czech Republic y=0.4x R 2 = Online booking 2010 (%) Sources: ITU, European Union statistics, CWT transactions, CWT Travel Management Institute 23

26 Economic context. Companies tend to accelerate their online usage plans when under greater pressure to reduce costs, as has been the case over the past few years with due to the economic downturn. Figure 17 shows how online usage grew percent faster after the start of the financial crisis (third quarter 2008 to third quarter 2010) than before (first quarter 2005 to second quarter 2008). Figure 17: Online usage increased with the economic downturn Impact of economic crisis on OBT usage in Europe and Asia Pacific Growth in online usage (%) +36% +32% Europe Asia Pacific Growth increase per quarter before crisis (Q Q2 2008) Growth increase per quarter after crisis (Q Q3 2010) While general trends can be observed, the pattern is different for every company, as illustrated by three examples in Figure 18. The first shows a global high-tech company with very high, stable levels of online adoption (more than 80 percent), while the second shows a global chemical company with much lower adoption (hovering around 20 percent). In the third, a global manufacturer doubled its adoption to around 50 percent in 2009 but later lost some momentum.

27 Figure 18: Online adoption trends vary between companies Online adoption (% all transactions) 100 Example 1: a global high-tech company Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Based on 1,400,000 transactions Online adoption (% all transactions) 100 Example 2: a global chemical company Based on 314,000 transactions Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Online adoption (% all transactions) 100 Example 3: a global manufacturing company Based on 181,000 transactions Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

28 Corporate culture. In addition to being influenced by external factors such as the industry context, companies with the highest adoption rates tend to have one or more of the following internal attributes: Adaptable to change Self-enabling: a strong do-it-yourself culture, where most employees do not have administrative assistants Process-focused: a methodology to improve process performance that is systematically measured and managed E-culture: employees are technology driven and go online for many administrative tasks, such as expense reporting Mandate-based: decision-making is generally a top-down process They also employ best practices in terms of online implementation, as discussed on Pages Figure 19: Online adoption is impacted by corporate culture Average score Very strong 10 Impact on online adoption Very weak 1 Ability to change Self-enabling Process performance E-culture Culture of mandates Online adoption <30% 30-50% 50-70% >70%. Based on a survey of travel managers (107 responses) Travel patterns. In Figure 14 on Page 21, the countries with the highest online usage levels (Australia, the United States and Canada) have a high proportion of domestic travel and many simple point-to-point bookings. Access to a growing range of content and features. Online booking tools are integrating more content and features that were previously only available offline (e.g., low-cost flights, rail bookings or reservations for more than one passenger at a time), although performance varies considerably between providers in different markets.

29 Implementing an online booking tool The way an online booking tool is implemented goes a long way to ensuring high adoption levels and optimized benefits. A number of best practices are worth noting: Define an OBT implementation strategy. Ideally clear objectives are set before embarking on a project that involves considerable stakes and challenges. Surprisingly, many companies either have no online strategy or no action plan attached to their strategy (Figure 20). Figure 20: 37 percent of companies have no online strategy or action plan Breakdown of companies by OBT strategy/action plan Strategy and action plan fully communicated 21% Don't know/ not applicable 1% No strategy defined and no action plan 19% Strategy and action plan ready for deployment with appropriate resources 16% Strategy defined but no action plan 18% Strategy and action plan complete but no resources/budget 5% Strategy defined and action plan being prepared 20% Based on a travel program diagnostic survey for 152 clients Set realistic objectives for OBT adoption, in terms of the amount and type of bookings that can be made online. Surveyed travelers and travel managers agree that online booking is most suitable for simple transactions (67 percent and 93 percent respectively, as shown in Figure 9 on Page 16). Above a certain level of complexity (e.g., multi-segment trips) booking tends to be more efficient through a travel counselor. Before implementing an OBT, companies should therefore consider the proportion of simple trips being booked, and in particular, point-to-point trips compared with more complex multi-segment itineraries. Based on CWT global client data for second semester 2010, point-topoint trips account for more than half of all transactions: 55 percent overall, rising to 62 percent in Europe, Middle East and Africa, although they are less common in Asia Pacific (34 percent of transactions) and in first class (45 percent). (See Figure 21.) 27

30 Figure 21: Point-to-point trips account for 55 percent of transactions on average Point-to-point vs. multi-segment trips (H2 2010) Trips (%) 100 By region Asia Pacific Europe, Middle East and Africa Latin America North America Global Trips (%) 100 By travel class Economy/ coach Premium economy Business First All classes Point-to-point Multi-segment Based on 12.5 million transactions

31 At a company level, point-to-point trips account for percent of transactions in a sample of 15 global CWT clients, underlining the need for a tailored approach to online booking strategy. (See Figure 22). Figure 22: Point-to-point trips account for percent of transactions in a sample of 15 global companies Trips (%) 100 Point-to-point vs. multi-segment trips by company (H2 2010) Type of company 0 Consumer goods (cosmetics) Oil, gas and mining Conglomerate Oil, gas and mining Computer technology Banking Consulting Oil, gas and mining Energy and transport Internet and computer technology Telecommunication Consumer goods (sports) Consulting Tire manufacturing Conglomerate Based on 2.1 million transactions Point-to-point Multi-segment Companies should not exclude all complex trips from online booking, however. When the same multi-segment trips are booked repeatedly, offline travel counselors can identify suitable flight options and two or three hotels in each location, enabling travelers to easily replicate previous bookings using the standard OBT repeat trips feature. Moreover, in Germany, Cytric has developed software to handle multi-segment itineraries efficiently. This said, offline booking remains the most effective way to guarantee the best routes and prices for complex trips, especially when repeat online booking may exclude the lowest available fare. 29

32 Companies can also consider their share of domestic and international trips. CWT client data for Asia Pacific, for example, shows that online booking is 3.5 times more common for domestic flights than international flights, which tend to be more complex and less recurrent. (See Figure 23.) Figure 23: In Asia Pacific, online booking is 3.5 times more common for domestic flights than international flights Online booking tool usage in Asia Pacific ( ) x3.6 x3.0 x3.4 x3.7 OBT usage (%) (January October) International flights Domestic flights As mentioned earlier, the success of online booking for different kinds of trips also depends on the company culture and travelers willingness and ability to use an OBT. One surveyed firm, a global consultancy, has dropped online booking after meeting with considerable resistance from travelers who prefer to book through travel counselors. In contrast, a global high-tech company with a strong self-help culture has a high online adoption rate, including for multi-destination itineraries. For the latter company, the key question is how to ensure sufficient content in the OBT so that travelers can book the most cost-effective travel options: country-specific content such as rail or lowcost carriers must be included if the company is to optimize savings. This illustrates how high adoption is not a cure-all solution by itself and must be part of a well thought-out market-bymarket strategy. Minimize assisted online bookings. This is important if companies are to reap maximum benefits from their online booking strategy in terms of efficiency and traveler satisfaction. Fifty-one percent of travel managers of large global or regional companies say online bookings require assistance due to traveler error or request, compared to 15 percent who say they are due to TMC back-office or technical constraints. (See Figure 24.)

33 Figure 24: 51 percent of travel managers in large global/regional companies say assisted bookings are due to traveler error or request, compared to 15 percent who say they are due to TMC back-office/technical constraints Online bookings requiring assistance for different reasons Large global/regional companies 21-40% >40% 16% 5% >40% 5% 21-40% Don't know 34% 16% Online bookings requiring assistance due to traveler error or request <20% 5% 5% 5% 30% <20% 21-40% Online bookings requiring >40% assistance due to TMC back-office/technical constraints Local companies >40% 5% 21-40% Don't know 34% 13% 31% Online bookings requiring assistance due to traveler error or request <20% 6% 3% Online bookings requiring 21-40% assistance due to >40% TMC back-office/technical constraints 8% <20% Based on travel program diagnostic surveys (152 and 322 clients) 31

34 Many more bookings could be completed without assistance if the right processes are used. For example, companies can switch off the OBT s add comment function, which is often used unnecessarily. They can also require travelers to keep their profiles up to date so that all the relevant information is available without involving a travel counselor. (The main reasons for automation failure are incomplete or outdated credit card information, or missing passport information, such as full name, gender and country of passport issuance, which is required by the Advanced Passenger Information System used in many countries, such as China, India, Japan, the United Kingdom and the United States.) Billing issues that call for manual intervention, such as hotel bill-back (where the travel management company pays upfront and invoices the customer), can be avoided by requiring travelers to use their corporate payment cards when making a reservation. Further bookings can be completed without assistance if the company favors instant ticketing, since around 50 percent of all air bookings require intervention by travel counselors when airlines bring forward their ticketing deadlines. According to surveyed travel managers, at least percent of assisted bookings could be avoided. (See Figure 25.) Some companies reach considerably higher levels of performance: (See Pages ) Figure 25: Travel managers estimate that percent of assisted bookings could be made touchless Assisted online bookings that could be avoided (i.e., non-assisted) in a sample of large regional/global companies Don't know/not applicable 45% <5% bookings 22% 5-20% 21% >80% 1% 60-80% 2% 40-60% 5% Average: 16% 20-40% 4% Based on a travel program diagnostic survey for 152 clients

35 Ensure that the travel policy and OBT configuration meet travelers needs. When questioned about why travelers book outside the preferred online channel, travel managers say the main reason is cheaper fares being available through other booking channels. This is confirmed by travelers relatively low satisfaction ratings for access to the cheapest fares: just 5.7 out of 10 on average, with a score of 6 or more for only 49 percent of respondents. (See Figures ) Figure 26: Travel managers say the main reason travelers book outside the online booking tool is that they find cheaper fares elsewhere Travelers finding cheaper fares through other booking channels Influence of different factors on non-compliance with preferred channels according to travel managers Average score 6.1 Proposed travel option not meeting traveler needs Travel management company not empowered to enforce policy for non-compliant bookings Compliance not a high management priority Travel management company strictly enforcing the policy Travelers personal preference for booking on other travel Websites Travelers lack of awareness of preferred booking channels No influence Respondents (%) Strong influence Based on a survey of travel managers (185 responses) 33

36 Figure 27: Traveler satisfaction scores are relatively low regarding lowest-fare availability on their corporate online booking tool Respondents (%) 25 Traveler's satisfaction with online booking tools for obtaining cheapest fares Average: Score Very dissatisfied Very satisfied Based on a survey of travelers (2,123 responses) Another important reason travel managers mention for travelers booking outside the OBT is their dissatisfaction with the travel options offered. This may be due to the OBT parameters set by the company, or some trips deviating from the main travel patterns covered by preferred supplier agreements. Travelers may also want to book with the same suppliers they use for leisure travel (e.g., low-cost carriers that may not be part of the travel program) and compare the OBT with leisure reservation sites that inevitably offer more choice. Travelers need to be reminded that OBTs are intended to facilitate their access to bookings supporting the travel program, and that using their OBT positively impacts supplier negotiations and the cost of travel after discounts. For example, research by Topaz International in 2009 shows that airfares booked through travel management companies were equal or lower to fares paid on public Internet sites in more than 90 percent of cases. (See Figure 28.) Moreover, booking through the preferred channels brings other benefits, such as the ability to track travelers effectively in emergencies. Communication on these issues plays a key role in change management programs, as discussed on Pages 37.) Ensure that the OBT is user friendly and travelers are trained to use it. Travelers are more likely to abandon their online booking tool in favor of another booking method if processes are unnecessarily complicated or time-consuming, especially compared to airlines Websites that are fast and easy to use, being limited to their own offerings. This is a weak point, according to travel managers satisfaction ratings: OBT usability/ features receive one of the lowest average scores, just ahead of OBT evolution and traveler satisfaction. (See Figure 29.)

37 Figure 28: Airfares booked through TMCs were equal or lower to fares booked on public Internet sites in more than 90 percent of cases Airfares (%) Agency fare equal or lower Agency fare higher Source: CWT Management Institute, Based on research by Topaz International, May 2009 Figure 29: Travel managers are less happy with traveler satisfaction than other criteria for evaluating online booking Compliance with travel policy Travel managers satisfaction with online booking tool features Average score 6.6 Accuracy of proposed rates Ability to steer travelers toward preferred suppliers Comprehensiveness of content Adoption rate (% of bookings made online) Ergonomy/functionalities Evolution of the tool Traveler satisfaction Respondents (%) Very dissatisfied Very satisfied Based on a survey of travel managers (105 responses) 35

38 Ongoing traveler satisfaction surveys carried by CWT (CWT Listens) reveal significantly lower scores for online than offline transactions in all regions, underlining that progress can still be made in terms of user-friendliness and travelers acceptance of this way of booking. In an analysis of close to 270,000 bookings worldwide made between January 2010 and May 2011, the population expressing high satisfaction (at least 7 out of 10) is much larger for offline bookings (87 percent) than for online (78 percent). Conversely, the population expressing high dissatisfaction (4 or below) is much smaller for offline bookings (6 percent) than for online (10 percent). These results are mirrored across all regions. Figure 30: Satisfaction scores are significantly lower for online than offline transactions Travelers (%) Offline Online Offline Online Offline Online Offline Online Offline Online Asia Pacific Latin America North America Europe, Middle East and Africa Global Average satisfaction scores Based on traveler feedback (CWT Listens survey) after 270,000 transactions (January May 2010) 5-6