Open Booking: A Possible Distraction Dressed Up as an Opportunity

We have discussed open booking before in the blog. It is the concept of allowing some pieces of travel requirements to be purchased outside of your Travel Management Company (TMC). Some corporate travel professionals believe that the established travel management model—travelers booking at published and negotiated prices through global distribution system-powered travel management companies—is broken. Many travelers don’t want to play that game anymore when they think they can buy better and cheaper without corporate interference.

So what’s the solution? I have shared before that there are some legitimate reasons to book some items outside of your TMC. Philosophically, I and many believe those instances should be approved and identified within your travel policy, there should be a system to add to this list of exceptions, and you should have a way to support these bookings. But this is a belief that travel management is the rule with some exceptions versus a belief that using these tools for travel anarchy is a better solution to control, manage, and procure T&E - the line item. As 2014 ended, I started to see the hype behind open booking as a method to handle travel slightly wither and a small return to the procurement principles we have discussed return. One of last year’s BTN Top 25 execs, KDS CEO Dean Forbes, even called it “failure dressed up as innovation.” The following story, originally detailed in Business Travel News, helps paint this picture and reinforces what some top travel managers think about this subject.

Stephan Hylander, Strategic Purchasing Manager for Marketing and Travel from The Volvo Group, was named by Business Travel News as one of the top 25 most influential leaders this year. What was interesting was why. He doubled down on travel procurement principles and rebooted his company’s preferred airline program, for which BTN named him 2014 Multinational Travel Manager of the Year and he now is in this year’s Top 25 list.

If corporate negotiated fares are going to stay relevant, they need to be literally the best deal in town, and that’s why Hylander persuaded his key preferred suppliers to agree to discounts on all fares, “even if it was only 1 percent lower” in the case of the most heavily discounted classes. “Our travelers should always notice they are getting a slightly cheaper fare ... through us,” Hylander said. According to Hylander, “the first time we spoke to the airlines, they looked at us with horror.” The result: a return to the traditional airline deal proving a win for all parties. For Volvo, average paid fares fell 10 percent in 2013 and another 2 percent in 2014. Travelers gained by knowing the easiest option also was the best-priced. And the preferred airlines won too, as typical market share climbed from 65 to 70 percent to more than 90 percent on key routes.

By ensuring all travel is booked in one place, Hylander could maximize leverage. Surely the leverage of Volvo is larger than the leverage for most of you reading this blog. That said, air, hotel, car, and even other expense category deals can be had when you can control purchasing and supply data. We have found that maximizing the four pillars of T&E Value should always be a focus. They are again: leverage your total volume for supplier opportunities, enforce the right policies at the point of sale, expand rate considerations without bias, and utilize pre-trip approval systems for exceptions.

Credit —Amon Cohen of Business Travel News.

I would love to hear your comments. Hopefully you learn something from me and I would love to learn something from you!