Content Fractualization
For those of you who missed this – it is a good article that explains the concerns of the loss of homogeneity in the travel space.
My fragmentation slide from 1999 is looking pretty darn good about now
Cheers
Timothy
CWT considers "content fractionalization to be a critical issue":
The major development currently affecting CWT in North America, as well as the... (10/10/2006)
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The major development currently affecting CWT in North America, as well as the entire corporate travel industry at large, is the shifting of airline inventory distribution costs, says Mike Koetting, executive vice president - North America, Carlson Wagonlit.
"While predictions have been widespread since 2003 about the consequences of US GDS deregulation, the real impact has now transpired over the past several months. In general, in exchange for a $.80/segment fee, each GDS is offering a new "opt-in" programme that guarantees continued access to all fares and protection from airline surcharges," says Koetting.
"As an alternative to the new GDS opt-in fees, airlines also implemented a new distribution policy. The policy "encourages" agencies to "opt-in" to their preferred, "opt-in" distribution channels, in a not so subtle way, by assessing an airline distribution fee surcharge of $3.50 per segment to those agencies who choose to "opt-out." Obviously the $3.50 surcharge is much more onerous than the $.80 opt-in fee, so agencies were left with little choice other than to "opt-in." The good news for CWT clients processing their air travel spend using CWT's direct connect technology is that airline reservations processed through this channel are not subject to GDS opt-in fees or airline surcharges," added Koetting.
When queried about to the prevalent trends and converting them into business development opportunities, Koetting had this to say:
The key to any successful business is anticipating marketplace trends and responding to them proactively and well. Following are several trends CWT has identified along with our marketplace response.
Trend 1: Content is increasingly becoming fractionalised around the world. With the approval of Global Distribution System deregulation, carriers are more likely to narrow their content distribution options. Low-cost carriers, anticipated to reach 35 percent lift in North America by 2007, will more aggressively pursue a corporate-direct strategy.
The implications of this are: · Corporations, with the help of their TMC, need to be prepared with a strategy to have full access to content in order to ensure lowest fares for their travelers. · Also, as low-cost carriers increase lift in every major world region, average ticket price (ATP) will decline. · In major markets and routes where network and low cost models intersect, average decline will be 20-30 percent. · On international routes where low-cost competition is nominal, cost will increase to offset reductions above.
CWT's Response: CWT is a leader globally. We offer expanded capabilities and deployment of CWT's GDS independent fulfillment platform, including integration to third-party online tools. This ensures access to all content options and providers through utilisation of CWT's existing direct connect technology, with increased participation by low cost carriers. In EMEA, CWT WebFares currently books content from 85 carriers. Other markets use local market tools as appropriate.
Trend 2: Corporations are segmenting their thinking around travel spend into two broad categories:
· Trip (transaction) fulfillment services-applies to five percent of total T&E spent with travel management firms.
1. Commodity (transaction-oriented)-high percentage at low cost;
2. White glove (high touch) -low percentage at higher cost.
· Optimisation and data management services-applies to 95 percent of total T&E spent with suppliers (air, hotel, car etc).
1. Reducing overall spend through effective data aggregation worldwide applied over best-in-class Program Optimization strategies.
2. Managing and analysing risk, such as carrier reaction to Simplifares, in the ever changing travel industry with real time analysis.
CWT Response: Program Optimization conducted by global corporations will lead to material savings averaging 10-15 percent of total T&E spend. These strategies encompass air and hotel sourcing and management, as well as enhanced dynamic metrics for increased usability and actionable data.
Trend 3: Small meeting management will become a greater focus for consolidation and integration with transient travel, with increased emphasis in Program Optimization.
· 37 percent of companies have consolidated small meetings; this is anticipated to grow to 50 percent within three years.
· A 25 percent increase in web-based tools for meeting management is projected.
Implications:
· Corporations will consolidate meetings management to manage not only their meetings dollars, but to leverage that spend with transient travel and attain greater discounts.
· Further integration of technologies between transient and meetings will be necessary in order to achieve consolidation and optimize spend.
CWT Response: Capture of all spend data for enhanced negotiations; build upon CWT's unique integration between online booking and meetings management tools for efficient traveler and meeting planning processes; global resources of sister company, Carlson Marketing Worldwide, for comprehensive program offerings.
(This analysis is an extract from EyeforTravel.com's Ritesh Gupta's interview with Mike Koetting, executive vice president - North America, Carlson Wagonlit. Watch out for the full version in the days to come).
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
Tel (US) +1 425 836 4770
Mobile (US) +1 425 785 4457
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