The Business Reality of Open Booking

This analysis appeared October 9, 2013 in Cornerstone Information System’s “Insight & Opinion” section.


Open Booking, noun: A travel industry term concocted to describe the process whereby problems that don’t exist are solved using techniques that don’t work, so as to produce savings that can’t be defined.

I’m not specifically against Open Travel or Open Booking, but if it’s such a good idea a straightforward case should be made in favor of it, using real data and sound business arguments. The fact that this doesn’t happen is very telling.

Open Booking rests upon a theoretical foundation that is distant from the real world and requires us to suspend belief in how travel distribution works if we are to adopt it. A few business concerns and examples may bring Open Booking’s contradictions into focus.

Travel Management Companies

The “M” in TMC represents Management. TMCs provide value because they appropriately manage the travel process on behalf of their customers; when they fail that value disappears.

Open Booking’s proponents speak of the evolving role for TMCs looking like a subscription-based service where agents provide support regardless of where and how reservations are made. How this might be an improvement over a TMC’s involvement in the current online booking process is left somewhat mysterious.

In the real world, TMC experience and expertise can shorten the path to correct decisions and avoid the wreckage from bad ones. While it’s not impossible to clean-up problems after the fact, it is typically more difficult and expensive–as anyone with experience at a subscription-based 24-hour travel support service could tell you.

To suggest that TMCs should support corporate travel in this mode by default is to say that their services have little or no value–which is clearly not the case.

Whatever its flaws, travel management operates the way it does because it works. Desiring to correct those flaws is not a testimonial for Open Booking.

Duty of Care

Corporate travel managers should have concerns beyond the basic cost of travel services, one being duty of care. Broadly speaking, in the real world this is a generally accepted principle which says that individuals must take reasonable care when performing actions that could foreseeably cause harm.

It applies in business as in other areas of life. Concerning travel, the possible implications are obvious, as there are numerous services informed and prudent people should not use, places they should not go, and things they should not do.

Allowing or even requiring travelers to bypass a source of expertise that is well-known, established, and otherwise available to them might not cause a duty of care problem, but the potential is real and shouldn’t be dismissed in the quest for imaginary travel cost savings.

Managed or Not?

Open Booking supporters often affirm that it is not the same as unmanaged travel–a distinction without a difference. When you stop managing in the real world you allow events under your control to be handled in whatever ways the people involved feel is appropriate.

That is the essence of Open Booking. The fact that you might be able to collect data, count the cost of the result, and disagree with choices made doesn’t compensate for the lack of control.

Since 2002 public companies in the United States have operated under the Sarbanes-Oxley Act (SOX), which is a complex set of financial regulations that are intended to correct the financial and management errors that caused the financial scandals of that period. Among many other things, it requires the management of public companies to take specific responsibility for financial reports and for their own actions.

It also imposes requirements as to internal financial controls, conflicts of interest, and the level of understanding management and auditors must have over internal processes and procedures.

Travel is a significant part of most public company finances–often among the largest expenditures. While the specific implications of SOX vary substantially by company, why would it be in the interest of any manager facing such obligations to forsake management-based controls over expenditures that might be counted in the millions in exchange for unproven lower costs and a somewhat lesser level of employee complaints?

SOX is very difficult to reconcile with Open Booking–counting what has been spent or even establishing budgets for travel is not sufficient, as SOX requires control and meaningful representations that proper procedures have been followed.

The Business Reality

Open Booking as it is currently represented is a bad idea for travel agents who have no realistic role in its operation. It’s equally bad for corporate travel managers who are asked to abandon the tools that are central to doing their jobs.

 

Open Travel and Industry Mythology

This analysis appeared August 12, 2013 in Cornerstone Information System’s “Insight & Opinion” section.


You may have heard of something called “open travel” or “open booking,” that is about to change corporate travel procurement. It says that travelers will book whatever they want as long as they don’t exceed budgets and fulfill other vague management requirements, such as paying with a corporate credit card.

Travel Management Companies will have to find new roles (no one is quite sure what those might be) and corporate travel managers will see their responsibilities changed, or substantially diminished.

Proponents of this new travel management strategy, which include some substantial travel buyers and data managers, assure us that travelers are buying where the want anyway, so clearly it’s best to make the best of the inevitable.

What’s interesting is that this isn’t new.

Prior to the mid 1980s, when consolidating travel procurement with a few designated travel management companies became popular, it was the default purchasing system–set your budget and let the rest take care of itself.

I’m confident that proponents of “open travel” believe that technology has advanced so much over the last 30 years that the essential management problems that resulted in consolidated travel management are no longer issues.

If we simply wait long enough, smart phones will solve everything–they’ll even change human nature.

Can Less Be More?

There are few analytical reports describing open travel’s effectiveness–those that do exist are contradictory and most are poorly executed(i). As a business strategy, open travel advances several logical fallacies that we should try to avoid:

Hasty Generalization

It doesn’t necessarily follow that because some, even most, travel management programs perform poorly and that they are at odds with new technology, that all such programs must do the same.

It also doesn’t follow that travelers in general will make informed and rational purchasing decisions absent a centrally managed travel program because some travelers appear to do so, for some of their trips, at least some of the time.

Open travel’s proponents need to conclusively demonstrate that the business rules they suggest the industry adopt are not based upon the behavior of a small sample operating under exceptional conditions.

Faulty Dilemma

Because there are clear shortcomings with travel management practice, we are not necessarily left with a “strength through weakness” strategy that allows travelers to book whatever they want as the alternative. There are other choices.

The Big Picture

Centralized travel management exists because it is effective. Vendors extend favorable pricing and other services to purchasers because they believe the benefits exceed the cost.

Part of what vendors presume is that travel managers will influence selection and behavior. Travel programs that consistently deliver such results are those that succeed.

Why would vendors offer similar benefits where buyers stop trying to do these things Control is an essential component of preferred pricing, and open travel is signal for higher prices, not lower.

The mythology of the travel industry asserts that technology allows individuals to find as good or better discounts in the marketplace as are available through managed travel programs.

Again, that’s nothing new, the assertion has been made for as long as there have been centralized travel programs. In practice there are always exceptional situations, but consistently poor discounts are signs of a poor travel programs, not testimonials for open travel.

Technology makes traveler shopping somewhat easier, but it doesn’t make informed buyers or change human behavior. Again with exceptions, travelers do not usually share the management goals of their companies–part of a travel manager’s role is to provide structure for those goals.

A traveler’s agenda is more personal and can always be validated by countless rationalizations and “this time is different” conclusions. There is no lack of creativity in this area.

To expect individual and company goals to align so as to correctly and consistently influence individual traveler behavior is to assume that people will stop behaving like people because they have better smart phone applications and are free to use them.

Open travel is less efficient than centralized travel management, not more. It assumes pricing practices that don’t today exist, people acting in ways they don’t normally do, and, even if these point are granted, that it is the best use of a traveler’s time to research prices and keep sufficiently informed so as to make good decisions.

It’s a theory that assumes much and delivers little.
(i) Unless a study describes a sound methodology, an adequate sample size, and the precise questions it tried to answer, which is almost never the case, it falls into this category. Please see my paper on this topic.

Corporate Mobile Travel Strategy

This analysis appeared June 14, 2013 in Cornerstone Information System’s “Insight & Opinion” section.


By now you’ve been thoroughly exposed to the idea that mobile applications (affectionately termed “apps”) are an essential part of travel technology. There’s no denying that mobile applications are popular, but understanding why and to what extent is more difficult.

Equally challenging is interpreting the specific implications for your business.

Business Case

Perhaps you’re as tired as I am of being told you “need” a mobile travel strategy, and it would be interesting to first understand what you could accomplish.

Proponents usually start building their case with surveys and research which suggest businesses without mobile capabilities risk being “overwhelmed” by competitors, as the number of people initiating travel transactions on mobile devices expands to eclipse all other methods.

This argument runs aground somewhat because almost all this research isn’t very good. Briefly, almost all popular industry researchers don’t disclose their financial backers and biases, or their research methods, and their products aren’t scientifically designed or operated.

We’re left to conclude that, from among the hundreds of millions of smartphones and tablets, consumers simply must be looking for travel products, even if specific numbers can’t be verified.

Competition among the literally millions of app developers is intense–for room on the device and consumer attention if nothing else. Of the dozens of apps on your device, how many do you really use?

Five or six is an oft-quoted number.

I’m not arguing against mobility or applications, just pointing out that the barriers to successful entry are significant, and assuming these are unimportant because the market must be huge doesn’t make it so, or drive travelers to use a mobile app simply because you offer it.

In the simplest terms, people probably use mobile applications for some of the following reasons:

  • Having a computer with you everywhere you go is certainly handy.
  • Most people didn’t do that much with their PCs anyway–the transition to mobile is fairly straightforward.
  • The apps can look and behave better than on a PC, because building tools in a web browser was never a really great idea.
  • Most travel vendors have made communicating with them so difficult and unpleasant that the simplest, handiest form of electronic access looks very attractive.

As you start thinking about a mobile strategy, consider carefully the real reasons you believe travelers will support it.

The Best Tool Is the One That Works

Corporate travel buyers are often presented a surprisingly sparse list of mobile application choices. Much of what is on offer doesn’t do much or work very well.

Consumers have always had a high tolerance for flawed travel technology–a frequent reaction being that, if it works at all, it works wonderfully. The basis for a successful mobile strategy might be to insist on delivering real value and performance to the customer.

Determine what the service and business needs of your travelers are, then look for products that can approximate those requirements with an acceptable level of change to your operation.

For example, if you’ve determined that travelers should be able to request, change, and reconcile their trips from a mobile device, be certain that the tools you select allow that to happen with very few failures, limited training, modest traveler effort, and acceptable recourse when things go wrong.

These sound like “everybody does that” goals, but in practice they are difficult. Don’t be coaxed into accepting marginal products simply because they’re mobile.

It appropriate to set more modest goals that support your overall service strategy and that you can successfully reach.

The Best Tool Is No Tool

The travel industry is often anxious to build solutions to problems that shouldn’t be solved. No tool, mobile or otherwise, can change the fact that most “technology problems” are really unresolved management problems.

Often your business goals are better supported by altering procedures and requirements to make problems go away, as opposed to looking for the latest apps that might solve them.

The distance between mobile applications and other computer-based tools isn’t very great, and no computer ever compensated for poor procedures and policies, unrealistic expectations, traveler misbehavior, or a failure to manage.

Mobility is best viewed not as the centerpiece, but rather as an intelligent and convenient enabler for your comprehensive product, service, and travel strategy.

 

IATA’s New Distribution Capability (NDC)

This analysis appeared July 15, 2013 in Cornerstone Information System’s “Insight & Opinion” section.


In an industry as diverse as travel distribution, there is rarely a shortage of controversial ideas. Recently, critical voices have been raised against IATA’s “New Distribution Capability” (NDC) initiative, variously asserting that its development was closed to most outside input, that it is unfair to travel agents, technology providers, and other stakeholders. It is claimed that the NDC harms consumer interests, and that its implementation requires unacceptable privacy compromises and financial expenditures from distributors and consumers alike.

Curiously, I’ve yet to hear the simplest and most concise justification for opposing the NDC from anyone:

It’s a fundamentally bad idea that probably won’t work.

As these posts must necessarily be brief, I’ll only touch on a few of the NDC’s strategic and business flaws–operational and technological shortcomings must await another discussion.

What Is the NDC?

According to IATA1 the NDC is a business and technological initiative best understood as a process that allows “indirect channels” to enable the same capabilities that exist on airline websites, while preserving an airline’s control of the product. It also proposes to enable product innovation, differentiation, and personalization by directly accessing expanded information as to a traveler’s purchasing profile and history.

The NDC’s “initial scope is the shopping process.” As an example of how this might work, supporters maintain that the NDC will modernize air travel distribution and benefitconsumers by giving them an experience similar to Amazon.

Perhaps, but the NDC mistakenly confuses multiple goals in a package that delivers capabilities few people want. It’s technical features represent one way, certainly not the only or necessarily the best, to enhance shopping data. Other intended benefits are more dubious.

Amazon is a poor service delivery model–air travel distribution has little to do with selling books or consumer products.

The personalized shopping experience, whether through Amazon or an airline, is largely a chimera without real-world application. Frequent Amazon shoppers are aware of the annoying and usually irrelevant suggestions the site continually offers–transferring this unhelpful dialogue to benefit air travel strains the imagination.

One Bad Idea Begets Another

IATA is criticized for failing to adequately consult with distributors and consumers as the NDC was developed–perhaps justly so, although interpretations disagree as to how meaningful the prior industry dialogue was. It’s worth noting that however worthwhile these discussions might have been, IATA isn’t obliged to hold them in any particular way, or to do so at all.

There is also a serious question as to who might participate. There are no industry-wide trade associations with adequate technology capabilities, credibility, and resources to represent even segments of distributors or consumers. Individual companies may have meaningful input, but are not in a position to speak for anyone else, or even their own customers.

Industry discussions to develop and refine technology policy are exceedingly rare–much more so that IATA’s critics would have us believe. Those who feel excluded would do well to upgrade the forums, expertise, and messages they might use to make meaningful future contributions.

Who Benefits?

Shouldn’t airlines know more about the consumer prior to booking so they can “personalize” the product offering, as the NDC promises?

If that were so, it should be easy to describe what that “personalization” would look like–but it isn’t. Beyond the vague “more like Amazon” promise, “personalization” sounds like a more technologically advanced bundling of the many obscure fees and charges no one likes or wants.

If the result isn’t higher consumer costs, what is it?

Many airlines have had access to personal data that were supposed to enable better offerings for decades (through frequent flyer programs, for example). The fact that these enhancements have been meager causes consumers to rightly question whether the new expense and privacy compromises the NDC imposes are justified.

The New Distribution Capability proposes to solve problems most consumers don’t see as problems and deliver ill-defined benefits they haven’t asked for and probably won’t appreciate–at an undetermined cost they are unlikely to embrace. Wholly apart from the clumsy way it has been developed and presented, this is not a formula for a successful project.

IATA was ill-advised to start down this path and its airline participants are likely to see more customer grievances, direct and indirect program costs, and few of the NDC’s promised benefits.

  1. International Air Transportation Association (IATA), NDC Update, November 2012, page 8.

Perspectives on Data Ownership: 2013

This analysis appeared March 15, 2013 in Cornerstone Information System’s “Insight & Opinion” section.


Recent popular discussions of “big data” (a surprisingly ill-defined term) are curiously silent on where these data may come from and who should decide where and how they are used. Perhaps this is because the current social media wave encourages individuals and businesses to surrender a degree of privacy (and hence control over data) in return for the promised benefits of whatever service is on offer.

While we may believe that travel data ownership questions were settled long ago, control and ownership questions are more complex than many assume and require careful review regardless of how open or restrictive data access should be.

Everyone’s In Charge

Most travel businesses you speak with will assert either that passenger travel data belong to them or that they have a right to use and distribute them essentially as they see fit.

Corporate travel managers usually maintain that, since they pay the bills, they both own and control the data. Airlines and other vendors often assume the right to use and distribute data about the use of their services, and travel management companies believe they have a degree of ownership because much of the most valuable travel data comes from their systems and exists because they expended energy to create it on behalf of “their customers.”

This travel data ownership conflict is a familiar story, but there are other less evident or considered levels:

A number of processing intermediaries including payment systems, ticket processors, GDS companies, and on-line booking tools assert a right to distribute travel data and reports for their financial benefit, apart from any direct or indirect benefit travel buyers receive. Typically this is done with individual travelers remaining anonymous, but the degree to which “anonymous” travel detail is widely available, down to specific itineraries and dates, would surprise most travel managers.

Many sources also make data available to third-party aggregators, who also operate for their own financial benefit under the assumed anonymity of individual travelers. Such companies produce an array of usage and comparative models, predictions, and similar data projects which find uses far removed from travel management.

Assumed Anonymity

I use this term to describe the broad assumption that, if my name isn’t present, whatever follows doesn’t matter. Anonymity can unravel quickly. It’s hard to argue that the kind of industry-wide data aggregations used by the DOT and others to predict economic trends are threatening, but under the care of a skilled analyst, extensive company-specific and individual travel patterns could be deduced, especially by combining multiple sources.

Interesting Questions

The extent and depth of travel data distribution and usage should at least cause travel managers some reflection, even if they decide they need not be concerned.
Here are a few specific thoughts:

  1.  complete chain of custody affecting anyone’s travel data is unknown–sometimes adequate, elsewhere non-existent. Many companies with data responsibilities have no real data security program in place that runs deeper that simply saying the right things.
  2. How is it that so many travel industry business intermediaries are selling data produced by customer activities for their own benefit? Aggregate industry analytical reports are one thing–distributing detailed raw data to third parties is another. Where did that permission come from?
  3. Have corporate travel managers looked at the type of data being distributed about their travelers in detail and rationalized it with their own company privacy and security practices?
  4. Are travel management companies comfortable with the extent of peer comparison by vendors and subsequent data aggregation that has become commonplace in the industry?

Whose Customer?

This analysis appeared April 9, 2013 in Cornerstone Information System’s “Insight & Opinion” section.


Talking about “the travel industry” often invites criticism that it’s impossible to generalize–travel companies of any description are not identical and can’t be expected to behave as one. This ignores the experience of even casual observers, who see business decisions, successes, and failures widely replicated and frequently repeated throughout the travel industry over time.

There is a continuity within companies that operate in the same field, face similar market challenges, and who must compete with each other that causes them to align similar practices and strategies to an often surprising degree. What is referred to as “institutional memory, (the phenomenon where groups of people working together circulate and perpetuate the same ways of thinking over time), makes such alignments difficult to change.

One such area is ownership and management of the customer relationship. Travel vendors largely think they should be interacting with their customers directly and with as few intermediaries as practical.

This belief predates the coming of The Internet and electronic commerce–it’s varied over decades but never disappeared. In many ways it’s a stronger business force than on-line selling.

The fact that travel vendors generally don’t do an especially good job of interacting with their customers, or of listening to them, doesn’t cancel the desire to remove intermediaries.

If it Were Only True

If travel suppliers deal directly with customers, costs and inefficiencies should decline. More important, it should be possible to protect and preserve loyal customers.

It almost never works that way.

One major impediment is that, to provide effective customer service, you need to listen to your customers and understand what they say. Translating these simple requirements into appropriate actions proves particularly difficult for the travel industry.

With exceedingly rare exceptions, nobody in the travel industry delivers customer service and nobody can–where “customer service” is defined as delivering what the customer truly wants to buy when it is needed.

Airlines are a reasonable example. Do you know anyone who thinks the excessive and capricious baggage fees most carriers are anxious to charge are a good idea? I’ve asked that question before groups of hundreds; apart from a few people with a specific viewpoint to represent, I’ve yet to get an affirmative response. I’ve never even heard of such a response.

The “ATM machine in the sky” approach to airline pricing is a major profit contributor, but it wasn’t designed to please the consumer.

If travel purchasers received everything they wanted by removing intermediaries, they’ve had the past 18 years (since the availability of Internet-based tools) to eliminate travel management companies, on-line travel sellers, and corporate travel departments. There remain necessary services that suppliers can’t or won’t provide.

Listen Here!

Travel management companies usually fail the “customer service” test as well. Even the most sophisticated are good at order-taking, exceptional at listening to customers (much better than vendors), tepid at data analysis and product innovation that addresses real customer needs, and non-existent at informed communication–when was the last time you received a newsletter or e-mail bulletin from a TMC that wasn’t an immediate, no-consequence throw-away?

Customer relationships are the product of continued, frequently arduous investment. They are earned, not simply claimed. Intermediaries such as TMCs and OTAs are valuable travel management participants because they meet real needs, despite their own failings.

Efforts to change that without adding equivalent value are destined to the growing list of management theories that simply don’t apply to this industry.

Improving Travel Industry Research

Once again a new year brings another round of what passes for industry research. Although notoriously over-surveyed, the travel industry remains awash in bad data, ill-conceived and poorly executed research projects, and self-serving studies that are relevant more to the next round of funding or the next newsletter sale than to developing a real understanding of markets and trends.

Eventually the industry may get better at labeling useless research for what it is (the trend is not positive, however), but for now the very few good studies routinely drown amidst the hyperbolae of research that can’t connect with real insight–or those that connect all too well because the result was fairly evident before the process began.

Nowhere is the problem more acute than in the online travel and social media worlds. High-priced research typically reinforces conventional wisdom and assumptions while key customer and behavior questions remain unresolved.

I’ve wondered aloud in past articles why major trade groups show such slight interest in these issues. If the online and social media worlds have such monumental consequences, what precisely could be more important to their members?

Here are a few suggestions for modeling forthcoming research projects. These are similar to suggestions I’ve made in public for 15 years, and hopefully they will help you appreciate the limitations of today’s travel research and be positioned to improve it in the future.

    1)    Broaden the Base

Successful studies need wide participation and sponsorship. Those funded and controlled by a single company or clique are not necessarily bad, but this adds complexities and concerns that are avoidable through planning and execution that strives to include more viewpoints. Addressing the needs of a broad constituency increases both value and integrity.

    2)    Sampling Is Key

Few research projects undertaken in the travel industry describe how the study sample was selected, what the resulting accuracy and margin for error are, or the size of the sample.  This is because these are among the most challenging aspects of valid research–requiring time, expertise, and money to address properly.

Most researchers simply ignore them; the resulting studies are little better than worthless.

If you peek under the covers only slightly at a surprising number of major industry studies, you’ll discover that the sample essentially self-selects. The researchers won’t explain how their conclusions in this environment are valid because they aren’t–and they can’t.

There are many parts of a study that has sufficient statistical validity to become the basis for real-world conclusions and predictions, but one is usually that a valid sample must be defined and identified in advance of the research and then the study must continue until it reaches the sample as defined.  More work than most researchers want.

    3)    Questions, Questions

Any question-based research should disclose the questions used and how these are presented.  Forming valid questions is a significant undertaking–which is frequently botched.

During 2010 I was treated to a trade conference  where the expert presented study results to show the importance of the field where he was the market leader and that was the subject of his presentation.  The self-selected sample were asked a variety of simplistic questions with many obvious answers:

“Is cost-control important in your business?”

Have you ever met anyone who would answer “no?”

When the presenter reached some study questions that were clearly silly, he remarked,

“Well, my staff assembled these questions and I should have reviewed them better.”

In other words, the presentation is a waste of everyone’s time–which also says something about the extent to which some conference organizers vet their presentations.

    4)    Seek Wide Input

Limiting control over a study to its sponsors or other “insiders” cannot but color the result as self-serving. Enlightened researchers learned along ago that the “best and brightest” often don’t work for them and they seek such talent out wherever they can find it.

    5)    Dump Hyperbolae; Focus On Quality

The industry doesn’t need another round or praise describing how great the opportunity of the day may be. What’s needed is thorough research and careful answers that relate to business concerns and allow the reader to reliably take action.

This simple definition disqualifies most of the fluff-laden e-commerce and social media studies of the past few years. There are people who know how to do real research–it’s a mystery when their input is so clearly lacking in the major reports of today.

    6)    Analyze

As there are competent researchers there are also competent interpreters who can make connections between abstract numbers and real business situations. Their work ought to by key to any research project. A study lacking informed, usable conclusions should be first into the worthless bucket.

    7)    Validate

There’s a saying that teaches thus:

“Premises that are absurd when projected into the future were absurd to begin with.”

Researchers and readers alike need to apply logical tests in order to understand the validity of a study’s conclusions.

For instance, most predictions about the fantastic growth of mobile, social media-based, or other new media travel purchases assume a level of personal computer use and literacy throughout society that is simply absurd within the time frames considered.

Clearly studies are failures when they cannot withstand the test of reasonableness.

    8)    Forget “Guru” Mentality

Research is ongoing and the “final word” on most topics will likely never be written. Successful research projects are willingly subject to critical review and are revised in light of new viewpoint and data.

A premise holding that the oracle has now spoken and nothing further may be added only highlights the underling weakness of the research in question.