The sad-sack business traveler has been put upon in recent years, coughing up thousands of dollars for last-minute flights, while leisure travelers snap up last-minute Web fares for a fraction of the cost. But that is all changing.
Business travelers, especially those at small- and medium-sized businesses, are now getting the chance to play on a level field, where Web fares mingle with corporate discounted fares and last-minute deals -- all on one screen.
, a unit of
, debuted "Travelocity Business." With the move, the online travel outfit joined rivals
in launching special products targeting companies with unmanaged and lightly managed travel needs.
"We allow corporations to load in their own negotiated rates, tell us who their preferred vendors are, which they can see along with all of Travelocity's unique content and fares," said Ellen Keszler, president of Travelocity Business. "Travel managers can set up their travel policies as they see fit and we'll encourage travelers to book the preferred carriers and help enforce the policy so they book the lowest fare."
Over the last six months, the online travel agencies have begun pushing into the low end of the corporate travel market, offering a variety of features at a fraction of the cost to companies so small they don't need to pay big bucks for full management of their travel needs.
"On average airfare booked online is 20% below what they'd buy from an agent on the phone," said Keszler. "And the corporation would save significantly on service fees. Ours is just $5 for online bookings and $20 for bookings over the phone. That's dramatically less than what full management costs."
Keszler estimates the market size for lightly managed or unmanaged businesses is $82 billion a year, which is one reason why all three online agencies have been creating new services for business. In 2002, the number of bookings at company-approved online agencies was $5 billion, according to Jupiter Research, which says that number will jump to $27 billion by 2007.
For decades, this segment went largely underserved by the corporate travel titans like Rosenbluth International and American Express, who were busy offering customized solutions to the largest companies with the deepest pockets. "We're delighted to see them approach this market," said Ron DiLeo, chief operating officer of strategic travel solutions for Rosenbluth. "The bulk of our clients want to aggressively manage their travel needs. They don't really do that."
What These Guys Do
While there are notable differences between the just-launched Travelocity Business, Expedia Corporate Travel (which launched in November) and Orbitz for Business (which debuted in September), they all essentially do the same thing and charge the same prices.
On the front end, when business travelers shop for tickets, a customized search feature is set up that allows them to see all the corporate fares along with the leisure fares than can be significantly cheaper. The corporate travel manager puts in a set of restrictions and while buying tickets, the employee can see the company's suggested travel option. If a cheaper flight is available, the employee can still buy it -- but it alerts the travel manager that company policy has been bent.
While the front end may be nothing more than a souped-up version of the powerful search engines leisure travelers use, the back-end reporting features are what make these products truly unique. "The most important thing is the reporting capabilities," said Jared Blank, online travel analyst for industry tracker Jupiter Media. "Businesses can see who is going where, what they're paying and then use it to negotiate better deals."
Indeed, using a feature such as the "exception codes" that Orbitz for Business rolled out a week ago, travel managers can not only see who is violating the company's travel policy, but employees will be warned before buying a ticket -- reinforcing the rules. At the end of the month, travel managers get a detailed report saying who spent what, with whom and what class of fare they received -- allowing even the smallest business greater control over travel costs.
In the future, these reporting tools will only get more advanced. In the months ahead, Rick Weber, vice president of Orbitz business services, says that corporate travel managers using Orbitz will be able to filter out fares they don't want employees to see, handicap future travel spending patterns and receive more frequent reports.
And there are other advantages outside of searching and reporting, such as the features Expedia Corporate travel offers clients, such as an international rate desk and VIP services. "We didn't just slap a business sticker on a leisure site," said Matt Hulett, vice president of Expedia Corporate Travel, who adds that, unlike rivals, Expedia also has a full-service component offering more services at higher price points.
What, Me Worry?
The first wave of business travel solutions from online travel agencies is a step in the right direction, but it's certainly not seen as a threat by the larger corporate travel firms. Both online agencies and corporate travel firms say they can happily coexist. "We're not even worried about it," said Rosenbluth's DiLeo. "These guys just aren't as client-centric as we are."
Indeed, larger business travel firms offer an array of services that online agencies can't match, small companies don't need but large corporations are willing to pay for. Consider Rosenbluth's security suite, which has three components that online travel agencies can't match. Not only does Rosenbluth provide constant updates of travel situations in every country, but it can suggest the best restaurants in Prague and even tell you exactly where all your on-the-road employees are at a given moment.
"If you want more intranet-based reporting, we can do that. They have shrink-wrapped, one-size-fits-all-solutions that work well for small businesses," said DiLeo. "We can build a custom program to suit your needs."
Win-win scenarios are rare in the world of business, but the push the big three online travel agencies have made into the business space seems to benefit travelers and airlines alike. With so much excess capacity, these new business platforms will provide another good outlet for airlines to hawk their fares and manage demand.
"Everyone has excess capacity and with more venues, the better it is to support the supplier's need to get rid of inventory while also letting buyers get seats on the cheap," said DiLeo. "It's a win-win. All these services they offer will keep everyone flying now, not just leisure."