23 Feb Thought Leadership: Travel Agency vs Online
Travel Agency vs Online
At some point, most travel managers are faced with questions from either their travellers or travel arrangers around the option of making bookings online. To clarify, in this document we are referring to bookings made online either direct to the supplier (airline website etc.) or via an Online Travel Agency (OTA)) but not bookings made via a corporate online booking tool as these are supported by the Travel Management Company (TMC) or travel agency. Whilst we appreciate that from time-to-time, there are fares viewed online that may be shown as cheaper than those available via your TMC, the following are some of the key things to consider when faced with this situation:
- Fares: It’s important that all parties understand that airlines manage the yield of each flight through the use of different booking codes within each class of travel. Each one of these codes relates to a different fare level and associated restrictions etc.
- Availability: The need to validate that the fare quoted is actually available. Often, we are faced with situations where someone goes online, a fare is quoted for the route to be taken before making the booking (marketing the fares), However, unless they go to the next stage and make the booking, it doesn’t confirm against availability and in many cases, is not available.
- Timeline: When making any booking, the fares quoted are effectively the fare available at that moment in time. With most online bookings (all that are direct with the carrier), there is no further processes to waitlist lower options, to call the airlines sales team to push to clear waitlists or for anyone to continue to check availability right up to the date of departure.
- Employee Productivity: This might seem obvious, but people often compare their experience of booking a leisure trip online with booking their business travel. When booking a leisure trip online most people will visit multiple websites ranging from various OTA’s to airline and hotel sites to validate the prices and options. This is fine when done in their personal time for one booking but when viewed in the context of making hundreds or thousands of bookings a year this is grossly inefficient, and the loss in productivity, would far outreach any fare or fee difference.
- Management Reporting: Bookings made online will not be included in your management reporting. This will make it very difficult to manage or measure the performance of your program e.g. to make quantified decisions on policy, to identify traveller behaviour, to negotiate with suppliers or to provide reporting to departments within your business.
- Security Tracking: Bookings made online will not be tracked by your TMC or be fed into your risk management systems e.g. ISOS etc. This can make it far more difficult to assess risk or support employees in terms of duty of care.
- Disruption & Disaster Recovery: Probably the biggest difference between booking online via an airline website or OTA and a TMC is when something goes wrong. If there are weather (typhoons, snow storms etc.) or civil unrest issues or impact from industrial action etc. with a TMC you have 24x7x365 support to advise you proactively on the situation and provide potential solutions… with the online option, you’re on your own…
- Traveller Guidance & Support: When booking online travellers are left to interrogate the options themselves, this can take a material amount of time if considering options to different airports or on different carriers (particularly if looking via airline websites). TMC’s have access to systems that can see all the flight options with related availability and should be able to relay this information efficiently. They can also steer travellers to the most effective options e.g. avoiding changes in terminals when transiting or advising on carriers with better on time performance etc. TMC’s are also materially better at enabling users to make changes to bookings, usually without charge.
- Compliance & Governance: When your travellers book online, alternative options are not documented or provided to the approval process, so your management has less visibility to the options declined. Whilst booking online is often positioned by travellers as them looking for the lowest cost option… it is also used by those wishing to hide the alternative options in favour of their personal preferences.
- Ticketing: Airlines apply ticketing time limits to tickets. This is to drive people to confirm options earlier so that they can manage their inventory and cash flow more effectively. However, many OTA’s force people to issue tickets at the time of booking and so have restrictions and fees apply immediately should they need to change or cancel. A TMC can review availability and if there are airline ticketing time limits, they can advise the booker and if available, cancel and rebook to extend the booking timeline at no extra cost.
- Payment & Processing: Creating an extra expense claim. Due to the time between paying online and the normal post trip expense; when booking online, employees create additional expense claims for which there is an associated cost. Based on a report from Aberdeen Group, the average “best in class” cost for processing each expense claim is USD15.84 (leveraging an integrated expense management system).
- Costs: When reviewing costs, always look at the total cost of travel, not just the individual components. Often people are seduced by the lack of transaction fees of booking direct but then fail to compare the total costs (change fees, employee productivity, expense claims, reporting, contribution to supplier contracts etc.)
Conclusion: When taken as a single transaction, for a simple point-to-point trip, online can be an option… However, when viewed from the program perspective of booking and managing trips across an entire business, it’s far less attractive.
Note: There are some very capable websites and some airline sites are better than others. All need to be reviewed in context of the needs of your business. There are also some TMC’s that market themselves as “Online” (e.g. Egencia or Ctrip) however, these are TMC’s that leverage an online booking tool (as could be done with most TMC’s) but also provide “offline” services and therefore not part of this comparison.
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Author: Simon Hague
Simon has been in the travel & expense industry for over 24 years, working across EMEA, The Americas, Asia and Australasia.