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Managed Travel 2020: Technology Drives New Opportunities

PhoCusWright White Paper:

Managed Travel 2020: Technology Drives New Opportunities October 2014

©2014 PhoCusWright Inc. All Rights Reserved. Page i

This PhoCusWright White Paper is made possible by The International Air Transport Association (IATA)

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About PhoCusWrightPhoCusWright is the travel industry research authority on how travelers, suppliers and intermediaries connect. Independent, rigorous and unbiased, PhoCusWright fosters smart strategic planning, tactical decision-making and organizational effectiveness.

PhoCusWright delivers qualitative and quantitative research on the evolving dynamics that influence travel, tourism and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation, sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior executives, marketers, strategists and research professionals from all segments of the industry value chain use PhoCusWright research for competitive advantage.

To complement its primary research in North and Latin America, Europe and Asia, PhoCusWright produces several high-profile conferences in the United States and Europe, and partners with conferences in Canada, China and Singapore. Industry leaders and company analysts bring this intelligence to life by debating issues, sharing ideas and defining the ever-evolving reality of travel commerce.

The company is headquartered in the United States with Asia Pacific opera-tions based in India and local analysts on five continents.

PhoCusWright is a wholly owned subsidiary of Northstar Travel Media, LLC.



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Managed Travel 2020: Technology Drives New Opportunities Written by Norm Rose

IntroductionTechnology is changing every aspect of our lives, including the way business travel is planned, booked and experienced. Few would consider modern day business travel to be hassle-free, but technology is making business travelers more informed and able to add services that make their trips more comfortable.

Most corporations have long recognized that business travel is one of the company’s largest controllable expenses. In an attempt to manage this spend, corporate travel managers have created structured programs designed to reduce and control costs by leveraging volume to obtain supplier discounts. To manage these discounts, corpo-rations have sought the help of dedicated corporate travel agencies or Travel Man-agement Companies (TMCs), and have deployed web-based applications known as Corporate Booking Tools (CBTs).

These traditional ways of managing travel are being disrupted by new technologies and standards that will change the face of business travel by 2020. These include the growth of personal device technology, new value-added ancillary travel services and emerging protocol standards that will provide greater choice of airline products and drive more personalized offers to travelers.

Purpose of PaperThe purpose of this paper is to examine the impact of technology on the way managed business travelers purchase airline products and services, predicting what will be the lead-ing trends by 2020. This paper analyzes disruptive changes happening today and forecasts how they will impact the managed travel process, the traveler experience and their expec-tations in the near future, with a focus on airline booking practices. The paper is organized in four sections:

0 Part One – Managed Travelers Embrace Smart Mobile Devices and Expect More Per-sonalized Services

0 Part Two – Technology Driving New Business Practices

0 Part Three – Managed Business Travel in 2020 – Greater Personalization

0 Part Four – Conclusions




MethodologyIATA Global Passenger Survey

PhoCusWright partnered with IATA, adding 20 unique questions targeting managed travel-ers to the annual IATA Global Passenger Survey, conducted between July 29 and Septem-ber 14, 2014. To be included in this section of the survey, the questions targeted travelers who work for companies that have specific policies regarding travel purchasing and reimbursement. The respondents needed to verify that their companies used one of these elements as part of a managed travel program: (1) expense policies (e.g., allowed and non-allowed expenses); (2) the use of preferred suppliers (e.g., airlines, hotels and car rental companies); (3) the use of preferred booking channels such as a corporate travel agency/TMC or a company-provided online booking tool (also known as a corporate booking tool or CBT).

The survey respondents represent a valid sample of 976 respondents from each of the major geographic regions of Europe, BRICs (Brazil, Russia, India and China), North America, Asia Pacific (APAC) and other regions beyond these four categories (see Figure 1).

Interviews with Key Travel Industry Executives To augment the survey, PhoCusWright conducted 18 detailed telephone interviews consist-ing of:

0 Five airlines, four full-service carriers (FSC) and one low-cost carrier (LCC).

0 Five TMCs: two global TMCs and three large regional TMCs.

0 Five corporate buyers representing different industries and geographies.

0 Three global travel technology vendors.

These in-depth interviews reviewed current and future trends in the managed travel sector, providing multiple perspectives on emerging trends impacting the market. These interviews helped us define the key issues disrupting the managed travel market today and tomorrow.

Figure 1: Survey Regional Breakdown

Question: What is your country of residence?Base: Business travelers (N=976)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Europe

Other Regions

North America

BRICS

APAC

30%

30%

18%

17%

6%




Figure 2: Satisfaction with Corporate Travel Service

Question: How satisfied are you with the current corporate travel service provided by your company/and corporate travel agency (Travel Management Company/TMC)?Base: Business travelers (N=976)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Very satisfied

Very dissatisfied

Neither satisfied nor dissatisfied

Somewhat satisfied

Somewhat dissatisfied

25%

44%

19%

9%

3%

Part 1: Managed Travelers Embrace Smart Mobile Devices and Expect More Personalized Services

In order to understand how emerging trends will impact managed travel programs in the near future, it is important to understand the perspective of managed travelers today.

Corporate Travelers are Not Completely Satisfied One quarter of the respondents said they were very satisfied with their corporate travel service, and another 44% were only somewhat satisfied (see Figure 2).

Among the 75% who were not completely satisfied or even dissatisfied, the number one reason was, “I can find lower fares and better rates online” (see Figure 3).

There is no doubt that the belief that lower prices can be obtained online continues to be a source of frustration for the managed traveler. With 35% expressing a desire to book airline reservations directly with suppliers, direct booking creates friction between man-aged travel goals and business traveler preferences for about one third of travelers.

Managed Travelers Own Smart Mobile Devices The survey revealed an almost universal adoption of smart devices by managed busi-ness travelers worldwide (see Figure 4).

Through their smart devices, managed business travelers are now connected 24/7 with untethered access to travel information.

Managed Travelers Book Airline Reservations through Preferred Channels More than two thirds (67%) of today’s managed travelers book air through preferred channels. Nearly four in 10 (38%) respondents book their air reservations through their company’s website, 11% have assistants make their reservations electronically for them,




Figure 4: Device Ownership

Question: Which of the following devices do you own?Base: Business travelers (N=976)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Smartphone (i.e. mobile phone advanced functionality such as access to the Internet, email capabilities and the ability to download applications e.g. Apple iPhone, Samsung S5)

Desktop/laptop

Tablet (i.e., portable touchscreen device such as iPad, Samsung Galaxy, Amazon Kindle Fire)

None of the above

95%

76%

93%

1%

Figure 3: Reasons for Dissatisfaction

Question: Why are you not completely satisfied with your current corporate travel service? Please select all that apply.Base: Business travelers (N=731)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

I can find lower fares and better rates online

It does not deliver my personal flight preferences

Other (please specify)

The process is complicated and takes too long

I am unable to make the reservations using my preferred device (e.g., smartphone, tablet, laptop)

I prefer to book my travel directly with my favorite suppliers

The choices conflict with my supplier preferences (e.g., favorite airline, hotel chain)

I am unable to buy optional airline services such as better seats or early boarding

None of the above

56%

35%

21%

30%

13%

24%

6%

24%

5 %




Figure 5: Airline Products Booking Method

Question: Please identify your main method for booking airline products for your business travel. Choose one for each category – Airline Tickets and Ancillary Services. Base: Business travelers (N=969)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Through my company travel agency (TMC) website or my company-provided website

Through my company travel agency (TMC) app or my company-provided mobile app

I never purchase optional airline products/services

Directly via the airline website

Directly via the airline app

My assistant calls my company travel agency (TMC) for my reservations

Online travel agency/portal (e.g., Expedia, Booking.com, Orbitz)

My assistant makes my travel reservations electronically using the airline, corporate travel agency (TMC) website or app

Calling the airline directly

38%8%

18%6%

15%22%

11%4%

6%5%

5%3%

4%6%

2%5%

0%40%

Airline tickets Optional airline products/services

and an additional 18% have their assistants book travel via the telephone (see Figure 5). Only 15% book their air travel directly on an airline website.

Optional airline services, also known as airline ancillary services, have a higher level of direct bookings with airline websites, at 22%. Six in 10 respondents have booked optional airline services.

When asked about their preferred booking methods for air travel products, an interest-ing shift emerged. Whether booking directly with the airline supplier or with the travel agency, the desktop/laptop is widely preferred over the smartphone or tablet. Howev-er, when asked about mobile apps, 39% of respondents stated a preference for book-ing directly on the airline’s smartphone app, compared with only 10% that preferred the TMC or company-provided app (see Figure 6).




Figure 6: Preferred Device for Booking Airline Products

Question: Please indicate your preferred device for booking airline products for business travel. Choose one device per activity. Base: Business travelers (N=685)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.


Through my company travel agency (TMC) website or my company provided website

Directly via the airline app

Through my company travel agency (TMC) app or my company provided mobile app

13%

59%6%

23%

39%

9%16%

37%

10%

66%3%

21%

21%

18%7%

54%

Smartphone Tablet Desktop/laptop Not applicable

Seats Dominate Airline Ancillary ServicesNearly half (49%) of managed travelers ranked preferred seating/extra legroom as the most important airline ancillary service. Highly ranked second place choices were fast-track secu-rity screening (18%), lounge access (16%) and early boarding (17%) (see Figure 7).

With a large percentage of corporate travelers already at a high frequent flyer status level, some ancillary fees such as baggage charges and preferred seating are less of an issue, since they are often complimentary. The pain point is the infrequent travelers, where these fees have the greatest impact (see Figure 8).

Nearly three in 10 (28%) respondents book ancillary airline services directly on the airline website (see Figure 9). Today, there are major challenges with selling ancillaries at the travel agent point of sale (POS). POS capabilities are emerging, and may shift the sale to the TMC. CBT displays will also need to be adjusted to accommodate ancillary services at the point of sale.




Question: Please rank the airline ancillary services below in order of importance to you (1 = most important, 2 = somewhat import-ant, 3 = neutral, 4 = less important, 5 = not important) when traveling for business? Base: Business travelers (N=976)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Preferred seating/extra legroom

Fast-track security screening

Lounge access

Early boarding

Checked bag fees

Onboard entertainment (e.g., movies, games)

In-flight Wi-Fi

Onboard meals

49%

13%

12%

12%

18%

16%

17%

5%

8%

4%

11%

2%

2%

2%

4%

6%

11%

18%

14%

13%

7%

8%

6%

13%

7%

11%

13%

11%

9%

14%

7%

17%

4%

9%

10%

12%

10%

14%

12%

19%

10%

10%

10%

10%

10%

10%

10%

10%

7%

21%

25%

32%

57%

44%

59%

29%

1st rank 2nd rank 5th rank3rd rankStatement not chosen

4th rankI do not purchase optional airline products/services

Figure 7: Airline Ancillary Services Importance Ranking




Figure 8: Airline Ancillary Services Payment

Question: Please indicate which statements are true regarding how you pay for ancillary services when traveling for business. Check all that apply.Base: Business travelers (N=883)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Preferred seating/extra legroom

Onboard meals

Lounge access

In-flight Wi-Fi

Early boarding

Expedited security screening

Onboard entertainment (e.g., movies, games)

Checked bag fees

43%

22%13%

22%

49%

20%7%

24%

55%

12%5%

28%

30%

18%4%

47%

31%

12%25%

32%

12%

22%16%

50%

43%

12%5%

39%

30%

11%38%

22%

Complimentary based on my frequent flyer status

My company reimburses me I personally pay for these services Not applicable




Figure 9: Preferred Methods for Purchasing Ancillary Services

Question: How would you prefer to purchase ancillary services for your next business trip?Base: Business travelers (N=389)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.


From a kiosk at the airport

I would prefer that all optional airline products/services be bundled into my ticket price

Other (please specify)

Through my company travel agency/TMC and/or my corporate online booking tool

Calling the airline directly

Directly via the airline website/app on my smart device (smartphone or tablet)

28%

26%

1%

24%

0%

18%

3%

Figure 10: Changing the Airline Booking and Communication Experience

Question: How do you see the airline experience changing for your business travel over the next 3-4 years? Choose all that apply. Base: Business travelers (N=976)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

I will make the majority of airline arrangements on my mobile phone

My mobile device will notify designated contacts in my business and personal social networks when my flight schedule changes

My mobile device will strore my preferences and my airline will use those preferences to book my reservations

I will interact with electronic messages sent to my mobile device at every point of my journey; these messages will be personalized

to my preferences and offer trip advice

I see little change in my airline experience

I will use wearable computers (e.g., smartglasses, smartwatches) that will transmit my preferences, improve the efficiency of the

process and offer personalized services

I believe the airline experience will get worse due to more weather delays, crowds and technology failures

My mobile device will automatically change all my reservations (e.g., air, car, hotel, etc.) when I change my flight schedule

46%

44%

42%

38%

31%

24%

19%

0%




Figure 11: Top 3 Ways to Improve Booking, Purchase and Pre-Flight Experience

Question: Please select the top three ways (1 = top choice, 2 = second choice, 3 = third choice) airlines could improve your booking, purchase and pre-flight experience when traveling for business? Base: Business travelers (N=976)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Store my preferences and automatically book my desired flights, seats and optional airline

products/services

Automatically rebook my flight if I have a change in my flight schedule

Anticipate weather delays and automatically rebook or provide alternatives

Automatically rebook all related itinerary elements (e.g., hotel, car rental) when my

flight schedule changes

45%

17%14%

22%

24%24%

18%

25%33%

7%

27%21%

1st Choice 2nd Choice 3rd Choice

Travelers Expect More Automation and Personalization Managed business travelers expect that 46% of airline bookings (up from less than 10% today) will be made via the smartphone within 3-4 years (see Figure 10). They also an-ticipate interaction with electronic messages sent to their mobile device at every point during the journey. Managed business travelers are expecting personalized service at all touchpoints, and that their preferences will be stored on their mobile device.

Nearly half of respondents (45%) would like to have their preferences stored and their flights automatically booked based on these preferences (see Figure 11). The managed traveler expects technology solutions that anticipate weather delays and automatically rebooks or provides alternatives.

The managed traveler is also looking for automated ways to change flights when their itinerary changes, or when flights are late or cancelled (51%) (see Figure 12). Managed travelers want greater integration with calendar appointments (26%). There is some inter-est in optional services such as hotels, cars, restaurants or ground transportation (11%).




Figure 12: Top 3 Booking Capabilities on Website or App

Question: Please select the top three (1 = top choice, 2 = second choice, 3 = third choice) booking capabilities you would like to see available on your mobile airline web or app over the next 3-4 years.Base: Business travelers (N=976)Source: IATA Global Passenger Survey©2014 PhoCusWright Inc. All Rights Reserved.

Automatically rebook me on alternative flights based on my preferences if my itinerary changes or

my flights are late or cancelled

Allow me to book optional services such as hotels, cars, restaurant meals or ground transportation

Automatically book my airline reservations based on my calendar appointments and preferences

Book my airline reservations via voice-enabled personal assistant (e.g., Siri, Google Now)

Allow me to shop for and purchase tickets for local events and activities at my destination

51%

12%28%

26%

17%21%

11%

30%28%

6%

4%

14%

25%

9%

11%

1st Choice 2nd Choice 3rd Choice




Part 2: Technology Driving New Business Practices

Managed Travel is a Continuum of Policy EnforcementThe managed travel market is often grouped into three categories: tightly managed, moderately managed and lightly managed with respect to policy enforcement. These traditional categories are not distinct segments, but actually represent a full continuum of company profiles (see Figure 13).

On one end companies enforce strict travel policies, often limiting expense reimburse-ment if the traveler violates any aspect of the policy. These are generally larger com-panies, but smaller firms may have equally strict policies. Tightly managed programs often deploy specific Key Performance Indicators (KPIs) that closely monitor travel policy performance and traveler behavior.

At the other end of the continuum are companies that publish travel guidelines and often lack measures to track policy compliance. Specific industry types and overall corporate culture often influence where a company fits on this spectrum. For example, industry sectors that need to abide by strict rules and controls such as the financial services industry are more likely to embrace tightly managed travel policy practices. On the other hand, high tech companies with a strong entrepreneurial spirit may opt more for guidelines rather than strict policy control.

The largest segment of companies falls into the moderately managed category. Within this group the level of enforcement may vary based on type of policy violation. There are also differences across regions and countries, where local culture and customs can impact the way corporate policy is enforced. In emerging markets or for smaller corpo-rations, policies tend to gravitate toward the lightly managed end of the continuum.

Technology is Driving New User Behaviors and Business Practices When the Internet went mainstream in the mid to late 1990s, a new level of transpar-ency emerged that allowed corporate travelers to shop supplier and online travel agencies against corporate negotiated fares and rates. This created a level of friction in which travelers often questioned the value of managed programs. As a result, the need for ongoing travel education became a constant effort for most corporate travel

Figure 13: Managed Travel Continuum of Policy Enforcement

©2014 PhoCusWright Inc. All Rights Reserved.

Tightly Managed Moderately Managed Lightly Managed




managers who must justify their programs to corporate travelers and senior manage-ment, many of whom are often frequent travelers themselves.

The introduction of the iPhone in June 2007 was a watershed moment for the man-aged travel industry, though few recognized it at the time and many are still struggling to manage the rapid adoption of smartphones by their corporate travelers. Of equal significance was the introduction of the iPad in 2010, which often augments or replaces the traveler’s laptop. The spread and dominance of Google Android phones and tab-lets has also accelerated mobile smart device adoption worldwide.

In the traditional corporate travel environment, compliance is driven by rules enforced by the TMC or embedded in the CBT. In today’s app-centric smart device world, com-pliance is more challenging as the temptation to find and book alternatives has been super-charged by the ability to do this anywhere, anytime, on multiple devices. Clearly, smart devices have given birth to a new kind of corporate traveler, one who is more demanding, looks for instant answers and expects more personalized services.

Technology is Adding Complexity to the Managed Travel EcosystemThe goal of a managed travel program is to direct travelers to book using the preferred booking channel. Traditionally that has been the TMC or CBT, and more recently a pre-ferred TMC or company mobile website or app. However, many corporations and TMCs have still not deployed a mobile web or app dedicated to the managed travel program.

This preferred channel has been challenged by direct supplier contact, either through the airline call center or based on airline loyalty programs. The web added additional options for searching airfares. This resulted in friction with the preferred booking channel.

The growth of smart devices has extended access to OTAs, airline direct, metasearch and social media – 24/7, anywhere. The emergence of value-added ancillary airline services also added more optional airline services (see Figure 14).

The Impact of Technological Change on the Managed Travel Airline Ecosystem TodayPersonal mobile technology is driving change worldwide. This includes parts of the world where mobile device ownership has had a leapfrog effect, with smart devices empowering segments of the population that never owned a desktop or laptop PC. As mobile bandwidth increases and devices continue to become more powerful, the sheer amount of information that is accessible via a mobile smart device is staggering. The managed travel sector is struggling to keep up with this rapid change.

Lack of Mobile Strategy and BYODFrom a corporate travel management perspective, this brave new world of mobile smart device computing is challenging the enterprise. Even the most advanced corpo-rate travel managers struggle with developing a comprehensive mobile strategy. In a




recent Carlson Wagonlit global survey on top travel priorities for 2014, only 38% of trav-el managers with global responsibility ranked mobile as a high priority. Specific regions had even lower mobile strategy priorities, such as EMEA with 21% of travel managers stating that mobile was a strategic priority for 2014.1 This effort has been significantly complicated by the corporate trends that allow travelers to Bring Your Own Device (BYOD). In a BYOD environment, corporate travel managers lack visibility into mobile travel app usage. Some companies dictate what apps are allowed on mobile devices, while many do not (see Figure 15).

Open BookingThe concept of Open Booking has been a hot topic over the last two years. The prem-ise of Open Booking, also referred to as Managed Travel 2.0., is simple: Companies set targets for trips, and allow travelers complete freedom to book through any channel based on meeting or beating the benchmark. Managed travelers are then incentivized to find lower rates and must share their itineraries with the company in order to support corporate duty of care requirements. Various tools have emerged to capture out-of-channel bookings made directly with suppliers. Because Open Booking technology can capture out-of-channel bookings into the managed program, it benefits all enterprises, even those that don’t want to implement an Open Booking policy.

Figure 14: Managed Travel Airline Ecosystem Web, Mobile and Value Added Ancillaries


Managed BusinessTraveler

TMC Travel Agent

Airline Agent

Web

Web

App

App

Web

Web

App

App

CBT

OTA & Metasearch

Airline Direct

Airline

1 “CWT Reveals Top Travel Priorities for 2014,” Carlson Wagonlit Travel press release (January 30, 2014).

http://www.carlsonwagonlit.com/en/global/news_and_media/news_releases/2014/20140130-travel-management-priorities-2014.html




Impact of New EntrantsTravel innovation is often driven by startups that provide innovative approaches to travel planning and purchasing. As more companies provide Application Programming Interfaces (APIs) to their travel applications and platforms, new entrants will continue to emerge, disrupting the way managed business travel is booked and experienced. This was evident in a 2013 Hackathon held by British Airways on flight 9120, which flew from San Francisco to London overnight, filled with 130 members of the tech community and a select number of BA frequent travelers.2 Similar hackathons (though not in the air) by American Airlines, Sabre and industry media outlets such as Tnooz are constant-ly pushing the industry to tap the entrepreneur to improve the technology behind travel. New entrants such as Rocketrip, a venture-funded new booking platform that uses employee incentives to drive compliance, and TripScanner, a browser-based, Open Booking enterprise tool targeted at small and midsize businesses, are two examples of new entrants disrupting the managed travel ecosystem today.

Figure 15: The Impact of Technology and Disruptive Trends on the Managed Travel Airline Ecosytem


Managed BusinessTraveler

TMC Travel Agent

Airline Agent

Web

Web

App

App

Web

Web

App

App

CBT

OTA & Metasearch

Airline Direct

AirlineNEW ENTRANTS

OPEN BOOKINGS

MOBILE DEVICES + NEW COMMUNICATION PROTOCOL

2 Zoe Fox, “The Hottest Spot for Hackathons? 30,000 Feet in the Air,” Mashable (June 13, 2013).

http://mashable.com/2013/06/13/british-airways-ungrounded




XMLThe underlying communication platform for travel is also changing. The Electronic Data Inter-change for Administration, Commerce and Transport (EDIFACT) is an international electronic interface standard (EDI) developed under the United Nations back in 1987.3 This protocol was designed to allow the easy interchange of information across disparate systems.

In February 1998, the World Wide Web Consortium (W3C) published its first version of an Extensible Markup Language XML (1.0.). Dr. Charles Goldfarb, an IBM researcher who was personally involved with the invention of XML, claims it to be “the holy grail of computing, solving the problem of universal data interchange between dissimilar systems.”4 XML has changed the way information is exchanged between systems. By definition, XML is extensible, which means it can be expanded to increase the amount of information exchanged between systems.

Some of the communication in the travel ecosystem has been converted to XML, but EDIFACT communication has remained the primary protocol for the majority of airline communication. A new airline XML standard is being introduced that allows for greater product differentiation, customized offers and efficient servicing of customer preferenc-es, responding to the very heart of the disruptive change driven by managed traveler expectations.

Part 3: Managed Business Travel In 2020 – Greater Personalization

In 2020, managed travelers will experience greater automation that reduces trip fric-tion, will have access to more transparent information and will receive personalized services for all aspects of the trip.

Emerging Technology Will Cause Further TransformationWith the dominance of smartphones and tablets in the hands of managed travelers and the transformational nature of these devices, air shopping and purchasing will continue to move to mobile by 2020. New personalized services will be facilitated by intelligent assistants and will be available on a variety of wearable technology.

Personalized Services By 2020, the managed travel ecosystem will seamlessly integrate traveler service pref-erences with expanded airline services to meet ever evolving managed traveler expec-tations. New communication protocols and the ability to track and measure customer preferences throughout the journey will be imbedded into the process. Big Data will be used to better match services with the preferences of travelers, anticipating their needs.

Wearable TechnologyWearable technologies will augment services provided by current mobile smart devic-es. These include smart watches and glasses that provide an easier hands-free comput-ing environment. By 2020, the adoption and impact of wearable technologies will likely provide an added level of efficiency to the managed travel experience with increased

3 United Nations Economic Commission for Europe 4 Tim Anderson, “Introducing XML,” (January 2004).

http://www.unece.org/trade/untdid/welcome.html

http://www.itwriting.com/xmlintro.php




use of augmented reality (AR), delivering real-time travel advice and offers to the man-aged traveler. Wearable technologies will be in wide use by airline service personnel, enabling the delivery of more personalized services.

Intelligent Assistants Today, intelligent assistants such Siri, Google Now and Cortana have limited ability to substantially support travelers. By 2020, intelligent assistants will be able to handle more complex tasks. Specific intelligent assistants for travel (i.e., intelligent travel assis-tants or ITAs) will be introduced that will automatically update itineraries during disrup-tions and recommend services to travelers en route. This technology will help meet the 2020 managed traveler’s expectations for more automated services.

Disruptive Business Practices Will Impact Airline Purchasing PracticesOpen Booking and the Capture of Information from all Channels

Open Booking will gain momentum, but will likely only be adopted by certain types of companies whose corporate culture supports this approach. The exact size of the Open Booking segment is hard to predict, as generational shifts may alter corporate culture and thus drive more acceptance of the Managed Travel 2.0 approach.

The ability to capture out-of-channel bookings will be widespread by 2020, enabling travel managers to look at all their travelers’ reservations and apply policies to any out-of-channel bookings. This means that whether companies completely embrace Open Booking or simply use the tools to capture out-of-channel bookings, managed travel in 2020 will capture all reservations from all channels.

The Airline as a Retailer Airline merchandising technology will enable specific a la carte or bundled ancillary offers that match customer preferences. Some airlines will use the merchandising plat-forms to dynamically bundle ancillary services based on the value of the passenger and the overall corporate client relationship.

In addition to today’s focus on seats, boarding and Wi-Fi, some creative ancillaries are emerging, including pre-purchase of online meals, flexibility in ticket rules (e.g., ability to change at a reduced fee) and customized in-flight entertainment delivered on per-sonal mobile devices. The airlines are hard at work creating a la carte and bundled an-cillary offers involving merchandise, complementary travel services (e.g., hotel, ground transportation) and even branded apparel. Corporate negotiated ancillary bundles will likely become part of an overall airline negotiation strategy.

By 2020, airlines will be able to provide a unique set of services for each reservation request, and a tailored response based on customer insights. Corporate relationships and discounts will likely still be in place for large companies, but by 2020, unique airline-controlled offers will be part of the ecosystem as well. This shift in the way the airline offer is created will be enabled by widespread adoption of the New Distribution Capability (NDC), an XML data exchange standard, facilitated by IATA.




Part 4: Conclusions

Predicting the future based on today’s technology can be challenging. Major change is often facilitated by innovations which in turn create disruptive business models. For example, Uber would not be possible without the smartphone. Understanding how tech-nology will fuel disruptive models is the key to understanding managed travel in 2020.

From the traveler’s point of view, the message is clear: Managed business travelers want personalized services that reduce travel friction and match their preferences. They expect automation to seamlessly handle itinerary changes.

In six years we may see moderate change in managed business practices, or a new era that looks dramatically different than it does today. What will dictate the level of change is how the emerging ecosystem embraces new technology, understands travel-er behavior and meets expectations.

For tightly managed business travel, new tools will likely emerge to create even greater control over the traveler through their mobile device. The question is: How big is the tightly managed segment? Our research indicates that the tightly managed business segment is no more than 15-20% of the market. This leaves 80% of the market vulnera-ble to disruptive trends and technology (see Figure 16):

Figure 16: Managed Travel Airline Purchasing Disruptors 2020


Tightly Managed

Generational Shifts Open Booking

Moderately Managed Lightly Managed

Personalized Messages Dynamic Offers & Bundles




0 Generation Shifts – Millennials moving into senior management positions will likely bring their self-service, instant gratification expectations to their roles, influencing the entire corporation to be more proactive in providing personalized travel services.

0 Open Booking – Managed Travel 2.0 will likely take hold with some moderately and, certainly, lightly managed companies. As tools to capture out-of-channel bookings improve, and as TMCs evolve to support fragmented itineraries, Open Booking will likely be mainstream for a portion of the market.

0 Personalized Messages – By 2020, personalized messages will be driven by Big Data analytics. The fear of being bombarded with unwanted requests is real, but if the offers are truly personalized, managed business travelers will recognize their benefit and thus embrace the process.

0 Dynamic Offers and Bundling – The airlines are implementing systems to drive personalization to all travelers in the form of dynamic offers and unique bundles.

The Role of NDC as an Enabler of TransformationOften the role of technology in disruption is misunderstood. Apple’s iPod did not disrupt the music industry. MP3 players already existed. It was iTunes, the business strategy that was the true disruptor. Smart devices are impacting every industry, but the business models around the technology are truly transformative. Travel is prone to disruptive business models, enabled by mobile smart devices by the very nature of the mobility of its customers. But just as with iPod versus iTunes, it will be the business models created from new technology that likely will drive greater change for the man-aged travel industry.

The underlying technology enabler for travel distribution transformation is NDC, which at its heart is simply an XML standard. Given that XML is already used by all players in the ecosystem, the emerging business models will likely be the catalyst of change.

The NDC Standard will enable the travel industry to transform the way air products are retailed. The goal is to allow a greater and richer amount of information to flow from the airlines throughout the entire ecosystem. NDC will provide airlines with the capability to dynamically create customized products and services, regardless of the channel through which the reservation is being made. The airline’s role in payments may change for those who choose book direct via an Open Booking policy, where airlines will accept and process payment, directly rather than through a TMC or corpo-rate charge card. By 2020, this will likely be via mobile payment services, making this a seamless experience.




When new business models are created, there is always a fear that existing relation-ships and roles may be altered, impacting the current stakeholders. There is a valuable and separate role for each ecosystem player in a 2020 managed travel world enabled by NDC. Change is inevitable, and it is ultimately the responsibility of the stakeholder to adapt. In 2020, whether you are a TMC, technology provider or corporate travel manager, you must add value to customers, partners and suppliers. The managed traveler is ultimately pushing this change for more personalized offers and services. To meet this challenge, all parties should cooperate in utilizing information and providing services that best reduce friction for the managed traveler, while helping the corpora-tion manage its overall travel expenses.

managed travel 2020: technology drives new opportunities · market research • industry...

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