Documente Academic
Documente Profesional
Documente Cultură
Carlson Wagonlit Travel founded the CWT Travel Management Institute in 2005. The principal aim of this institute is to conduct fact-based research into effective travel management practices for the benefit of CWT clients worldwide. To this end, the institute draws on the companys global resources and expertise in business travel management. The institutes latest research is focused on online booking and its role in todays global business travel market.
Background
In seeking to optimize their managed travel programs, companies worldwide share the same principal goals. In a nutshell, they are looking for service, savings and security. In a recently published handb ook entitled Effective Travel Management, Carlson Wagonlit Travel (CWT) highlighted eight key levers to meet these goals:
1. Drive online adoption and process optimization around the world. 2. Tackle hotel spend in a disciplined and professional manner. 3. Attack meetings and events as an additional opportunity for savings. 4. Continue to optimize air spend for example, through spot buying and advance purchasing. In this guide, the first in a series illustrating each of the eight levers, CWT highlights Lever One and presents the findings from its research project Toward Excellence in Online Booking. 5. Monitor and address program leakage. 6. Further consolidate travel programs globally. 7. Enhance high-touch services to travelers and vigilantly address security issues. 8. Develop executive-friendly, action-oriented performance measurement reports.
Unique in its geographical span and methodology, this research was conducted from July to November 2005 in two phases, starting with 10 case studies and concluding with a survey of 143 companies. The companies represented a broad crosssection of industries and nationalities.
Scandinavia 2%
Spain 2% Other 4%
US 44%
Research objectives
The principal aim of CWTs research was to explore the lessons learned by the early online booking adopters which could benefit new and potential users in todays global business travel market.
To this end, the research focused on the following objectives: 1. Evaluate return on investment (ROI) of online booking, in terms of booking fees and average ticket price (ATP), against the cost of implementation. 2. Benchmark actual performance levels in online booking achieved by those companies that have already implemented a booking tool. 3. Identify the key drivers and influencers behind successful online booking implementation, highlighting the differences between the leaders and laggards.
Key findings
CWTs research resulted in the following key findings:
1. Significant savings and rapid return on investment (ROI) By driving the adoption of online booking, companies can reduce their total travel spend by up to 10 percent. Half of the savings come from reduced airfares and the other half from lower booking costs. In more than half the companies surveyed, the payback of the investment was less than one year. 2. Major differences in online booking performance across companies Online booking performance defined in terms of level and speed of adoption varies by a factor of five between the leaders and the laggards. Geography, in terms of region and/or proximity to headquarters, is not a major factor behind the marked difference in performance levels. 3. Key drivers of adoption and the 4 Ps Online performance is first and foremost influenced by company culture and financial context. Companies that have embarked on an overall effort to reduce costs obtain better and faster results. Beyond this, companies combine the use of four key drivers to boost online adoption: Product and process, Price, Push and Pull the 4 Ps.
Savings on airfares
Savings on airfares are first and foremost derived from a reduction in average ticket price (ATP). Based on CWTs analysis of 23 large North American, Australian and European companies, online bookings result in savings on ATP of 5 percent on average and can represent as much as 15 percent.
Capital letters refer to company case studies described on Page 26. (1) As a % of airfares and booking fees. Calculations made from Q3 04 to Q2 05. Recurring fees charged by the booking tool editors are deducted from the agency fee savings. Source: CWT Travel Management Institute
With online booking, two key factors help reduce ATP: The visual guilt factor: when travelers or travel arrangers can see a variety of prices directly on their screen, they tend to select the lower-priced alternative. The tendency for travelers or their travel arrangers to make more advanced bookings than when booking offline. Out of 23 large North American and European companies surveyed that were currently using an online booking tool, visual guilt was perceived as the more effective of the two factors in reducing ATP. In fact, it was perceived as the key reason in up to 70 percent of the cases; while more advanced booking was identified as the key by only 20 percent.
Online booking was perceived to be more effective in reducing ATP, particularly for those companies that, up until their implementation of a booking tool, were not strictly pushing travelers to choose the lowest fares. Although advanced bookings were perceived as a key factor for savings in only 20 percent of the cases, CWTs analysis of a group of companies based in North America nevertheless indicated a clear correlation between earlier online bookings (compared to those made offline) and lower ATP.
Visual guilt and advanced booking perceived as two factors behind savings
E C J G
-6%
A
-8% -10% -12%
Source: CWT Discovery data (Q1 '04 to Q2 '05). Calculated on top travelers and routes on the U.S. market. All fares. (1) Average number of days between online booking and departure minus average number of days between offline booking and departure. Capital letters refer to company case studies described on Page 26.
In Australia, as reflected in the case studies, although companies started online booking later than in Europe, penetration is increasing quickly. In North America and Europe, once a booking tool is deployed by a company, most travelers or their travel arrangers have access to it. Out of 52 North American companies surveyed and using online booking, 85 percent confirmed that more than 70 percent of their travelers had access to it. So too in Europe: out of 36 companies surveyed, 90 percent stated that more than 70 percent of their travelers had access.
9
100%
High
Fast adopters
Adoption level: ~70% Time since implementation: ~2.5y Av. speed: ~1 1pts/quarter (1)
Adoption
Leaders
High but progressive adoption
Average adoption level of the sample ~40%
Long runners
Adoption level: ~60% Time since implementation: ~5.5y Av. speed: ~3pts/quarter (1)
100%
Stalled pioneers
Adoption level: ~20% Time since implementation: ~3.5y Av. speed: ~2pts/quarter (1)
Adoption
Adoption
Adoption
H (US)
F (D)
Laggards
Late implementation
Newcomers
Low
Adoption
G (US)
Source: CWT Travel Management Institute : Basis of analysis: 106 companies (1) Speed = Current adoption level / Number of quarters to reach the current level since implementation
Geographic location is not a major factor behind the marked difference in adoption levels between the leaders and laggards.
When comparing performance levels of companies in North America and Europe, the findings revealed that adoption levels varied by a factor of ~1.5 only, with the North Americans at 50 percent and the Europeans at 35 percent. But the North American companies are leading principally because they started implementation earlier. In terms of speed, on average the regions were on a par. It should be noted, however, that the
level of speed in North America was diminished by the performance of the long runners those companies with early implementation processes and tools which were not as advanced and effective as those used today. Fast adopters in both regions achieved an adoption level of 70 percent with an average speed per quarter of 11 points in North America and 14 in Europe. A similar relative pattern was observed within each sub-group, right down to the newcomers. Overall, performance levels were similar for each corresponding sub-group, whether based in North America or Europe.
Overall performance levels are similar between North America and Europe
13
Europe
In Europe, the proportion of newcomers is currently nearly double that in North America a reflection of the later move toward online booking in Europe. This group will inevitably diminish with time, however, transforming into either long runners or fast adopters. Some may go through a stalled phase, but eventually will move forward as they revitalize their travel programs. Beyond this transitional group of newcomers, European companies using online booking are for the most part equally split between fast adopters and stalled pioneers. Generally, the European fast adopters started online booking implementation more recently than the stalled pioneers. This trend indicates that those companies which put off adoption until more recently (within the last two years) have particularly benefited from the more advanced booking-tool technology, making speedier initial progress than those companies which started earlier (on average, as far back as four years ago) when the technology was less advanced.
North America
In North America, the pattern is different. The fast adopters represent approximately half the online-user population. But there is a significantly lower proportion of stalled pioneers in this region suggesting that over time, some have since revitalized their program and joined the long runners, swelling the numbers in this latter group to a significantly higher proportion than in Europe.
Australia
In Australia, among the case studies and companies surveyed, the proportion of newcomers was relatively high, and on average this group started even later than in Europe (within the previous year only). Beyond this transitional group of newcomers, however, the companies tended to cluster in the fast adopter sub-group. This phenomenon may be attributable to three principal factors: large international companies in this region having benefited from the implementation know-how of other regions, the recent advances in bookingtool technology and national culture.
Company E
Speed (Pts/quarter)
30
25
25
20
20
15
10 Italy Australia
US
Belgium
UK
US
Adoption level
Adoption level
Company H
Speed (Pts/quarter) 30
25 US
Company J
Speed (Pts/quarter)
30
25
20 Spain 15 France UK
20 France Netherlands
15
10
10
US
Adoption level
Adoption level
Capital letters refer to company case studies described on Page 26. Source: CWT Travel Management Institute
15
Culture
Companies with the greatest speed of adoption tended to have one or more of the following attributes: Ability to change: the company usually adapts to change very easily. Self-enabling: a strong do-it-yourself culture, where employees typically do not use administrative assistants. Process performance: the company has a widely shared methodology to improve process performance, which is systematically measured and managed. e-culture: employees are technology-driven and many administrative tasks are completed online, particularly those related to procurement. Mandatory culture: decision-making is generally a top-down process.
Pull
Communications Training Appointment of champions Display of statistics Incentives
Price
Differentiated pricing between online and offline transactions
Push
Barriers to access BTCs Tracking of non-booking-tool users Effective management support / mandates
The 4 Ps
Beyond this, the survey revealed that companies tend to combine four key drivers, the 4 Ps, to drive online adoption.
The 4 Ps
Product and process: ongoing actions to ensure the booking process is user-friendly and efficient and that its functionalities are appropriate, accessible and visible on the company intranet; integration/automation of the booking process, including pre-trip and expense management workflows; and the evolution of the service configuration. Price differential: internal communications about differences in pricing between online and offline transactions.
Push from management: actions to encourage bookers to use online tools, such as tracking non-online bookers; implementation of barriers to access business travel centers (BTCs), including voice prompts directing travelers to the booking tool; reducing service level agreements (SLAs); and mandates from management. Pull through training and incentives: actions favoring change, such as ongoing training, incentives and rewards; communications; statistical comparisons between business units/ divisions/departments; and appointment of champions or ambassadors within a company to promote online adoption.
17
Average Average effectiveness effectiveness of of actions actions High High (>20 pts) (>20 pts)
Mandates Mandates
Pull Pull
Push Push
Rewards Rewards
Price Price
Training Training
Communications Communications
Display of Display of statistics statistics Creation of Creation of travel travel arranger arrangerposition position
Low Low
High High
Source: CWT Travel Management Institute
Companies tend to combine a range of actions. There is no silver bullet. A holistic approach is what is needed.
Product and process Ensuring easy access to online booking tools and improving the efficiency of the booking process were perceived as highly effective against the risk of stalled low adoption, but interestingly, were not frequently used. Incorporating these relatively simple initiatives, however, could produce positive results.
CWTs findings indicated the tendency for those companies served by dedicated travel consultants to fall below average speed of adoption. For those who shared BTCs with other companies, their speed was higher than average and in North America, was nearly doubled. The relationship between travel arrangers and their dedicated consultants was clearly a more difficult habit to break and therefore, slowed down online adoption.
On average, integration of an online booking process with pre-trip approval and expense management workflows was not perceived as key to successful adoption. Nor was the creation of travel arranger positions considered effective.
Push actions Mandatory actions were perceived as the most effective, but were not widely used perhaps because of their negative implications and incompatibility with company culture. By contrast, tracking non-users was rated as quite effective and often used, offering an effective compromise for those companies seeking to rapidly enforce online booking. Pull actions Training and communications were the most popular solutions to prepare bookers for online adoption and were perceived as critical to successful change management. Incentives were perceived as equally effective, but were not frequently used, perhaps because they were incompatible with company practice and involved additional cost. Display of statistics and appointment of champions were perceived as favorable for change, but low in effectiveness.
In North America, speed of adoption is almost twice as great when companies are served by shared BTCs.
Price differentials Although differentiated pricing was perceived as low in effectiveness, it was, nevertheless, commonly used. The key, as reflected in the case studies, lies in making travelers accountable for their travel expenditures.
19
With these pull drivers in place, the adoption level increased by 25 points in less than six months. Differentiated pricing was introduced in early 2001 and travelers were made accountable for their travel costs through the introduction of individual corporate cards and the reallocation of travel costs for each consulting project. For this same period, a combination of three different drivers product and process, pull and push were introduced and used on an ongoing basis. Initiatives included regular surveys and focus groups for online booking improvement, quarterly metrics reviews on online usage and management support. As a result of these actions, an 80-percent adoption level was achieved by the second quarter of 2005.
Company A
Adoption level 100%
Price
60% Training and communication campaigns Ongoing 40% Regular surveys and focus groups for online booking 20%
Push Product & process Pull
Management support
1999
2000
2001
2002
2003
2004
2005
Company B, a North American leader in the pharmaceutical industry, took several steps between the fourth quarter of 1999 and the second quarter of 2005 to reinforce its online booking implementation, beginning with incentives and training both pull drivers. The company subsequently combined push and pull drivers, including mandates for simple round-trips and communications, underscoring the importance of adoption to relevant departments. Company B achieved a 65-percent adoption level for online bookings by the end of the period. It is particularly interesting to note the speed of online adoption in the period following the companys implementation of incentives and training.
Training and incentives were introduced by the third quarter of 2000. Adoption picked up 20 points within the subsequent quarter and stayed at this level into the following year. In the fourth quarter of 2001, the company introduced its combination of push and pull drivers. Again, the adoption level picked up dramatically, increasing by 35 points from the fourth quarter of 2001 to the second quarter of 2002, a giant leap within a very short time frame of only three quarters. The results here suggest that the combination of drivers has a major impact on speed and level of adoption.
Company B
Adoption level 100%
Pull
80%
Push
60%
Pull
+~35 pts
1999
2000
2001
2002
2003
2004
2005
21
Source: CWT Travel Management Institute
Company E
Adoption level 100%
Pull
Push
80%
60%
Push
SLAs with BTCs downgraded 40% Partnership with the tool provider to improve the tool Restructuring of the intranet 20%
Prompts from travel consultants to use booking tool for point-to-point trips, e-mails sent to non-tool users mentioning non-compliance
+ 5-10 pts
+~20 pts
1999
2000
2001
2002
2003
2004
2005
significant advances in online booking technology have resulted in the ability to handle multinational itineraries, including: international currencies, filtering and selecting hotels within program policy, offsite car rental, low-cost carrier and rail bookings
Rail
UK
DE
FR
1-way
2-way
e-Travel
GetThere
KDS
Fully functional
Non functional
25
Research Methodology
Case studies
The first phase of CWTs research, from July to September 2005, entailed 10 case studies of large North American, European and Australian companies representing a variety of industries, all using online booking in one region or more and identified as A to J below: Company A B C D E F G H I J Large North American consulting firm North American leader in the pharmaceutical industry Large European company in the oil and gas industry Large North American company in the oil and gas industry Large North American diversified leader Large European company in the household and personal care industry Major North American investment bank Worldwide leader in the IT industry North American conglomerate in the media industry Large European company in the household and personal care industry
Survey
The second phase of CWTs research, the survey, was launched in early October and completed by November 2005. Its geographical scope encompassed North America, Australia and key countries in Europe France, Germany, Italy, the Netherlands, Spain and the United Kingdom. Of the North American, Australian and European companies surveyed, approximately 50 percent were online users in one region or more. CWTs priority was to obtain results based on a common methodology, ensuring consistency and uniformity in the responses. To this end, prior to launching the survey, the company briefed an international team of CWT account managers to administer the survey globally to the North American, Australian and European travel managers within each company. The survey was made up of 100 questions aimed at gathering both qualitative and quantitative information. For the online-user companies, questions focused on the following: countries wherein a booking tool is currently implemented; adoption rate; actions carried out to drive adoption up; impact on savings; and company context, in terms of culture, size, sector, financial conditions and pressure to reduce costs. For the non-online-user companies, questions focused on the following: their reasons for not implementing to date; whether they intended to do so; if yes, when and where; and if not, why not?
Calculating savings
1. Impact on booking fees For the case studies, CWT calculated savings on booking fees by comparing what the online-user companies actually paid, to what they would have paid for booking fees if all transactions had been completed offline. For the survey, savings on agency fees were calculated jointly by the travel managers and CWT account managers using the same methodology. 2. Impact on ATP Calculation of the impact of online booking on ATP is a complex and problematic area, subject to oversimplification and exaggeration. For this reason, CWTs findings were drawn from a restricted set of criteria. For the case studies, calculations were based on data accumulated over a period spanning 12 to 18 months. CWT calculated, for top routes only, the difference between bookings performed online and bookings performed offline by the same traveler and then made a weighted average of the differences observed.
CWT considered this methodology more reliable than simply comparing online to offline ATP on a route-by-route basis. With this latter methodology, calculations risk distortion, as some travelers or their travel arrangers buying online may be more restricted by company travel policy than those booking offline. According to CWTs case-study findings, this can lead to overestimates in real savings by a factor of up to ~3. For the survey, travel managers were asked to estimate the impact of online booking on ATP only if a specific assessment of the question had been conducted prior to the survey. Consequently, less than 10 percent of the online users submitted an estimate which they considered reflected real savings on ATP. CWTs findings were, therefore, drawn from the case studies and survey on this restricted basis to ensure objectivity.
27
For more information about how CWT's online experts can help your company, please contact your account manager or e-mail:
onlineconsulting@carlsonwagonlit.com
or connect on
www.carlsonwagonlit.com
29