Remembrances of business travel’s past

Remembrances Of Business D uring the past two decades, Business Travel News has witnessed and weighed the developments of an emerging and increasingly sophisticated corporate discipline, the purchase and management of corporate travel services. Our efforts during these 20 years have been aided by professionals—buyers, suppliers and consultants—who generously have shared their insights and helped lay the foundation of best practices on which the industry continues to build. For travel buyers, established relationships with travel management company and airline representatives went through severe change that accelerated throughout the decade. Ten years ago, this industry still was being led by many of the entrepreneurs who built it, but few of them are still in the business. As the industry matured and consolidated, it became more capital intensive, more corporate and increasingly publicly held. To some extent, 1994 was an echo of 1984, with a second wave of consolidation for the travel management companies during which the long-term distributors acquired the successful entrepreneurs. “It was a good time for them to sell out,” said WorldTravel BTI president Danny Hood, citing the changing economics that soon followed. Hood also pointed to 1994 as the year that saw the rise of the first generation of online booking engines, which included PC Travel, Travel Net, ITN, BTS, E-travel and ResAssist. “These were such revolutionary products that the market wasn’t ready for them,” he said. “Only a few made it through the first 10 years because there wasn’t much usage.” Since then, the rising acceptance of the Internet and the deployment of corporate intranet travel pages have altered the landscape. “As we and others built extranet hosting of Webbased tools, such as booking engines, self-profiling systems, expense reporting and meetings consolidation software, that played into corporate strategy well,” Hood said. “Self-service adoption increased dramatically when the corporate intranet became the enabling platform. We were all kind of flailing because we needed to educate users on a large scale. Now that we have that through the intranets, we have been able to improve and customize dramatically.” While the emergence of the Internet was a huge enabler, a driving force for change during the past decade was the impact of war and economic downturn on profitability for major airlines, which in turn exacerbated the need for airlines to lower distribution costs. “Airlines losing money has changed the whole industry,” said Jim Lennon, global travel leader for PricewaterhouseCoopers. Lennon said the past decade was one in which consolidation really took off for airlines, as well as for large corporate accounts. Overcoming territorial issues during the past decade enabled both parties to negotiate on a multinational basis with larger volumes and capacity. Also driving change was buyer dissatisfaction with agency Continued on page 35 To celebrate the 20th anniversary of our attempt to cover this discipline and those who have shaped it, we have turned to some of the industry’s most accomplished practitioners and leaders. The following pages contain a discussion with a handful of industry pioneers, and reminiscences from some of our best sources and the industry’s most influential leaders, in tandem with current staff and several of BTN’s editorial alumni. In summoning the collective memory, we hope to recall the milestones of our industry from the beginning, with and about the people who made the news happen. Our predecessors speak here about the early days and moments during the first decade of Business Travel News, which published its first newspaper on May 14, 1984. The current institutional memory on the editorial side of BTN is little more than one decade—and what a dynamic decade it has been. It really began for BTN at the end of 1993, nearly 10 years after being founded by CMP Publications, when West Coast publisher Miller Freeman acquired Business Travel News and chief rival Corporate Travel Magazine and merged them. Miller Freeman later was acquired by United News & Media, which in 2000 sold much of its portfolio, including BTN, to current owner VNU Business Media. For the industry, American Express’ acquisition of Thomas Cook and the merger of Carlson and Wagonlit dominated the news in 1994. Meanwhile, electronic ticketing first reared its head in the U.S. market and Delta led U.S. airlines in cutting international agency commissions, harbingers of things to come. In 1995, U.S. airlines capped domestic agency commissions, signaling the beginning of an almost annual whittling away at domestic agency commissions and the end of the travel department as a profit center. The year 1996 witnessed the Internet gaining wide business acceptance. To some extent that was reflected by both NBTA and ACTE endorsing a standard electronic hotel RFP, and also by BTN launching BTNonline.com. As companies approached Y2K, IT resources were focused on avoiding computer problems. Meanwhile, U.S. airlines eliminated agency commissions and online fulfillment services began to emerge. As the year 2000 ended, so did a period of sustained economic growth. We all still are recovering from the events of 2001. What happened to the industry in the past 10 years is more than a mere timeline can show. It is, after all, all about people. s part of our 20th anniversary celebration, Business Travel News invited five distinguished travel industry professionals to talk about the development of the practice of business travel management. Joining in the discussion were Jeff Katz, president and CEO of Orbitz and former airline and Sabre executive; Hanna Murphy, Siemens Corp. director of corporate travel and fleet agreements for the Americas; Harold Seligman, the recently retired founder of travel management consulting firm Management Alternatives; Peter Sontag, the long18 Monday, May 10, 2004 A Industry Experts Recall The Evolution Of Business Travel Mgmt. Practices BTN: Even though airline deregulation came in 1978, our understanding is that travel management as we know it didn’t really get underway until 1984, when American Express launched its Corporate Services division and BTN published its first issue. Is that accurate? Peter Sontag: 1984 was a pivotal year, as that was when the corporate travel buyers determined, “Why can’t we buy travel like we buy anything else, on a competitive basis. Secondly, 20th ANNIVERSARY TOAST: (from left) TQ3 Travel Solutions’ Peter Sontag; Akamai Technologies’ Terry Sullo; Harold Seligman, retired founder of Management Alternatives; Orbitz’s Jeff Katz; and Siemens Corp.’s Hanna Murphy. if we buy more of one something, why don’t we get a discount?” The example was in 1984, I was running Sontag, Annis and Associates and we won the IBM account to help them restructure their travel. In 1984, IBM was using 1,800 vendors to buy travel. They bought $600 million worth of domestic air travel alone in 1984. When you buy anything for $600 million, you want to get a discount. The end result of the analysis was that they reduced Business Travel News time travel management company executive now affiliated with TQ3 Travel Solutions; and Terry Sullo, manager of travel and meeting services at Akamai Technologies. www.btnonline.com Travel’s Past:20 Years Of BTN it down to about six vendors and were able to save substantial amounts of money by purchasing smarter. So 1984 was pivotal in the sense that the buyers realized that there was a better way to do business. Hanna Murphy: I agree with Peter. I came to the United States in 1982 and noticed that the United States was the only country in the world where people literally were bringing up the thought of negotiating Business Travel News rates. In Europe, that was unheard of because until a few years ago there was a slogan from one airline that said, “If you want to fly business class you pay for business class.” So it was very unique that in the United States in 1984 an initiative comes up with a discount on rates without any scruples asking for it and negotiating. That to me was one of the most amazing phenomena. I joined Siemens in 1985, so almost the same time. BTN: Harold, from your vantage point, business travel airline negotiating started earlier than that, right? Harold Seligman: From our vantage point it started in 1978, when we got a call from Peter’s client to help them with a travel expense management problem. They couldn’t find any consultants in the field and they got to me somehow and I helped them with their problem, which was the abuse of then-recently introduced tickets at substantial discounts for leisure travel, Supersaver Fares. They had the suspicion that their employees were buying them and expensing the company for full fare tickets. They had been told by the airlines and a few of the travel agents among those 1,800 vendors that there was no solution. We set up a procedure for them to detect and prevent future occurrence of any abuse, although it was minimal Continued on page 20 www.btnonline.com Monday, May 10, 2004 19 JONATHAN SMITH ★ Remembrances Of Business Travel’s Past ★ began being consolidated. American And in those days the fares were manAirlines, I think, was the first to actual- aged in a fashion where the primary ly systematize it. Then everybody else airline that owned the GDS displayed followed and the sale of the informa- their fares on the first page and so tion became a lucrative revenue forth. So at Gelco, we created a unit stream for the CRS companies as well. with 14 people working full time that When I was there, I would chide our took the data out of Sabre and took folks and say, “Why don’t we raise this 14, 15 or 20 screens of fares and sort50 percent a year every year?” Because ed them from low to high, because the really an airline customer wanted without that data is the lower fare. missing a part of its We had a meetbrain. So that was ing on a Friday and another element in we called that unit the process that and said, “This is a struck me as imporbig marketing ploy, tant in changing the we’re going to call it way things were the Fare Alternative being managed. Research Technique.” And then there Someone called out was the everimmediately, “Peter, increasing automathe acronym doesn’t JEFF KATZ: Airlines’ measuretion of the whole work out.” So we ments became more precise. process. The early changed the name to automation processFare Alternative ing had to do with booking, but then Search Technique and we promoted the more and more it’s become integrat- Fast system, because we were able to ing all that information with the rest find the lowest fares instantaneously as of the company’s systems or enter- opposed to others where the agents have prise resource planning systems, such to scroll through screen after screen. as SAP, and other ledger systems of Seligman: Another historical perthe companies. That also began to spective would be Heritage Travel. happen and to become much more Back in the early days after deregulacommonplace, as the ERP tools have tion, Don Sohn was the first to introbecome de facto standards. duce the GDS to a travel agency and BTN: It’s really all about data when already was developing the software you boil down this industry, so who to provide clients with data they could really built the tools, was it just a use to enhance their purchasing capabunch of code writers in back rooms? bilities. That was the first travel manKatz: Still the standard tools in the agement reporting tool. industry today are custom, self-built Sontag: The travel industry wasn’t tools. American Express tends to be a really that hard to predict. If you fairly big component of providing looked at the brokerage business, for card data back to the company. Most example, where in the 1960s when companies in America today have a you bought stock, the industry was fairly large proportion of software that regulated and the brokers got 10 perwas built in-house that integrates all cent commission no matter what hapthis stuff and makes the company pened. A big day on Wall Street was 4 work. There are exceptions, and there billion shares traded. That was a thigh are lots of standards one can acquire, slapper in 1965, because nobody tradbut most companies in America think ed. In order to make any money you they can always do it better them- had to buy and pay 10 percent and sell selves. Whether it’s IBM, Siemens or and pay 10 percent, so the stock had Orbitz, it’s a hard trend to overcome. to move 20 percent before it made Sontag: To kind of get a historic sense to do anything. Now that it’s perspective on data, in 1981 I was been deregulated, a 2 billion or 3 bilrunning Gelco Travel Services, which lion day is nothing. The same was true was really the first commercial travel of travel, so it was inevitable that it be company that was built after 1978. In deregulated. It had to happen. 1981, we were a heavy Sabre user, and BTN: Was the period from 1984 to at that point the prices were deregu- the Gulf War one period, or were lated. And sometimes on a flight from there several milestones along that point A to point B, the flight had 120 way? From the perspective of those of Continued on page 22 seats on it but there were 180 fares. 1984 1978 Airline deregulation enacted; IBM establishes travel expense management American Express launches its Corporate Services division; Competitive bids for corporate travel services gain critical mass; Emergence of "implant" operations at business travel buyer sites; IBM consolidates vendors; Dupont consolidates in U.S. with Rosenbluth MAPPING OUT TRAVEL’S PROGRESS Continued from page 19 Board, and it was all regulated and after we looked at several thousand there really was no way to negotiate. expense accounts. That gave me the How long after deregulation occurred introduction to travel expense man- was negotiating actually taking place? agement and I left the tour operator Seligman: As far as corporate field. Contrary to what an earlier negotiating is concerned, we conductspeaker said, discounting had been ed some corporate negotiations as available—not to business travelers early as 1981. We started with a coubut in the tour operator business. I ple of international carriers. They had been paying the airlines 50 cents were much more pliable than the on the dollar for every ticket that we American-based carriers because they bought. After seeing what IBM was had ways and means of doing things paying, I felt there must be some pos- that American carriers didn’t. sibility for applying what we were Jeff Katz: My perch was from sitdoing in tour operations to commer- ting in an airline for a bunch of years cial travel and that’s when I founded and then in the information arena. Management Alternatives, at the From my perspective, there were two beginning of 1978. Deregulation fol- or three interesting phases of evolution lowed 10 months later. In between since deregulation. One was a trend that time, in order to build a consult- that is still occurring in my opinion, ing practice, I ran seminars. moving from travel experts to this I made a note of some of what we notion of purchasing management. We included in those seminars from the have people more and more approachearliest brochure: ing the buying and the use of company •How To Write A Corporate Travel resources for travel in classic purchasManual, which virtually was nonexis- ing management theory. That is still tent in 1978 evolving, but it began to happen post• Corporate Travel Agency Or deregulation. And I think it is still hapCorporate Travel Department, Which pening now, where there is more manWay To Go? agement science around the travel • Expense Record Keeping: decisions than there was 20 years ago. Everybody was doing it manually. Another thing that probably started There, already at that time, were some in the mid-’80s was when the airlines rudimentary electronic programs began to be able to measure share at a available. very finite and dis• The big issue: crete level. Then the Travel Purchasing airlines could begin Rather Than Travel to make tradeoffs in Ordering. terms of benefits for In 1979, we introshare performance. duced the opportuniAnd that really wasties that were made n’t able to be done available from airwith any real preciline deregulation. In sion until the mid1980, we added a ’80s. So the formusegment on the benlas of the whole efits of an inplant buying and benefit HANNA MURPHY: Corp. negotirelationship, which trade process ations began in the U.S. enabled corporations revolved around to share in commismarketing informasions. In 1981, we began to focus on tion data tapes and more sophisticatpurchasing ground services, including ed ways to measure what was going hotels and car rental. And way ahead of on in the air part of the process. That our time, in 1982, we added to the sem- struck me as a new frontier for awhile. inars a segment on teleconferencing. By Now it’s pretty much standard, and 1984, we felt that travel management some people can’t even envision a already had become a significant part world without MIDT. They build their of the travel operation and managing whole business models around it. the costs of travel and managing the BTN: When did it first begin to be lifestyles of the traveler. available? BTN: Of course, prior to deregulaKatz: I think it was mid-’80s, I want tion in 1978, you had the Civil Aviation to say 1985 roughly, when CRS data Business Travel Timeline 1978-2004 20 Monday, May 10, 2004 1981 Emergence of first corporate contracts and standard meeting fares 1984 BTN PUBLISHES ITS FIRST ISSUE 1985 CRSs begin consolidating MIDT data; Pan Am sells its Pacific routes to United for $750 million; www.btnonline.com Business Travel News ★ Remembrances Of Business Travel’s Past ★ had more time. I don’t think there say, “You know, if you had only sold were as dramatic layoffs as with the 14 more tickets to Dusseldorf you most recent war, and people had time would have made an extra $400,000.” to read up more on their customers If I had known, I would have bought and become more professional. And the damn tickets and given them for buyers like us, we were delighted away. Of course, today we have data to see someone that found out about technology that can really help manthe company before they visited you. I age the process. But we were able to think it took that five-year time span influence channel purchasing and for them to become truly professional. make a very nice profit at the time. Katz: To me, it’s a Murphy: You blur. I spent the midmention such a great 80s in the finance word, which is and the marketing “process.” Until the part of American ’90s, you never would Airlines, and the have used that word, early ’90s in the sales but, coming out of part. I think Hanna’s the Gulf War, people right, there was a lot began to rethink of sophistication and their whole process a lot of expansion stream. That became that happened. 1983 a buzzword and still was when AMR CEO today it remains one PETER SONTAG: Massive conRobert Crandall of the most powerful solidation opps. in the ’80s. began the so-called buzzwords in the Growth Plan and industry. bought 200 McDonnell Douglas BTN: So how was the process Super80s. That really lasted until 1989, reengineered at that time? when the first deregulation contract Seligman: I think the earliest expired. That’s when things began to reengineering of the process came collapse actually, when labor rates went when the GDSs were introduced for back to industry levels. the first time, with Sabre and— What I remember most about the Sontag: Western29 was the first one. mid-’80s through the early ’90s was Seligman:—and PARS and later the prevailing hubris that we are UAL’s operation. That was the first going to get bigger, better and the wave. I think Heritage put in the first company wealthier. So the Kuwait Sabre system in 1976, give or take a War was the first really big shock for year. And the travel agency communithe name brand carriers, especially for ty at the time had tried for several young managers, who were working years before that to develop together without a model for the downturn. with United and American and TWA a Sontag: In the mid-’80s, we saw common system for all parties. And the opportunity for massive consolida- United broke away and scuttled the tion. I started US Travel in 1986 and universal approach. started to acquire companies all the Sontag: Western29 was telex, there way through 1994. It was a period were no CRTs at that point in time. where the distribution system began Seligman: It was very rudimentary to realize that in order to have any compared with today’s systems, but kind of future, there has to be consoli- back in the middle ’90s, again BTN dation. They have to pool their was ahead of itself when in 1994, it resources. The consortium model has published “Looking Toward 2000.” never worked because while they say And again I’ve picked out some of the Woodsides and Hickories of the former BTN executive editor Mary world do billions of dollars in travel, Brisson’s insightful sound bites. One they were never able to channel the that was particularly good was, “What travel purchasing into specific direc- is the worth of a traveler’s time?” Also, tions. So the only logical thing to do “What is the worth of a travel agent’s was to create mega organizations. US knowledge or skill? What is the worth Travel did very well. of technology? What is the risk of misThe lack we had was the data. We calculating its power?” All those queswere on quarterly incentives with tions are just as relevant today. She Lufthansa for example, and the was right on the ball with that. Lufthansa sales rep would come in 60 Katz: I heard a speech recently in Continued on page 24 days after the end of the quarter and EXPERTS TRACE INDUSTRY’S FEATS Continued from page 20 change—and I wonder. us who came to the industry later, it BTN: Terry, you became a travel seems a blur. manager in 1987. How has the funcSeligman: Well, I dug out from my tion changed since then? archives your retrospective issue from Terry Sullo: It has fluctuated 1989 and as I went through it, each between the notion of price versus seryear I picked out an item that I vice. I would say that today the focus thought was of major consequence. is on cheaper, better, faster. That’s 1984: Robert Crandall, president of what the Internet has provoked and AMR Corp., tells employees that low fare probably will continue to do. The competition has made things tougher. demand is for both. They want the Employees were called on for give- right price, they want it fast, but they backs—not so very different than today. want service—and travelers want ser1985: Pan Am sells its Pacific vice that is fine-tuned to them. A basic routes to United Airlines for $750 mil- profile is not a solution. We need a lion. I don’t know how many billions total person profile. The question is, they would be worth today. who will pay for the level of service 1986: People Express sells out to that the travelers want? New York Air, which is later taken Sontag: In 1991, right after the over by Continental Airlines. Gulf War started, I was in San Diego. 1987: The party ended for Allegis, At that point in time, US Travel was United’s attempt at vertical integration owned by PS Group. After a board of travel service. Richard Ferris meeting, I was to fly to Las Vegas to stepped down as the head of the com- give a speech at an industry function. pany, and Hertz, Hilton and Westin The taxi from La Jolla to the airport in were put on the market. Allegis was San Diego was $38, the hotel I stayed the one and only really strong attempt at in Las Vegas was $140 per night and to try and build a vertical operation in the flight was $19.95—and my speech this industry. was, How To Save Money In Buying 1988: Terror struck when Pan Am Air Travel. It was totally ludicrous. Flight 103 was bombed. The other point you made, which 1989: Eastern Airlines mechanics was very interesting, was that the strike again, foreshadowing the end of Allegis, as Hanna may verify, vertical the airline. integration model has not worked in 1990: The biggest the United States, change that occurred but it has worked since BTN began very well in Europe, publishing was the because TUI/TQ3 is consolidation of the a company that airline business. owns 4,800 travel Bankruptcies and agencies, 400 hotels, takeovers had 140 aircraft, 82 operchanged what had ators. It’s a model been a very staid and that works very well. stable industry from In the future in the the end of World United States, you War II. are going to see verTERRY SULLO: Web continues to Next in line was tical integration and, evolve travel mgmt. functions. the development of to some degree, you automation. By that already are seeing it. time, the spread of global distribution Murphy: We also need to mention systems had led to today’s Internet that between 1985 and 1990 the supapplications. 1989 through 1991 were pliers became very sophisticated. In recessional years, very similar to the the old days they would say, “You fly past two years that we just went us don’t you?” They had no clue how through, during which everyone said much, no clue what their baseline business travel would not recover and was, but they had read up on your would never be the same again. Then company. They did not really know we entered the 1990s. I read some of one iota about it but they tried to fish the things in all of the press today that for it at that time. say business travel has undergone funThat changed in the ’90s, I think, damental change—not a cyclical because with the Gulf War, people 1986 People Express sells out to New York Air; Prism introduces Travel Manager's Workstation 1988 Terrorism strikes Pan Am Flight 103 1990 Airline consolidation: Eastern, Pan Am disappear 1987 Allegis, United's attempt at vertical integration of travel service, fails 1989 Eastern Airlines mechanics strike 1991 The Gulf War 22 Monday, May 10, 2004 www.btnonline.com Business Travel News ★ Remembrances Of Business Travel’s Past ★ lot of talk about commission cutting. Clearly, there were a lot of changes happening in buyers’ relationships with suppliers. At Sabre, in 1995, we had this team go off and live in their own apartment and that ultimately became Sabre Business Travel Solutions. And so we had this very strong view that we could have this Internet-enabled agency application and corporate buyer application. The scheme was pretty simple. We had to protect Sabre booking fees, so put Sabre everywhere you can because we have to vacuum up the booking fees. It was a great model and still is a good model. And we put Sabre Business Travel Solutions out there about 1996 and Travelocity happened about the same time. I remember telling Terry Jones, “You are nuts to spend a million dollars on advertising”—which was just a drop in the bucket compared to what the Internet companies spend on advertising today. At that time, the airline systems got more sophisticated in terms of yield management, the AAdvantage program and how we were able to administer and market it all over the agency community. At the same time, the industry began to perform worse and worse. There were some boom years, of course. 1999 was a boom year, but if you looked at the rising costs and the prices that were necessary to offset the rising prices, it was pretty clear that didn’t correspond with a slowing economy, which was evident in 1999 and very visible in the year 2000. So we were heading toward something unfavorable, from the macroeconomic perspective, certainly by 2001. Unfortunately, 9/11 was a cataclysm that accelerated what already was happening. BTN: So Harold, the first commission cut was in 1995, but that wasn’t the first time anyone had ever talked about that concept. Seligman: No, I can recall commission cuts back in 1951, so it goes back a long, long way. But I had an experience back in 1999 that I think is worth talking about for a moment. I had a client that spent several hundred millions of dollars in air tickets alone and they put together a task force to develop an end-to-end system. GetThere.com eventually became the vehicle for placing the reservations, they developed internally their own 1994 Delta leads airlines in cutting international agency commissions; Amex Buys Thomas Cook; Carlson, Wagonlit merge; Emergence of “ticketless” travel Three global distribution systems stop booking Southwest Airlines PROS CHART TRAVEL EVOLUTION Continued from page 22 which someone said that everybody just got over the Y2K problem, but nobody is talking about the Y10K problem that looms ahead. Seligman: I also heard a speech recently in that regard that was quite profound, in which the speaker said that Y2K was responsible for the recession. That’s because everybody in anticipation of Y2K went out and spent millions of dollars on new automation equipment so that they wouldn’t be caught short in the change to the millennium. And then for the next three years they didn’t buy anything. Murphy: I remember that after the Gulf War, as a travel manager, we wanted to revamp all of our policies, because this was a time when you could literally tell your constituencies of travelers that we have to do this together. We need to know where you are at all times. So just as you became stronger companies, we became stronger. And with that we required suppliers to go net, non-commissionable. At that time, because the agencies became so strong, suppliers would say, “I can’t go net because my fiduciary agreement is with the agency.” We went net in 1993. It was a major change, because I know we were the first and the airline said to us, “You cannot discuss this with anybody else.” This is just a simplification of the back of the house process. In the case of car rental, they were sending out checks with $1.75 commission. And now we know what cutting a check costs. So I think fondly of that time when there was so much tension between us and our suppliers that I thought, “Sooner or later they won’t deliver us any services anymore.” And we were just adamant about being net. BTN: So, when we got to the late 1990s, with net fares, commission cuts and the rise of the Internet, Jeff, you were at Sabre at that point, right? Katz: Right. What we saw, as in many other industries, was that was when automation really flourished. I’ve been involved in automation since college and that’s really when the tools became practical for almost everybody to use. They became affordable, flexible, faster, whether you were a garage shop or a big company. It was, as has been mentioned, a period when carriers got a sense of who did and didn’t have the leverage. There was a 1992 KLM, Northwest form first airline alliance; Corporate buyers, competitors torpedo American's Value Pricing effort data transfer from GetThere into their were able to do at the time to help books of accounts. I flew to the West travel managers and companies slice Coast for one, two or three days every and dice information. I felt that week for 40 weeks to put together this Michael Whitesage had developed one program, and it’s working together of the better tools, and certainly a beautifully still to this day. I clearly widely accepted confidence, and so we remember about 17 of us in a large went out and did a licensing deal that conference room and going step by we were enthused about. Now, like so step from the time someone tells their many things, ultimately, in my experisecretary that they need to book a trip ence, the GDS did one thing well, and through filing the expense report. We that was to install a terminal in a travput Post-it notes around the room el agency. about three inches apart and we went As the industry began to evolve to around twice with all the steps that where that wasn’t as useful, though it were involved in handling a reserva- still works very well, a lot of the evolution from end to end. I think the thing tion of the industry wasn’t able to be that most companies felt they gained tackled well from that sort of vantage from advanced technology at the end point. So I think the notion of using of the ’90s was the development of Michael’s tool to help grow our promimuch more sophisnence wasn’t as sucticated data. cessful as Michael Murphy: In 1997, had been on his there were three own. And many credit card compacompanies have nies that provided developed their own data to corporations. capabilities that are That was also the in some cases betyear when most ter, especially when large corporations it comes to integratstarted a travel data ing their own data, warehouse. I think which is about 90 that was the year percent of the puzHAROLD SELIGMAN: Commisson when corporations zle, whereas intecuts date back to the ’50s. started to challenge grating travel data the data that they is about 10 percent got on paper because they couldn’t of the puzzle. We saw the importance, remanufacture the data from the raw and I can remember going out and data they were receiving. licensing this tool from Michael and 1997 was an absolutely super year thinking that it could be very valuable, to explain to the suppliers that what and I’m sure that it was, but it wasn’t they were providing on paper was not the be all, end all that we had hoped. necessarily what we were finding and But I totally agree that access to data that we should discuss it and has advanced a lot and become quite improve data and start working on a the science. partnership. And that word “partnerSullo: I recall fondly in the late ship” in my view was from that time, 1980s, early 1990s being a customer of certainly in the data area. Heritage Travel, and they had the New Corporations helped suppliers to get Horizons product, which was first, I the data to a higher level. thought, in allowing queries of data. Sontag: What I also remember Afterward they became acquired and from that era was that was the first the product went away. What I found time that hotel data became available interesting was that it took all that and could be manipulated. Until then, time for something that good to come all the focus had been on air data. back. There was a lapse of several BTN: The Travel Manager years during which that kind of data Workstation seems to have been the was not available, or able to be first system designed to let the travel queried or as reliable, until now, with manager manipulate the data them- the advent of the online agencies and selves. Sabre just announced that it the ability to get data in real time or soon will sunset the software. Jeff, do near-real time. you have a recollection of the developFor a look ahead from these particiment of that software? pants, please log on to btnonline.com Katz: Yes, it became clear that we and click on “Retrospective Roundtable needed to do something more than we Outlook” under Selected Surveys. 1996 NBTA, ACTE endorse standard electronic hotel RFP; BTN launches BTNonline.com as Internet gains wide business acceptance Continued on page 35 1993 Emergence of net deals; Miller Freeman acquires Business Travel News and chief rival Corporate Travel Magazine and merges them 1995 U.S. airlines cap domestic agency commissions, agency boycott fails, signalling the end of the travel department as profit center; Emergence of "agentless" business booking tools; AA moves to marketshare rather than volume agreements 1997 Emergence of travel data warehouse; AA caps agency commissions for online transactions; Navigant rolls up regional agencies into a mega entity; IRS accepts electronic receipts 24 Monday, May 10, 2004 www.btnonline.com Business Travel News ★ Remembrances Of Business Travel’s Past ★ sued Northwest Airlines for poaching executives. In a Texas courtroom, where Continental was suing him for being overly aggressive, lawyers for the plaintiffs asked Crandall to explain to the jury why on a memo about the ailing Pan Am, he scribbled “crush them” in the margins. I had tremendous respect for Crandall. He ran the world’s leading airline. He was an accomplished speaker. He surrounded himself with the best and brightest people. And he was great for a quote. My pursuit of great quotes led me to my own personal Bob Crandall moment. Crandall was speaking at the Grand Hyatt in New York. For 40-plus minutes, he kept thousands of attendees enrapt with his speech about the state of the airline industry, then engaged and disarmed them during a lively Q&A. Afterward, I joined a small group of aviation journalists in a smallish conference room away from the main ball- room. Crandall stood in the front of four or five rows of seats, while a small coterie of AA execs and PR staff stood in the back. I chose a seat, alone, in the second row. Most of my journalist colleagues took BOB CRANDALL: seats further behind, and A fierce competitor no one sat in the first row. Early on, I asked Crandall why, the day before, American once again had matched yet another Continental Airlines fare cut. I challenged him, reminding him that AA always argued to the press and investors that business travelers obtained greater value from American and that, as a result, they were able to extract a premium for that value. “Why,” I asked, “don’t you test that premium value proposition and not match the competition across the board every time they attempt to lower your revenues?” he hero of this story is someone you probably never heard was a mistake until several months later, when Hertz for Now, I knew Crandall had little of. If you did, you’ve probably forgotten him. about the fifth straight time did not grant my request to patience for people with whom he felt First, the background: I came to BTN in 1987 as assistant interview Olson for a story. he had a significant intellectual advanmanaging editor and wound up covering the car rental beat. Olson was by far the biggest name in the industry, and tage. He could not tolerate people who The level of acrimony among the car rental companies in his unavailability hurt the coverage, which, in my estima- he felt didn’t fully comprehend the those days was beyond what could be attributable to tion, already was hurting because of the extreme difficulty intricacies of the airline industry. So staunch competition, even in an industry with numerous of getting objective information of a type that would be rel- my question sent Crandall into a diaplayers selling a product that is, basically, a evant to the readers. What I needed was a tribe about being held captive to the commodity. As in a political campaign, some strong independent analyst, but there was “dumbest competitor” in the marketcar rental officials talked more about their comnone to be found. place. His competitive spirit was just petitors’ flaws than their own initiatives. This Here’s where that hero I mentioned comes bursting, his face reddening. He put rhetoric often was of a personal nature rather into play. For some time, all the major players his knee on the chair in front of me than a business one. One person liked to refer had been privately held, but after Thrifty Car and leaned forward in a very intimiderisively to a counterpart at another company Rental and another, much smaller company dating manner. Inches from my face, as “that chubby one.” Another person once told went public, the investment banking firm Alex. he spewed out his argument against me, rather gleefully, how he’d heard that a key Brown & Sons hired a young business genius my perhaps naïve question, along with executive at an opposing vendor had been disnamed Charlie Finnie to follow the industry. some expectorant all over a silk tie I graced and humiliated by his boss at a meeting. Suddenly, the light dawned. Charlie learned just recently had purchased. Not wantNot that the business side didn’t provide the industry cold in a few months, and I had ing to call too much attention to what CHARLIE FINNIE: some openings for attack. The most famous an authoritative source. The car rental compa- he was doing, but hoping to send some Took on car cos. incident came in 1988, when a Hertz manager nies found themselves compelled to comment kind of signal to turn things down a litwas caught inflating the cost of repairs to accion substance rather than schlock. The quality tle, I made a slight brushing gesture dent-damaged cars for which customers were liable. My of my coverage improved vastly. over my tie that I hoped Crandall phone buzzed with calls from competitors begging to be Charlie spent a lot of time with me. He seemed almost would see. This movement only raised quoted in my story. Joe Vittoria, the CEO of Avis, had me to be training me, so that there could be someone in addi- his ire, and he got louder and redder, come to his office so he could look me in the eye and say tion to himself qualified to monitor the industry for infor- and I got wetter. After five or so minevenly, “We have never done any of that.” mation. He was around for only a couple of years before utes, Crandall wrapped up his arguVittoria was at the center of another matter I reported moving on to cover another industry. ment. To this day I cannot remember on. He mentioned during an interview that he once had We are all off the car rental beat now—Olson, Vittoria, exactly what his answer was. worked for Hertz, and candidly added that he had been Finnie and myself—but lessons I learned from Charlie about ~Richard D’Ambrosio, American fired by Frank Olson—for many years the dominating CEO how to view an industry are still of great value to me today. Express Corporate Travel North of the industry leader. “And the way he did it,” Vittoria ~David McCann, Meeting News editor in chief America director of communications said, “and the personal things he said to me, were extremely unprofessional.” So I called Olson. In his trademark, slow and quiet but stern manhad just been named editor in chief of BTN, was even changed their “P” to “B.” That made it the ner, he insisted, “The things I said to introducing myself to the alien files that lined my de facto “business” travel trade association, so him were about his performance as a businessman.” That’s all he cared to desk and office, when my boss Mitchell York came they thought. Yet, Mitch and I were about to say on the subject, so I asked him in and told me to put on my coat and take a ride to meet the upstart, renegade founders of a new about recent evidence that Hertz had central New Jersey. A la Woodward and Bernstein, association hoping to bring business travel needs and concerns up to date with a fresh voice, but, lost some marketshare to Avis. Would we were about to break the story of the year. The travel and transportation industry had more importantly, an alternate voice. it be conceivable, I posed, for Avis to Mitch had gotten a tip from someone who take the lead? Burning now, he said been governed for generations by the National Passenger Travel Association, a trade association had read the business plan of what was to fiercely, “Avis will never be No. 1.” Back to Vittoria: “Frank said that, with old-guard principles and a reputation for become ACTE, the Association of Corporate well that’s demonstrably false and it’s making old-guard decisions. Not until BTN came Travel Executives. The group consisted of a along, frankly, did the business travel industry handful of longtime NBTA members and wellsomething a child would say.” PETER JENSEN: The mistake came when we printed think of itself as a true community unto itself. known travel managers, like Rudy Monteleone Launched ACTE Continued on page 33 this exchange in BTN. I didn’t know it NPTA bought into the community concept. They ometimes, if you read the business pages today, you might think that the airline industry has never been more competitive. Low-cost carriers are placing tremendous pressure on their more established network hub rivals. Three major international alliances spread intense marketing and pricing competition across the globe. Yet, I’m not sure I’ve seen a time when the airlines were more aggressive than from 1987-1994, when I served as airline editor for BTN. And who can forget the charismatic personalities that ran these airlines? There was Continental’s Frank Lorenzo, wielding bankruptcy courts as a cudgel to drive labor costs lower. Steve Wolf strode the halls of O’Hare, trying to raise United out of the shadow of that carrier from Texas. And of course, there was the industry’s singularly recognizable leader, American Airlines’ Bob Crandall, the conquistador of the sky. Crandall was so fearsome a competitor that he AA Chief Epitomizes Airlines’ Aggression S At Last, A Consultant Tackles Car Rental T MICHAEL DELIA Founder Is A Tough ACTE To Follow I 26 Monday, May 10, 2004 www.btnonline.com Business Travel News ★ Remembrances Of Business Travel’s Past ★ fake headlines and Greek text—letters Award as part of their program. That that didn’t mean anything. Bob was was Mike’s idea too. From then on, we such a stickler for detail that he copy- were important to NPTA and always edited the Greek text to make sure presented at their conference. We later there were periods at the end of sen- created such ideas as the Top 10 U.S. tences. I won’t even Hotel Systems to tell you what it was solidify our imporlike when we put out tance to the supplier the first issue and side. We developed Bob, Mike and Mike’s other specials, like dad, CMP co-founder Looking Toward the Gerry Leeds, all got Nineties, which was a involved with me in research-based edithe sleepless days and tion identifying issues nights of May 1984. of importance to travMike and I spent el managers and almost the entire first agents. Doing those year of BTN’s existhought-leader protence on the road. We jects helped build saw more of each BTN’s prestige and other than we did our unique position. wives. The first issue After a few years, I BTN: The inaugural issue of BTN was timed to became publisher of coincide with the BTN. I’d always wantNational Passenger Traffic ed to see Asia. I hooked up with CMP’s Association’s annual conference in Asia sales manager, Steve Drace, and Phoenix, and we got permission from we built a rep network. I spent three its president, Arlene Macchia, to pre- weeks talking to suppliers in Japan, sent our Travel Manager of the Year Korea, Singapore, Thailand, Taiwan and Hong Kong and then made yearly visits. I told one of the publishers who competed with me, who wasn’t thrilled with the idea of going to Asia, that the trips made me sick, and it took me weeks to recover. The truth was I loved them. We had nearly 100 percent marketshare in Asia. Sorry, Dan. BTN, Mike reminded me at lunch, has been around so long that O.J. was the spokesperson for Hertz when he sold them their first ad schedule. We traveled around with Compaq “luggable” computers and later TRS (“Trash”) 80s from Tandy and used acoustic couplers to send stories from phone lines. It worked occasionally. Twenty years is a long time for a business publication, and to state the obvious, much has changed. Business travel then was safe and casual. There was no Internet to book our trips. There were no notebook computers to make us as productive from the road as we were at home. There was no al Qaeda to make travel something we no longer can take for granted. ~Mitchell York is now a business owner and professional coach was the founding editor in chief of Business Travel News in 1984, and Michael Leeds was the founding publisher. We got together for lunch recently at a diner near MacArthur Airport on Long Island, where Michael now works at Executive Fliteways Inc., to talk about the early days of BTN. Before the newspaper started, of course, there was the idea of the newspaper. It was Mike’s baby. He had been publisher of Meetings & Conventions for several years and felt, correctly as it turns out, that while the information needs of meeting planners were well covered, the business travel manager’s were not. This was in the early days of airline deregulation when the airlines, corporate buyers and business travel agents were starting to arm wrestle for deals based on volume. At the same time, the big travel agencies were jockeying for huge corporate contracts in the opening gambits to consolidated corporate travel management. So there was a lot of news, and most of it went unreported by the other industry publications. While they were reporting the findings of a fam trip to Hawaii, our “investigative reporter,” Diane Merlino, was unearthing mega-million-dollar contract stories before their announcements, to the dismay of IVI Travel, American Express and many others. Mike believed that travel journalism as a whole was a little light when it came to news quality. He told me that when he came to CMP Media Inc. in late-1983 to launch BTN, he spent months interviewing every editor in chief in the business but couldn’t find someone with enough journalistic integrity. Fortunately, CMP had a gutsy senior editor in its computer publishing division, me, who wasn’t afraid of what he didn’t know or of the travel industry’s queasiness about telling it like it is, despite the potential hurt feelings of advertisers. We did tell it like it was, and sometimes we lost advertisers, but they almost always came back. Mike was equally picky about salespeople. He interviewed 20 people for one position in Los Angeles and didn’t think any of them had what it took to be successful with a new concept. Then a woman named Jane Hayward called as he was getting ready to leave for the airport. When he told her he was done interviewing for this trip, she offered to drive him to the airport. That’s a salesperson, he thought. She gave him a lift, and he hired her. She was a terrific salesperson for many years. Mike, along with a CMP veteran, Bob Evans, created the prototype for BTN in early 1984. This mockup of the paper, which the sales force used to sell ads into the first live issue, had 32 Monday, May 10, 2004 BTN Founders Look Back To The Beginning I Triangulating Tech, Mgmt. And Air S teve Taylor was an executive at Lifeco from 1986 until categories of ratings, and every one of them for four Dec. 31, 1991, when American Express bought the com- months in a row was 98, 99. pany from chairman Barney Kogen, Steve and other co-ownThat is the kind of thing that makes you as a manager ers for a nine-figure sum. Steve turned 40 the next day. Now just grin a great ear to ear smile. I remember Raymond he develops senior housing communities in southern looking over at me in front of his boss and saying, “Mr. California. In the late 1980s, while I was executive editor at Taylor, we’re not seeing an upward trend in these numBTN, Steve taught me more than anyone else about the zone bers.” And he was serious. where travel management, technology and the airline busiBrisson: Do you travel much on business? ness intersect. Recently, 15 years later, he filled in more backTaylor: I still travel extensively personally, but I don’t ground on the climate and clients that made Lifeco a success. travel a whole lot on business. Steve Taylor: At that time, airline overBrisson: Do you use a travel agent? rides were going up to where you were able to Taylor: I do everything on the Internet. I do earn 2 percent to 4 percent, and rebates as the all the research. I generally book directly with industry consolidated were running zero to 2 the airlines on their Web sites. I look around percent. That two-point gap was huge. And for the best deal. I charge everything I can on from the very beginning Barney’s and my stratmy frequent flyer credit cards. egy was we would ride that arbitrage as long as Brisson: Flying has changed so much… we could. We knew eventually on a graph the Taylor: If you’ve had the same job for 10 overrides would go down, and the demand for years and you’ve got a family and own a home rebates would go up. Our theory from day one and so on, you should be able to breeze was when those two lines crossed, we’d sell the through airports. You’re not a terrorist, but company—and that’s precisely what happened. that’s anathema to what’s politically correct in STEVE TAYLOR: Mary Brisson: You’ve told me how much terms of profiling. Co. had an edge. you enjoy the high risk, high reward aspect of Brisson: Should travel managers be making real estate development. Did the Lifeco days this their issue? have any of that feeling? Taylor: I think they should push a lot harder. If someTaylor: They did. We were spending millions of dollars. body could take the bull by the horns and figure out how to At one time we had 55 programmers, in the late-’80s with implement a travel card system and let people get on airJeff Hoffman. There was always the question do we really planes more freely, that person would be a hero. Until the need to do this, but it gave us our edge. industry makes travel at least moderately fun again, they’re Brisson: Is there a particular client who stands out in going to be in trouble. your memory? Brisson: Of all the people I knew in those years, you are Taylor: Raymond Burton at Northern Telecom. I the one who most genuinely loved and valued travel for always liked Raymond. He kept us on our toes and really travel’s sake. pushed the envelope on rebates. They did a lot of internal Taylor: I’ve always believed in making a living in what surveys rating our service. At first our numbers were in the you enjoy because if you don’t enjoy it you’ll never derive 70s and 80s, so we worked very hard on it over a period of the energy to do it well. I still to this day love travel. Maybe months. I remember going into a meeting with people that’s part of what drove me. from Northern Telecom. They pulled out seven or eight ~Mary Brisson retired in 2002 from Expedia.com www.btnonline.com Business Travel News ★ Remembrances Of Business Travel’s Past ★ generators, and, especially in the past few years, an increased dependence on the Internet and thirdparty providers. Today, there’s intense competition from extremely well capitalized players. We have to weigh every investment against other divisions of the corporation and make choices based on how we can get the largest return. Every day we have to analyze our business, our customer, the kind of service we offer and whether our business is appropriate and profitable. What hasn’t changed is the hotel business—and by that I mean the focus on our guests, whether they are traveling for business, pleasure, alone or with family. What they want and expect hasn’t changed for 100 years: It’s hospitality. You still have to exceed guest expectations at a fair price. As chairman of the Travel Business Roundtable, where my focus is on broader industry issues, I’ve seen our elected officials become more cognizant of the economic and social contributions the travel and tourism industry makes to our country. We’re working with many different sectors of the government to promote the United States as a destination overseas and to minimize restrictions that slow inbound travel. As chairman of NYC & Co., I’ve seen the expansion of the Javits Center and the creation of a convention corridor that now will run from 30th to 40th streets, essentially doubling the size of Javits. I’ve JON TISCH: More tried to articulate that as than a hotelier. we continue to migrate from a manufacturing to a service economy, it’s travel and tourism that lead the way in job creation and economic development. For the past 20 years, I’ve counted on BTN to educate me in every aspect of the industry other than hotels, about trends and opportunities but also about what the travel manager and meeting planner are looking for and expecting. BTN has been highly supportive of our efforts to raise the visibility of the industry and helped educate elected officials about how important we are. David Meyer was there at the beginning moments of the roundtable, and he was always willing to assist us. Tisch Traces Travel, Lodging Triumphs Cheryl Rosen, former BTN executive editor and current freelance writer, interviewed Jonathan Tisch, Loews Hotels president and CEO. Below is the transcript. I started at Loews as a sales rep in 1980. By 1984, I was director of development, responsible for acquisition and development of new hotels. The first hotel I built was the Ventana Canyon Resort in Tucson. It’s interesting to compare the industry then and now; you can break it down into things that have changed and things that have not. What has changed dramatically is the business of hotels, due to the rapid expansion of properties and brands, not only in the United States but around the world, and the incredible amount of competition that has brought. The level of sophistication and the access to capital also have changed. Twenty years ago you didn’t see hotels as viable means of investment from capital markets, and there was far less competition. There were just a few players who had been in business for years. Now it’s more and more of a business, with an intense focus on the bottom line, a need to continually reexamine the demand Data May Be The Same, But The Analysis Differs T he data that the travel industry generates is essentially the same today as it was 20 years ago. Yet, boy has that manipulation, analysis, consolidation and sharing with vendors changed, according to Michael Whitesage, president of Prism Group Inc., Albuquerque, N.M. “Today, the customer and supplier are sharing the same data and have high quality data they didn’t have in the past,” Whitesage said. “This brings transparency to buying and selling and enables both parties to share risks. Just in the past few years, we are fulfilling the promises of deregulation where buyers and sellers can come to the market to determine price.” Whitesage believes the corporate travel industry is really entering a renaissance, down two distinct paths. One can lead to contracts with a low-cost carrier pricing methodology in which a company can commit and direct volume, but gets no went on a long time and really created advantage. “On the other side, where we a climate of distrust.” now have good information, the airlines In the ’90s, Whitesage began have good information and preaching the axiom that when they come to the table, “data is a business we both have the same requirement. Now that information. That empoweraxiom has won out.” As ment is the absolute renaisproof, Whitesage points to sance in the industry.” the growth of travel sourcIn the 1980s and early ing and procurement 1990s, airlines knew that firms Travel Analytics and corporate data was flawed, Eclipse Advisors, now part often reflecting segments of American Express. He instead of origination and also noted that his own destination and including firm now is working with MICHAEL WHITESAGE: refunds. Airlines came to more than 5,500 corporaData brings clarity. discount the validity, by tions, more than double the error rate of 20 percent the number the company to 30 percent. Customers typically worked with a decade earlier. “Data inflated their data by 20 percent or doesn’t give you an advantage or a dismore. This led to wide disparities at the advantage, it’s how you use that data negotiating table, Whitesage said. “This that makes the difference.” In the JENSEN BROUGHT FRESH PERSPECTIVE TO INDUSTRY Continued from page 26 and Andy Menkes, but was being spearheaded by a relative unknown, a fellow named Peter Jensen. Who was this guy? Simply put, Jensen was a genius. His charter for the new organization was well thought out, well researched and, above all, very practical to implement. He had everything figured, from a mission statement to logo colors. Jensen had enthusiasm. He believed in what he was doing. He was tired of the way NBTA operated, he was perplexed by how the common man’s voice seemed to fall on deaf ears and he loved his role as the rebellious underdog. Back then, the business travel industry refused to admit that large corporations were striking discount deals with major airlines, thus changing the landscape of business travel management. It was time for the business travel world to come clean. Jensen demanded accountability. He sought an environment in which knowledge and honesty allowed the industry to move forward productively. No more winks down the tradeshow aisles. ACTE I, the first annual event of the organization, as it Business Travel News turned out generated more invoices than attendees. Yet, Jensen had accomplished his goal. You couldn’t ignore ACTE. You couldn’t dismiss the energy. Any viable trade association naturally is larger than any single person. Still, when tragedy struck Jensen and ACTE, one had to wonder whether ACTE’s remaining founders could shine brighter than Jensen’s marketing, hype and showmanship. It was while closing an issue of BTN one evening that I got the phone call: Peter Jensen was dead. He had fallen asleep and failed to extinguish a cigarette by his bed. Jensen was not around for ACTE II. The other founders carried his torch and gave it a noble effort. For ACTE II and subsequent shows, it was clear the group faced major hurdles. Finances were low, the promotional savvy of Jensen was missing, but the group did what was needed most: They kept it going. Jensen’s contribution to the business travel industry perhaps is viewed by many as a footnote in some grand volume. Fair enough, but in his own way, he helped put business travel on the executive map. ~Jim Alkon, PBI Media senior vice president www.btnonline.com 1990s, Prism Group built and sold a corporate travel management tool called Travel Manager’s Workstation. In one box, corporations could add travel agency, credit card, air, hotel, car and other data and slice and dice it anyway they wished. By 1996, Prism sold the product to Sabre, which just announced plans to sunset support of it. In recent years, Prism has focused on selling data management solutions to airlines to measure and monitor marketshare and contract compliance of corporations. As part of this product set, Prism has been forced to drive development of data protection and privacy standards, which the industry, for the most part, has adopted. When BTN began in 1984, Whitesage was an American Council on Education Fellow and assistant chancellor at the University of Maryland, but the entrepreneurial bug bit. By 1987, he joined a visionary group of travel insiders building a corporate travel agency and founded Prism Group Inc. Dumbstruck by the quality and quantity of data, Whitesage soon learned that he needed to rely on something beyond what airlines and computer reservation systems were offering. He learned that a system developed to help tour operators manage inventory could more effectively manage business travel and generate good data. How did BTN and Corporate Travel help shape travel management? “The role of the press has been to record history,” Whitesage said, “to recognize the best practitioners and innovators. With these stories, we can go back to recognize those who built the industry.” ~Former BTN executive editor Mary Ann McNulty, present StarCite Inc. editor, spoke with Michael Whitesage. Monday, May 10, 2004 33 ★ Remembrances Of Business Travel’s Past ★ corporate travel management circles. Indeed, leisure travelers generally began using e-tickets before business travelers. Beauchine said one of the biggest developments for the corporate market was international e-ticket expansion in the late 1990s. Much more slowly than first anticipated, other challenges have been met. Major carriers in recent years finally developed e-ticket interline links, seen for years as the primary inhibitor of e-ticket usage in the corporate market. Travel management companies now easily can track unused e-tickets, corporate travel managers have access to much more timely data and airlines can streamline airport and reservations processes. Meanwhile, the early push and pull regarding eticket fees, incentives and other financial arrangements between airlines, travel management companies, global distribution systems and corporate buyers virtually has been erased. Now, airlines simply charge a paper ticket fee on fares that are e-ticket eligible. Otherwise, e-tickets have reached critical mass and now are the default option for most types of travel. That has led to a selfservice mentality among today’s corporate travelers. From online booking and FAY BEAUCHINE: expense reporting systems Paper tix fair game. to Internet and airport kiosk checkin, they rarely need to interact with travel professionals or wait at ticket counters. More recent developments allow them to make changes and request refunds and reward travel over the Internet, none of which would be conceivable without paperless tickets. “Airlines will continue to look for ways to improve the process for the customer,” Beauchine said. “Everything that still is paper is fair game.” ~David Jonas, BTN airline editor Escalation In E-Tix Usage Spurs Savings E lectronic tickets today nearly are ubiquitous in the domestic market, but it took all of the past 10 years for paperless travel to become the standard option for corporate travelers and the source of cost savings that airlines first envisioned. Without the advent of e-tickets, today’s business traveler could not make use of various timesaving technologies and travel managers could not leverage the automation that has become an integral element of modern corporate travel programs. “Customers were used to traveling without hotel or car tickets, so why not airlines?” said Fay Beauchine, Northwest Airlines vice president of sales and customer relations. “One of the sales pitches we developed early on was that it would be impossible to misplace your ticket. I was struck by how well that message resonated.” Even so, the history of the e-ticket—from the earliest, small-scale applications in the mid-90s to the 90 percent-plus usage now reported by most major airlines—had been checkered with uncertainty in he pivotal introduction of bankcards into the commercial card space totally changed the landscape for clients, according to Visa U.S.A. senior vice president of commercial sales David Cramer. Before the hyper-competitiveness of today’s commercial card providers, two corporate payment players—American Express and Diners Club—cornered the market. However, in the late 1980s Visa, MasterCard International and their bank issuers began to open their consumer-focused platforms to the corporate segment, boosting competition and, ultimately, more than doubling the choices buyers had when selecting a corporate payment system. The enhanced competition has been one of the foundations for innovation within the past 10 years, “adding new and improved product attributes and changing the makeup of providers to all banks,” Cramer said. First Chicago on the MasterCard platform and U.S. Bank on the Visa platform are considered the first bankcard issuers to make Visa and MasterCard a viable choice for corporate travel buyers. Since then, a slew of national and regional commercial bankcard issuers have come into play. Throughout their brief commercial card history the associations and their issuing banks have been able to carve out a niche in the corporate card market. In the past 10 years, Visa and MasterCard consistently have been adding customers and building marketshare. In the meantime, as American Express has continued to dominate the market for travel and entertainment cards and Diners Club has slipped in its second-place status, bankcard issuers have had a strong showing in such commercial card areas as purchasing, small business cards, as well as T&E. Other innovations, such as the one 34 Monday, May 10, 2004 Bankcard Entrance Into Corp. Game Upped Ante T card and purchasing card, have helped redefine what is considered a “cardable purchase,” Cramer said. “Before it was T&E only, and now they’ve started getting into low-value purchasing.” This has driven volumes for the card vendors, while offering more spend data for customers. The bankcard issuers and their associations also have driven important issues for corporate customers, most recently advancements in the slow evolution of transmitting electronic hotel folio data. While folio data still faces limited transmission from hotels, bank issuers have worked with clients to enable level-three data feeds, and Visa and MasterCard have struck line tools, and undercutting deals with hotel chains to competitors on price—much transmit the data—garto the benefit of buyers. nering success in moving “It’s been more an evothe much-demanded data lution than anything else,” forward. according to Cramer. Since the bankcard isEven American Express suers and the associations and Diners Club have have entered the competitive grown to see the value of landscape, the market has the associations and cardbeen one where vendors issuing banks. Just this continually try to trump one year, American Express DAVID CRAMER: Bank another to maintain and opened up its network to cards spur change. boost marketshare. Corpothe bankcard issuers, and rate payment vendors agDiners Club partnered with gressively have been bolstering accep- MasterCard for acceptance. tance, updating card functionality, ~Jay Boehmer, BTN payment and enhancing reporting, adding a slew of onexpense editor he past 20 years have seen innovations in development, tems eliminated staff positions, but they allowed hotels to technology, loyalty programs and beds that have con- operate more efficiently, shortening checkin and checkout tributed to reshaping the lodging industry, according to Bjorn times, thereby impacting both guest service and profitabiliHanson, global leader of the hospitality and leisure practice ty,” he said. at PricewaterhouseCoopers. The second application is easy to overlook: The introduction “On the development side, the expansion in the limited of electronic room keys. “Guest security was improved conservice segment, including all suite and extendsiderably, meaning that no one can be given a key ed stay brands, has had a large impact,” he said, that works in the room where you’re staying. And citing the expansion of the midprice without food as employees enter rooms, there’s a record of that and beverage tier, in particular. These brands activity. Not only are guests physically safer, but typically eschew onsite restaurants and meeting their belongings are protected as well.” rooms to achieve operating efficiencies. SimiHotel loyalty programs also have expanded larly, many extended stay brands have achieved widely in the past 20 years, attracting millions broad distribution by targeting consultants and of members. “Unfortunately, programs like business travelers on long-term assignments who these have done a lot to commoditize the lodgprefer hotels with a strong residential feel. Of ining industry, but at the same time they’ve sucterest to buyers, extended stay brands also have ceeded in helping to drive demand to the madeveloped their own pricing model, which makes jor brands, giving them an advantage that in BJORN HANSON: the price of the room per night more economical, the current marketing environment can never Loyalty commodithe longer the stay. “The effect these brands have be undone.” tizes lodging. had on the financial performance of the lodging A final milestone cited by Hanson goes back industry has been dramatic,” Hanson said. to the core experience of staying in a hotel: “It’s Given the pervasive influence of technology, Hanson cit- the quality of the night’s sleep. Starting in the late-1990s, the ed two applications aside from the growth of Internet-only industry began investing in bedding that is equal to or superates that have had a telling effect since the 1980s. “Com- rior to what travelers have at home.” puter-based property management and other back-office sys~Bruce Serlen, BTN hotel editor www.btnonline.com Business Travel News New Brands, Tech Transform Lodging T ★ Remembrances Of Business Travel’s Past ★ of Deloitte’s global conference group. “It was tough,” she said. “When we started doing this, there were not many models.” She pointed to General Electric as one of the only other companies to broach the topic at the time, and the then-fledgling Meeting Professionals International as an important resource. Deloitte’s move to consolidate meetings did not spark a wave of imitators, despite the success of the endeavor. Most corporations didn’t try to implement meeting controls until the 1990s or later. “It was because meetings was not the big nut to crack; that was travel. Then they looked at meetings as another opportunity,” she said. “I guess I was surprised [more companies didn’t attempt consolidation in the 1980s], but I was too busy with our own program then. We literally had only three people doing this; now we have 38.” Strategic management is not the only way in which the meetings industry has matured during the past 20 years. Moynihan pointed to the aftermath of Sept. 11, 2001, as the pivotal moment of change during those two decades. “It’s been a roller coaster for the past 20 years, but the big challenge was 9/11 from MARGARET MOYNIHAN: both an industry and a De9/11 was pivotal for loitte perspective,” Moynimtgs. changes. han said. “Not just in how we all had to deal with a major disaster, but in how it affected the industry: One minute it was a seller’s market, one minute later it was a buyer’s market, but the industry worked so well together in the aftermath, and I felt very good to be a part of it.” ~Chris Davis, Meetings Today editor Terrorism also brought to senior management attention the need for travel managers to track travelers’ whereabouts, driving compliance with preferred vendors and booking channels as never before. For us at BTN, looking back has become a five-year ritual. The covers of our first three retrospective issues appear on this page. We published our initial retrospective on Aug. 28, 1989, a blow-byblow account of the rise of the industry and the movers who shaped it during BTN’s first five years. In our July 25, 1994, issue, we published a 10-year scrapbook, featuring news clippings and photos. In our May 17, 1999, issue, we published a 15-year overview of the changing role of the travel manager, listing travel managers of the year and those executives who appeared four or more times on our annual list of the 25 most influential executives in the business travel industry. We would not be here today to continue to build on this 20year tradition without the support of our advertisers. An even bigger debt of gratitude goes to you, our readers, to whom we are committed to deliver the most important news, analysis and research for managing business travel. We hardly can wait to tell you about what happens during the next 20. ~David Meyer, BTN editor in chief n 1984, the phrase “corporate strategic meetings management,” save for a few exceptions, essentially was oxymoronic. Most corporations were still years or even decades from wresting control of meetings contracts, policies and processes, such as they were, away from administrative assistants and sales executives into the hands of professional meeting planners and travel managers. The few corporations that had instituted strategic meetings management and consolidation processes two decades ago paved the long road to acceptance of those advanced concepts. One of the most prominent was Deloitte & Touche, which began a meetings consolidation initiative in 1980, offering the conference group’s leader, then and now, a singular view of the industry’s growth. Back then, however, resources and information to draw upon were few and far between, said Margaret Moynihan, managing director Deloitte Brought Prominence To Mtgs. Mgmt. I THANKS FOR THE MEMORIES Continued from page 18 relationships: Rebates were paid to buyers by travel management companies, which paid for them with the incentives and overrides paid by airlines. While many travel management professionals foresaw and called for relationships with suppliers that were net of commissions and net of overrides, whereby they would pay fees for agency services, travel management companies had to convince many that this was a better way of doing business. To do so, many travel management companies told their clients that they would open their books to them so they could understand the economics driving them to charge fees for services that they previously provided as agents of the airlines. This move toward transparency was not the full disclosure many were led to believe it was, as buyers later discovered commissions and override payments that had not been previously revealed. For more than 100 business travel buyers, the book did not truly become open until they obtained the ARC Corporate Travel Department accreditation. According to several travel buyers, travel management companies, and especially the largest ones, still have a lot they haven’t shown. 1998 Airlines make additional cuts in international commissions; ARC introduces Corporate Travel Department designation; WorldTravel merges with BTI Americas to become third-largest agency “The airlines do still provide us with subsidies against our fees, pass-throughs that remain in place today,” WorldTravel’s Hood said. In summing up how dramatically the airlines have changed the way that travel management companies are paid in the past to learn a lot and implement Six Sigma programs, tracking mechanisms and service level agreements,” Hood said. “We’ve had to build a lot of software for procurement, including e-auction processes and airline scenario analyses.” Hood said that as a result, his travel management company is dealing a lot more with chief purchasing officers to- 10 years, he said, “Before, 100 percent of our revenue came from suppliers, and we used to rebate 30 percent to customers. Now, 80 percent of our revenue comes from customers and 20 percent comes from suppliers.” Another significant agent of change has been the rise of the corporate procurement discipline and the strength of strategic sourcing initiatives. “We’ve had Y2K Emergence of corporate low-cost online fulfillment centers; VNU acquires BTN day. He estimated that, among his customers, travel now reports to procurement at about 30 percent of them. In the process of developing solutions to meet all of the changes, PwC’s Lennon said, travel has become more visible to senior management. Part of that, he noted, was the rise of travel costs in the late 1990s, making it the second rather than the thirdlargest controllable corporate expense. 2002 America West eliminates Saturday night stay requirement; Orbitz, Expedia launch corporate services 2004 BTN CELEBRATES 20TH ANNIVERSARY Continued from page 24 1999 U.S. airlines make deeper domestic commission cuts, spurring growth of agency fees; Use of nonrefundable tickets by business travelers gains critical mass 2001 Corporate online booking reaches critical mass; BA eliminates commissions; Terrorism strikes New York, Washington; Industry develops traveler tracking tools 2003 U.S. airlines eliminate domestic agency commissions; Amex buys Rosenbluth; Marriott offers rate guarantee regardless of channel Business Travel News www.btnonline.com Monday, May 10, 2004 35