The travel management company long has served as a vital conduit between buyers and suppliers while fulfilling key program management and data functions. But some travel managers are rethinking the TMC as center of the corporate travel ecosystem. They're exploring instead whether their companies' needs may be better served by booking directly with suppliers, capturing booking data via third-party tools and assembling custom lineups of specialized service providers to round out their programs.
This approach is a bold departure from the do-it-all TMC model, and it's certainly not for everyone. But companies with the right profile that are willing to experiment may find that de-emphasizing the TMC leads to an array of benefits, including lower costs, happier travelers—and TMCs perhaps motivated to innovate to maintain relevance.
Such was the case for ZS Associates. The Illinois-based consulting and professional services firm, which has 7,000 employees and operates globally, is piloting a program it hopes will shift 50 percent of its air and hotel travel volume to direct channels. The initiative is based on a direct connection with United for air booking, underpinned by the airline's integration with Traxo, which funnels back to ZS all bookings made directly with United. Pilot participants are allowed to book other airlines but must go through the traditional TMC channel to do so.
Meanwhile, the hotel guidelines—ZS eschews the term "policy" when referring to its travel program—include one or two preferred properties near each of a few ZS offices. To get ZS travel operations coordinator Suzanne Boyan's negotiated rates, travelers would need to book through the TMC or, during direct bookings, enter discount codes provided by the hotel chains. However, travelers are free to book directly at any properties they choose, and the company captures those bookings using Traxo Filter.
To bolster the program, ZS has contracted so-called "microservice" providers to fulfill specific functions, including Freebird for flight disruption management and rebooking, Tripbam for hotel rate reshopping and International SOS for duty of care. The Traxo Marketplace integration service transmits travel data directly to those providers, and it's all tied together by ZS's in-house travel dashboard, which serves as a control center for tracking data.
"We just don't find value in the GDS model of booking travel," Boyan said, referring to the global distribution system, which traditionally has functioned as a sort of clearinghouse of supplier content for business travelers whose companies have managed travel programs. Boyan wanted to give ZS's travelers three things: a better booking experience, more akin to the consumer side; greater freedom; and the ability to leverage loyalty programs, as corporate travel policies can inadvertently shut travelers out from cost-saving loyalty perks.
Since rolling out in the Midwest this year, Boyan said, the pilot has garnered stellar ratings from participating travelers, has reduced TMC service fees and has given ZS greater leverage in negotiating rates with United, as the airline earns higher profits on direct bookings because they don't include GDS fees. ZS's pilot is set to expand to the rest of the U.S. by the end of this summer and then to roll out globally. Meanwhile, ZS is talking with additional airlines, according to Boyan, and she's considering applying the direct connect strategy to hotels. A direct hotel integration with Traxo would be a "differentiator" and "high on the list" of ZS's considerations when the company goes out to bid for hotel suppliers again next year, she noted.
Ripple Effect?
ZS's initiative could help redefine how companies buy travel and force TMCs to adapt. But is the strategy one other companies can replicate? It depends, said GoldSpring Consulting partner Will Tate, who advised ZS during the conception of the program. For one thing, it takes plenty of upfront work to assemble the perfect array of microservice providers, as opposed to contracting with a one-stop-shop TMC, he noted. Further, each specialty provider requires its own cost-benefit analysis and becomes a separate relationship to manage—without the assistance of a TMC. It adds up to a significant amount of time and manpower, especially for larger corporations with massive spend. "Because they're a little smaller than that and because they're a data company" with the ability to build their own data management systems, ZS was particularly well-positioned to benefit from this type of approach, Tate noted.
That said, Tate thinks the concept "absolutely" could be applied by other small and midsize enterprises that are willing to innovate and to accept some of the risks, such as lack of a single, TMC-managed traveler profile and the potential for leakage when travelers don't book with their corporate email addresses and thus slip through Traxo's net.
DigiTravel already has helped some companies set up direct supplier connections in targeted markets. Former Cisco global travel manager Susan Lichtenstein launched the consultancy, aimed at digitizing and simplifying managed travel programs, this year. The future for travel programs, she said, is an omnichannel approach that maximizes choice with direct connections and TMCs side by side. "The tools are there [for a direct model], but it shouldn't be an either/or," Lichtenstein said. "If a traveler wants to use a corporate booking tool, great. But they should be able to do direct booking, too, if they want to." Indeed, ZS hasn't done away with its TMC but rather retains it as an option for travelers who want to book via that channel.
Amid the overall rise of direct connections and microservice options, TMCs will have to reconceive their value proposition, and that ultimately will benefit travel buyers, Lichtenstein noted. "TMCs will have to decide how to add value and how they're going to make money because buyers will pay for what they want," said Lichtenstein. Several TMCs already have embraced a "marketplace" model, partnering with travel tech startups and microservice providers and offering those as add-on services to clients.
Lighting a fire under an ecosystem that has remained "stuck" for the past several decades may be the biggest result of Boyan's bold experiment at ZS. "At the end of the day," she said, "the biggest benefit is that if we can move the travel industry forward … we're going to have access to even more technology, and that alone could be well worth the risk."