Way back in the early 2000s I was asked to address a session at Oracle Corporation shortly after they had acquired e-Travel. I was introduced as the “grandfather” of self-booking tools. This title reflected my early adoption of this tech at Sun Microsystems and the fact that I authored the first analysis of OBTs back in the late 1990s. That title was a bit frightening as I was only in my mid 40s at that time. Now that I am in my mid 60’s I feel it is time to reflect on the role of OBTs and how they have evolved in the market.
I have seen the technology move from a few early adopters to become a mainstream component of all travel management programs. The original pitch of OBTs was to automate the travel process allowing the traveler direct access to booking information so they would choose the right options that met their needs. The addition of policy filters was designed to direct the traveler to the preferred supplier to ensure their choices were policy compliment.
Nearly 25 years later, I believe it is time to re-evaluate the role of OBTs and recognize how they now act as gatekeepers and even obstacles to innovation. Many corporate travel managers have heard a clear message from their airline suppliers, carriers are moving from a process of static percentage off discounts to an era of continuous pricing and dynamic bundles. This simply means you can no longer compare offers in the same way as in the era of static percent off discounts. The challenges faced by ATPCO’s Next Generation Store Front or the lawsuit between American Airlines and Sabre over the Delta value pricing display illustrates how comparing offers between carriers is challenging in a dynamic pricing era. Carriers such as Southwest are also put at a disadvantage in this apple to oranges search as their free baggage policy is not shown as an advantage and their lack of seat assignments is viewed as an inferior offering.
The question that should be asked is how the OBT model fits with standard corporate procurement processes? I encourage corporate travel manager to look at how their companies deal with suppliers in other sectors. Do they expect their employees who are shopping for office suppliers or computers to use a tool that compares offers from multiple suppliers, including non-preferred vendors? I believe you be hard pressed to find an example of this outside of travel. Then why is travel still a shopping process versus simply an ordering of services from a preferred supplier? The answer is rooted in a belief that choice must be presented at the time of booking, or the traveler will go aside the preferred channel. I believe this is a false narrative that does not reflect the reality of the traveler mindset. If you are in a market where there is a dominant carrier the traveler most likely has loyalty to that airline, or the carrier has more direct flight options. In addition, standard published pricing is generally not dramatically different across carriers. With the emergence of airline retailing the true differentiation of airline product will be based on dynamic offers and bundles. I am not optimistic that OBTs will meet this challenge. Currently dynamic offers are not being brought to the point of sale and in fact, the indirect channel often lacks “NDC” inventory to make the OBT choices competitive with what can be found online. OBTs can act as an additional barrier to content as evidenced by the dominant OBT, SAP Concur, requiring another layer (Travelfusion) to gain access to NDC inventory at an additional markup on all volume on that carrier. This does not even address dynamic pricing and bundles as it is only trying to fill the content gap.
Airlines continue to invest heavily in their direct channel .COM and more importantly their apps. Younger travelers are app focused and if it is easier to book travel via a supplier app, they will embrace this as we’ve seen from progressive companies who have adopted the “open booking” philosophy. In addition, restrictive travel policies inhibit employee acquisition and retention and thus are detrimental to the success of a corporation in a tight labor market.
The next question is the obvious one. If I allow my travelers to book directly with suppliers, how do I continue to have consolidated information, and ensure I meet my company’s duty of care requirements? Fortunately, companies such as nuTravel, Atriis and Traxo can capture all bookings and feed them back to the corporation and their TMC. How about support of direct bookings? Progressive TMCs such as AmTrav and Spotnana recognize that the true definition of omnichannel is support of all bookings regardless of source. So, if the data consolidation, TMC support can be solved what about policy compliance and delivery of corporate dynamic pricing and bundles? Here’s where Web3 technology plays a role. Smart contracts can deliver benefits at the point of sale through the airline.com and supplier apps. The days where the traveler shopping paradigm using an OBT through a mandated channel are rapidly becoming obsolete. As the “grandfather of OBTs” it is time for another paradigm shift embracing a new direct supplier booking environment. What about the rest of the itinerary in the form of hotels, rent a car, ride share and other elements of the trip? More about that conundrum in my next blog post.
