I was three-quarters of the way through writing the 1998 timeline below, when one mention from then-technology editor Mary Ann McNulty threw me into a new perspective on the year. The front-page article was entitled "For Online Booking, Focus Turns to Usage" and the truth is, I didn't include anything from that article in the 1998 timeline. But the opening phrase "The economic downturn appears to be having a positive effect on the deployment of online booking systems..." took me completely by surprise.
I had been focused totally on the fast-paced moves in managed travel. Tech developments and adoption were everywhere. In particular, Portable Software led by the Singh brothers Steve and Rajeev, was on the move with expense reporting innovation and acquisitions happening one after another. It started the year by landing a big deal with mega TMC American Express to serve as the expense piece in Amex's end-to-end system. The company would change its name in August to Concur Technologies. But, honestly, there was tons of activity in the expense space among companies like Extensity, Captura, Workflow Solutions and others. And it included a rush of adoption among larger corporations to dispense with paper-based processes.
It was looking so lucrative and ripe for innovation that major enterprise software providers like ADP, Oracle, PeopleSoft and SAP were jumping into the expense-reporting technology scene. They developed a model of 'giving away' the expense modules, according to industry observers, as part of the overall technology buy, threatening to upend the smaller, dedicated expense reporting providers. Ironically, years later Concur will be finger-pointed as doing the exact same thing with its travel booking tools, and accused of stymieing the ability of smaller innovators to break into the market. But that will take many years. Venture capitalists were also hot on the trail of business travel and expense technologies, investing $100 million in 1998 dollars in the industry in the first 9 months of 1998 (that's about $200 million in 2024 dollars).
Certainly, booking technologies were jazzed up as well. In what looks like a strategic change developing across the industry, technology providers were shifting from intranet-based products to internet browser-based products, maybe given the ability to house and pull more historic data from centralized data warehouses rather than from local servers. Someone may need to correct me on this one, but it appears that better data histories and storage of more complete information was available through web-based browser versions of the new tools, and browser versions also began to offer more features. Travel agencies, following the lead of Carlson Wagonlit and American Express who realized this a little earlier, began to let go of their proprietary homegrown booking technologies and reach out to third parties to offer (and actively maintain) better tools. Internet Travel Network, Business Travel Solutions, Xtra On-line and a little French outfit called Klee Data Systems which would become better known as KDS, were all very active in the space.
Not to be left out of the mix, airlines and hotels were rapidly adopting new and better technologies—and new data strategies. Hotels were streamlining inventory displays across all their distribution channels and property management systems; this was a big deal in terms of operations that were coming into play as big Real Estate Investment Trusts began to invest in the hospitality industry and professionalize that industry in a way that Wall Street was able to understand. As a side note, acquisitions were active in the hotel market and we begin to see with Starwood Hotels & Resorts and Marriott Hotels & Resorts a real race for bigger hospitality companies with lots of brand proliferation across the portfolios. The focus on loyalty programs hasn't quite hit its peak with hotels, though; the airlines, on the other hand are really catching on in terms of how data, data, data is going to drive their loyalty strategies.
I loved one article from September in which both Galileo and Sabre unveil their plans to enable airline customers to identify individual travelers and customize offers for them based on their frequent flier status. Sabre was developing its products in coordination with American Airlines' new version of its consumer website to personalize the travel experience. The description of these products is so vividly related to the objectives defined for New Distribution Capability. I don't know yet what became of these early initiatives, but I suspect they were shelved due to complexity. The point is, however, airlines were developing deep database expertise to classify and understand their customers, and technology providers like Galileo and Sabre were recognizing the power that could be delivered on top of those systems.
Car rental companies, too, were re-platforming their services to deliver new value. But they lagged a little bit behind the other categories and I expect those stories to come into their own in 1999. So stay tuned for that, because car rental companies were changing all their leadership mixes at the end of 1998.
I can't leave out a really important development happening in 1998 that has nothing to do with technology. And that's the deep interest in airline alliances, both transatlantic and domestic. Not only the interest among the airlines to bolster their route maps, rationalize some marketing resources and provide more value to the corporate market through some levels of joint negotiations, but also the interest from the government, which was chaffing against what looked to be some very strong airline partnerships forming that could drive—and really already had driven, in acute instances—competition out of the marketplace.
Both the Clinton administration Department of Justice and the European Commission were sniffing everywhere for anticompetitive tendencies among airlines. And you will see those dynamics in play throughout the timeline below. It was a very complex marketplace with controlling interests at stake in what often looked like "synthetic mergers" but, to that point, we do see some close relationships begin to form that eventually would turn into full mergers in the goodness of time. I'll let you peruse the timeline to see how all of that is shaping up.
But what does all of the above say about that line in Mary Ann's November 2 BTN article—you know, that economic downturn? Well, alongside all the excitement in business travel, there was a global economic downturn sparked from a financial crisis in Asia in 1997. In August 1998, the Dow Jones—after weeks of decline—took a 512-point plunge, which was the second-worst in the index's history at that time. By the end of the year, however, real U.S. GDP had grown 3.9 percent, the same as in 1997. So... what downturn are we talking about here?
Without the computer and technology-related investments of businesses, U.S. GDP in 1998 would have grown only 1 percent. That's a phenomenon that is thrown into high relief when reading through a timeline of events, investments and adoption trends in the managed travel industry. I'll let you take a look...
BTN Masthead Notes from 1998
Chris Davis, current BTN managing editor, joined BTN in July 1998 as the editor of BTN's monthly section Meetings Today. BTN veteran David Jonas, who now is part of the inimitable duo at The Company Dime also put his name on the masthead in 1998 as assistant editor. Congrats, gents—little did you know it was the career of a lifetime!
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Mega-TMC American Express replaces its homegrown email-based
expense management tool Expense Manager with Portable Software’s Xpense
Management Solution. Portable CEO Steve Singh says the company is excited to go
with “the market leader.” Portable, in August of the same year, rebrands as
Concur Technologies.
Kevin Mitchell folds Business Travel Contractors Corp, the
member-based buying group that attempted to leverage joint spend to influence
how airlines would offer fares to the corporate market. He claimed the idea of
joint sourcing was not dead, but airline load factors would have to go below 70
percent for carriers to care.
Real estate investment trust Meditrust acquires La Quinta.
Hotel Electronic Distribution Network Association warns of hotel
rate squatting—the practice of hotels brands applying a client’s corporate rate
code across non-preferred properties—and how it is affecting traveler manager
ability to control share.
Airlines Reporting Corp. mulls the prospect of accrediting
corporate travel departments without requiring them to accept public bookings.
Congress approves a 4.2% tax on airfares, plus additional
taxes to apply sequentially over the next 4 years. Consultants recommend net
fare deals to reduce the impact of taxes.
United States Travel Agent Registry proposes a $50M Project
Genesis that would build an independent computerized reservation system as an
alternative to airline-associated CRSs.
Thomson Consumer Electronics mandates online, email or
fax-based booking for travel to and from corporate sites. “We’re not going to
waste our consultant’s time on telephone calls for simple trips,” said Thomson worldwide
travel manager Cindy Heston.
U.S. Office Products, which includes a travel division with turnover
of $1.6 billion after launching just a year prior, plans to spin off the travel
division and names Ed Adams as CEO. The spinoff company
becomes publicly traded as Navigant later in the year
Internet Travel Network partners with Galileo to bring
booking tools to the CRS and global clout to ITN. Galileo was a slower adopter
of online booking, with Sabre having introduced Business Travel Solutions and
signing a majority of megas to that tool—with Amex as the exception that
partnered with Microsoft for AXI based on the Expedia platform. Within two
years, Sabre would buy ITN.
Northwest announces it will buy a controlling stake in Continental Airlines and
form a joint alliance that industry analysts viewed as a ‘synthetic merger.” The
DOJ later in the year files suit to block the plan on anti-trust concerns. Two
years later, Northwest returns its controlling stake to Continental, keeps a 7%
stake that prevents another airline from buying Continental. The move clears
the way for the alliance activity to move forward.
Starwood Hotels & Resorts Worldwide and ITT close their
merger that forms the world’s largest hotel company, including Starwood,
Sheraton, St. Regis and Westin brands.
U.S. Department of Transportation becomes the first government
account with a fee-based TMC agreement. The carve-out contract for $10M of the government
agency’s $250M in annual spend has separate fees for phone, fax, email and a
lower fee for self-serve online booking.
Galileo and Apollo’s 50-cent fee on etickets draws fire from
airlines. Northwest, which had restructured its domestic commissions to a flat
fee of $15, penalizes the agency for booking etickets from the CRS and will
only offer $14.50; Continental prohibits agencies from is issuing etickets on
Apollo. “We won’t be charged for a product we invented,” said Continental
execs.
Kevin Mitchell announces that advocacy group the Business
Travel Coalition will live on after the demise of BTCC.
Portable Software enables a single version of its XMS
product that allows administrators to accept both emailed reports from an
office environment and intranet-based reports created in the software. It also
enables expense policies changes to be made in a centralized location that
instantly updates all instances of the technology
Asian CRS Abacus dumps Worldspan for Sabre, with a joint venture
between the Asian airline owners of Abacus and the U.S. CRS owned by AMR Corp,
the parent company of American Airlines. It positions Sabre’s Business Travel
Solutions online booking platforms in the Asian market.
Bass PLC acquires Inter-Continental Hotels & Resorts.
Captura Software Inc. buys automated expense reporting
competitor Workflow Solutions.
The International Air Transport Authority preps to adopt the
euro worldwide effective Jan. 1, 1999 as 11 of the member association’s 15
European airlines plan to adopt the new currency alongside their local
currencies when it is introduced.
ARC clears the way for corporations to get travel agency
accreditation and plans a phase one rollout during which time 12 corporate
travel departments will be accredited.
Continental rolls out a small business program for companies
with annual air volumes under $40,000. The program is built around RewardOne
loyalty points
Carlson changes leadership from Curtis Carlson to Marilyn
Carlson Nelson, embarking on an internal technology project that will link its
global travel management, hospitality and motivation businesses.
Potential domestic alliances—United with Delta, and US Airways with American
or United—are overshadowed by a Department of Transportation proposal to curb
anti-competitive practices among airlines. “Maybe after the wind blows over,” said
analysts, airlines will continue with domestic alliance schemes.
Air Canada suspends online booking test with Canadian
Broadcasting Corp. The online reservation pilot of a white labeled Galileo tool
announced in Jan. 1997 was “more complicated than they originally anticipated”
and Galileo had shifted to partner with Internet Travel Network.
Allied airlines KLM and Northwest turn over all North American
sales and operations functions to Northwest and those in Europe will go to KLM.
All corporate agreements include both carriers and deals are matched as closely
as possible. KLM closes its 50-year-old U.S. sales office.
United and Delta announce they are close to a domestic
alliance agreement; American Airlines and US Airways announce a marketing
alliance and limited codeshare partnership. The United-Delta alliance is undone
by September when Delta’s Air Line Pilots Union rejects the codeshare. American’s
Airline Pilots Association forms a committee to assess competitive impact. The next month, the airlines convey that new domestic marketing alliances will
not include joint negotiations for fear of antitrust infringements.
Continental promotes a vision of seeking travel agency
partners that will build direct links to its air content to bypass the
traditional computer reservation and settlement systems. Within 2 months, it
claims, it will be ready to test the concept with willing agency partners.
Venture capitalists are putting more focus on travel
management and expense technologies, with $100 million invested in such tech in
the previous 3 years. Public stock offerings of travel tech companies have garnered
$1.5 billion in one year.
Inspired by alliance plans, major U.S. airlines make progress
in interlining standards for etickets. The upshot for agencies and corporate travelers
is that segments on multiple airlines can be mixed in a single PNR and not
booked on multiple tickets, removing a major hurdle for adoption.
BTI Hogg Robinson in the U.K. claims to have tech that will
track unused etickets and refunds, removing a major hurdle to adoption.
Low hotel inventory worldwide pushes Amex to begin blocking
rooms in major hotels club floors and paying for them in advance in order to
guarantee room availability in Europe and Latin America.
Oracle mandates nonrefundable tickets, requiring travelers
to pay the difference if they book a refundable fare and refuse to change it.
The first iteration of the mandate applies to seats on the same flight, but the
company plans to expand the mandate to seats within a two-hour window.
Schwab & Co. Inc. achieves end-to-end paperless
automation for travel processes, using Sabre’s Business Travel Solutions Travel
Planner and expense reporting from IBM that Schwab’s MIS lead called “the toughest
piece of technology I’ve ever had my hands on,” but it pre-populates card data
from Diner’s Club daily.
In the fee-based agency environment in which CRSs now are
kicking back volume-based bonuses to agencies, travel managers are advised at
the ACTE X conference to push for transparency and to negotiate a piece of that
revenue into their agreements.
Hyatt unveils single image inventory strategy to display
streamline inventory information across property management systems, central
reservation systems, global distribution systems and the internet. By
September, Choice, Marriott, Omni, Radisson, Starwood and Wyndham are doing the
same.
Scandinavia—or SAS—the leading carrier in Sweden, Denmark
and Norway again slashes commissions from 5% to 4% and caps segment commissions
at $32. It also removes overrides and other agency incentives. The move leaves
European travel managers again in the position of renegotiating with agencies.
Hilton begins a direct booking pilot that will allow corporations
to book on its public websites but still access their corporate transient and
meetings rate. It plans to attract travelers to these bookings through
understanding their recent booking history with Hilton and personalizing the
shopping and booking experience.
Travel managers try bulk buying with airlines to sidestep
commissions and overrides, but also remove fees associated with credit card
transactions, CRS distribution and ARC settlement. Agreements make a bulk buy
upfront and require ongoing bookings above that bulk buy and are route specific
deals.
Enterprise technology vendors like SAP, PeopleSoft and
Oracle begin to deploy travel management applications—starting with expense management
tools. While they are arriving late, they have built-in customer bases and
threaten to upend existing players.
The European Commission delivers an interim list of conditions
in the long wait for American Airline’s and British Airways’ transatlantic
alliance. The conditions are steep and focus on slot requirements at London
Heathrow. Ultimately, the slot issue will undermine the alliance plans but it
will take years.
After years of spikes, corporate airfares plateau, with
average one-way domestic fares running about $450, according to American
Express Domestic Airfare Index. This average includes all fare classes.
Expense reporting technology specialist Portable Software
acquires 7Software and rebrands as Concur Technologies.
A proposal from the European Commission seeks to limit how US-Europe
alliances can interact with corporates, denying the partners the ability to
jointly negotiate for agreements. The commission also wants to prohibit alliance
partners from pooling frequent flier programs and seeks to oblige alliance airlines
to interline with other carriers.
Worldwide compression in the hotel market drives up costs
but also impacts the application of last room availability strategies for
corporates, with the option becoming increasingly unavailable except to large
companies and at an increased room rate.
Meanwhile, more buyers look at videoconferencing
technologies and Rosenbluth begins a strategy of helping clients manage “non-travel”
by pushing select trips to a videoconferencing option.
US Airways and Delta shuttle operations reorganize sales strategies
and fiercely compete with each other on East Coast routes, also rolling out new
personalization technology for frequent corporate travelers to ease the
experience.
ADP rolls out browser-based expense management product, adding
more features to the Java version than it offered in its original Windows-based
platform, in particular the ability to customize expense categories. “We went a
little different direction,” said a company exec. Companies plan to launch both
versions, but only the browser-based version will be able to access a the full
report history.
Amadeus reveals the details of Project Vista as an internet-based
interface for travel agencies instead of cryptic codes; additionally Vista will
tap out to other websites to allow agents to explore internet-only fares not
available in the global distribution system. “We have to do things differently
than before,” said Amadeus marketing company president Jim Davidson.
According to Airlines Reporting Corp., more companies embraced
onsite agency locations in 1998, with more than 800 popping up between Jan. and
Sep. that year. An “onsite” is defined by ARC as a branch office on the
premises of a client company, dedicated to travel services and not open to the
public. Onsites offered a way to have high-touch front end service in the new
reservation center environment brought about with commission cuts.
Air France introduces a small business deal that provides a
38 percent discount off L’Espace business travel seats and business travel
seats of codeshare partners Continental and Delta, without requiring any market
share shift or promises of future business. The backlash is immediate among
partners and bona fide contracted clients, many of whom have a less favorable
negotiated deal with commitments. Air France defends the move as a promotion to
capture a key segment.
Galileo and Sabre each claim that they are on the verge of
offering new products that will enable airlines to identify individual
travelers and customize “in a nanosecond” the availability and fare information
offered to them by the CRS, unlocking personalized deals. The Galileo product
is called 1-2-1. The Sabre product is not yet named but was piloted for the
redesigned American Airlines website. It’s all based on frequent flier number
and the new databases that airlines have been building.
Rosenbluth restructures and announces it will go end-to-end
with third-party tech, moving away from offering only its home-grown systems,
following in the footsteps of Carlson Wagonlit and Amex. New CIO Neil Bibeau is
noncommittal about supporting the agency’s proprietary E-Res system moving forward.
Adam’s Mark, Carlson Hospitality, Choice Hotels,
Inter-Continental, Marriott Hotels, Omni and Wyndham each are on track to
introduce a single property management system to standardize onsite operations across
their individual portfolios. “If you are going to go after the corporate
market, it’s very important to have a single property management system…
Corporate travel managers are becoming much more sophisticated,” said one hotel
exec.
ARC announced Charles Schwab Inc, Eagle USA Air Freight,
Bear Stearns & Co. and Republic National Bank as its first four officially
accredited Corporate Travel Department clients. It says 11 more are in the
wings.
IBM introduces a home grown solution to get hotel folio
data, weary of waiting for an industry solution to emerge. The software sits by
the hotel’s property management system, recognizes the IBM contract number and
pulls the data over to IBM. The solution is called “simple” but it also is
applied on a per-property basis for a single client.
Hilton, which introduced customized website pages for corporate
client bookings, sells more travel buyers on the idea as the sites maintain
rate integrity, drive compliance and accurately capture spending volume. The
idea was originally developed for meeting planners, but Hilton expanded the
pilot to transient.
Online booking rates anecdotally rise to as much as 75% at
best-practice companies, with as much at 20% savings off of average ticket
prices compared to those booked with agent assistance. While most companies remain
below 20% with online transactions, the industry acknowledges that it has
crossed a threshold to prove that the technology will save money and resources.
Northwest-Continental marketing alliance moves forward
despite DOJ suit. The airlines say the alliance will include joint corporate negotiations
and that they do not require antitrust immunity to do so.
French tech company Klee Data Systems—which eventually will
be called simply KDS—introduces its browser-based online booking tool to the
U.S. market. For agencies, Book It! Pro from Web Ventures, FocalpointNet from
Galileo, Galileo Passport Worldspan Go! roll out for agencies, signaling a
clear move to browser-based tech strategies.
Sabre follows Galileo’s move earlier in the year to put a
fee on e-ticket bookings. While the fee is focused on international bookings,
it’s imposed as an annual upfront charge of $70,000. Airlines freak and
threaten to move eticket bookings off of Sabre.
ADP sells its expense reporting business to Concur Technologies.
In what looks to be an end-of-year tradition for the airline
industry, United takes the lead in diminishing agency commissions, this time on
international fares, which it caps with a $50 commission per segment. United in
a DOT filing denied the cap was impactful because it largely impacted only “last-minute
business travel.”
Airline interlining appears to be in jeopardy as the European
Commission considers whether to scrap the “block exemption” (it’s term for
antitrust immunity) it grants to carriers that allows them to set joint
interline fares within the EU through IATA.
Rosenbluth announces it will have an exclusive, white-labeled
booking tool provided by Xtra On-Line Corp. to debut in January. Rosenbluth
said it continued to research expense reporting partners and would select more
than one. Xtra also provides the technology called PowerTrip to McCord Travel
Management and Maritz Travel Co.
Alamo Car Rental appoints Karen Beard as its new
president. An 18-year veteran at Alamo, Beard is the first woman to lead a major
car rental company. Across the board, however, car rental companies are reshuffling
their executive teams and will begin the year with new focus on operations
informed by data and driven by tech systems as they try to differentiate
services and move away from price as the only indication of value for corporate
clients.
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Elizabeth West is the editorial director of the
BTN Group. She has reported on the business travel and meetings industries for
24 years. Beth was editor-in-chief of Meeting News from 2006 to 2008 and
director of content solutions for ProMedia Travel from 2008 to 2011, when
ProMedia was acquired by Northstar Travel Media and merged with BTN. She became
editor-in-chief of BTN in 2015 and editorial director of the BTN Group in
2019.
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