History Lesson
When I started as reservations agent at TWA, mine was the first class to use a computer! Within a few years I managed the “Automation Sales” Department at TWA in NYC where we installed computers (PARS) at large corporations and travel agencies. There was a lot of competition back then for airlines to imbed their CRS (Carrier Reservations Systems) as they could be biased, and in some cases not even show competitive flights/schedules. Each of American, Delta, United, Pan Am, Eastern Airlines had their own system and only Eastern’s SODA (System One Direct Access) offered the ability to “toggle” between carriers to see the choices.
At TWA we saw a tremendous spike in volume from our PARS agencies and corporate accounts as they preferred to “self-book’ as compared to having to call the airline to make a booking. And so, the transformation from telephone bookings to self-bookings began to take shape. And travel technology drove airline sales. We enabled our PARS accounts to queue PNR’s for VIP service/rate desk, etc., which was the predecessor to e-mail (they no longer had to call us).
From CRS to GDS
After tolerating years of the airlines “biasing” their flights in their own CRS, in 1984 the Civil Aeronautics Board published regulations that banned certain actions against competitor airlines. In the late 1980’s the shift transitioned from single-airline-ownership of a CRS to multiple airline ownership of a GDS (Global Distribution System). This created the systems we knew as Amadeus, Galileo and Worldspan. The Transportation Department rolled out new regulations that required all carriers to participate in competing GDSs. Travel agencies (for the first time) could use their own hardware and software, mitigating many inherent biases, aka “filtering.”
The OBT Revolution
The first online booking tools for corporate travel developed in the 1990s. By the early 2000s OBTs quickly became the inevitable future for corporate travel booking, as they focused on driving down corporate client costs and shopping/booking time. The costs were the result of travel management companies having to charge per transaction instead of rebating based on total annual airfare.
An online booking 2010 cost a corporation between $4-$8 in agency fees, compared with up to $65 for an agent-initiated booking. In my view, it was the fee savings, not the technology, that drove the growth from offline to online.
Sabre had the brilliant strategy to not only offer a GDS, but to “own” their own OBT (and Travelocity Business) when they purchased ITN (Internet Travel Network) in 2000, giving the GDS/OBT combination of an “End-To-End Travel Solution.” It was an assumed coincidence that the Sabre OBT (GetThere) would work more fluidly with Sabre as the GDS behind it versus a competing GDS with GetThere on top of it. And so, the GDS and OBT wars began:
• 2001 Amadeus purchases e-Travel (a US-based OBT)
• 2006 Concur Technologies acquires Outtask Inc., the provider of Cliqbook which was a healthy competitor to GetThere and any other OBT
• 2014 SAP acquires Concur, thus increasing their market power
• 2016 Amadeus launches Cytric-based booking and expense tool
• 2019 Enterprise Holdings purchases Deem
• 2021 Microsoft and Amadeus form strategic partnership
• 2023 Travelport acquires Deem
Where’s All This Going and Why?
If you follow the trend lines and history, owning the user experience in corporate travel can drive revenues to (travel) suppliers either by indirect/direct preferencing, or in some cases “owning the end-to-end.” In addition to the stand-alone OBT’s, each of the major global TMCs offer their branded OBT that coincidentally works near-flawlessly with their in-house mobile app.
If you have ownership over the booking process (OBT) and inventory displays (GDS), you have an advantage over independent entities that need to be “connected.” If you own the client (TMC) and OBT then you are both writing the Rx and fulfilling it.
Since nearly 80 percent of all managed travel in the US is booked online then the Holy Grail of managed travel distribution is to own the OBT and the enterprise resource planning systems (ERPs) because you can cross-sell among clients and have “flexibility” in pricing the OBT. And if by coincidence, your OBT interoperates best with your own ERP, then you can expect to gain a large market share over your OBT competitors.
It is noteworthy that we are seeing a synergy between ERPs and OBTs in recent years. There are a number of niche players that now offer their own OBT and expense reporting platform. That can provide advantages in terms of a single-source supplier for both, but at the same time it can also limit competition for one or the other if you are “expected” to take both as a package. It becomes more of a challenge when the ERP “coincidentally” works better with their own(ed) online booking tool than it does with the competition’s OBTs.
Summary
We are seeing a number of new entrants into the OBT space (I counted 15 competitors) and there’s plenty of competition among the ERP providers; yet there is market dominance among the very few combatants especially here in the US. The same pattern is replicated globally with some unique (content) exceptions. We need to see more competition in the space to drive innovation, just like NDC has created a degree of standardization in terms of how airline tickets are purchased online.It’s time to have PNR standardization so that travel procurement managers can have their choice of technology options for GDS/OBT/ERP and not be forced to eat the “Happy Meal” because it’s the cheapest option, or because you really can’t “Have it Your Way.”
