The Search for the Elusive: Lowest Airfare
There are opinions….There are factsKnow the Facts!
Learning the Facts Can Save You Money & Your Travel Program
How many times have you heard your employees say they can find better fares on the internet than what your travel department or travel agency (TMC/Travel Management Company) can offer? Not only can this one statement spread mayhem and doubt across your travelers, it can also lead to leakage and a full scale breakdown in your travel program, chipping away at your carefully executed management process. Questioning the mechanics of your program and the balance you have established for travel services vs travel costs, and negotiated supplier rates vs uncontrolled retail spend can weaken the integrity of your well-ordered financial performance and throw your structured budget right out the window.
FACT: There are no magical websites that hold the golden ticket to “lowest airfares.” You are probably already receiving the best airfares right at your own travel department or with your preferred TMC. Airlines set the prices and circulate them equally throughout each distribution channel. Internet travel sites and your travel department or TMC equally aggregate fares producing equal results. The only difference the internet websites have over your current travel management service is that they have catchier sales pitches.
Yes, we’ve all seen these!
But Really?
FACT: Yes. What the internet travel sites (ITS) neglect to mention is that they are all in competition with one another, all leading to how they can outsell
the other guy, including your travel department. That’s called marketing and we as consumers could
save 75% more of our earnings if we weren’t sold with pretty colors and pictures and unprovable promises. But -- That is what sells. Needless to say, if there really was one site that could match the “hype” there wouldn’t be a need for over 1000 travel sites all with the claim of selling you the “lowest fare”. This poses a new question: how do they make their profit if they have the lowest prices?
Secrets of Success inside the Internet Travel Sites…
(Which they’d like to keep a secret)
Here are a few of the finer points to the ITS “cheap air-fares”……. a bargain at any cost.
1. Airfares ARE created equal… airlines are not partial to where they distribute their fares. (We’ll cover this later, in how Airlines price their seats) However, that can’t be said of the ITS. Airlines with a direct-connect booking process (such as Southwest) may never appear on the internet travel site, because that airline does not transact their product through that method of distribution. So you may actually never be comparing apples-to-apples for the lowest fare. 2. What you see isn’t what you get… this covers multiple illusions. A. Teaser
advertising with fares that are no longer available and used as attention grabbers, B. Advertising fares without the final taxes and surcharges increasing your end cost by as much as 27%, C. tighter restrictions and minimum stays that are not conducive with general business travel practices, D. ITS sites operate far differently than your travel department. Seeing a great posted fare does not actually mean you are going to get it. Most sites require you to book, provide your personal payment information, and once you’ve reached the final page, indicate that the initial posted fare is not available.
3. Fine print… Before you click the final button have you spent the time to review each of the fine print restrictions? You should “look that horse in the mouth” so to speak and read the details. This more than any other reason is
why using a non-preferred 3rd party for your business travel will lead to costly,
non-refundable, and unresolvable mistakes.
4. Where’s the fees… Creatively positioning ancillary baggage fees or additional costs, for that “special” wider seat, are in an unassuming place that doesn’t tally up with the total cost of your flight. (until you’ve clicked the final purchase button)
However, creativity doesn’t stop with airline reservations. Hotels offer the biggest area of return to an ITS. These sites are there to make money but how can they accomplish that and still offer the consumer the best deal? Let’s take a look………
1. Loyalty has its privileges… Hotels treat internet consumers singly. They forego the complimentary internet or the bottles of water in the room. Even to the point of saving the room next to the elevator or overlooking the dumpster especially for the internet customer. The hotel property views an internet customer as less likely to be loyal, offering the “extras” to the identified corporate client that can boost their future room nights.
2. Where’s the loyalty points… Many hotel chains do not include loyalty points with internet bookings. As listed above, the hotels categorize identifiable corporate business as more desirable than the ITS booking. For one, market share is tracked by corporate use, substantiating loyalty for the hotel. An incentive for loyalty points are best spent where the hotel can track its earnings. ITS bookings are transparent and don’t quantify back into a consolidated amount of lodging data from a corporation.
3. Read between the lines… Much is disclosed in this area and most of us never stop to read it. A. Non-refundable purchase. This information is generally not displayed until once you have made your final purchase.
(OOPS) They can be as little as the first night or the complete stay with no recourse of
getting a refund. Your contract was with the ITS, not the hotel, so
restrictions that you may not be aware of, which benefit the ITS, may
apply whereas the hotel may not have had them. B. Guaranteed price
match, not to be confused with money-back guarantee can
sometimes represent a maximum amount of only $50 even though
your compared price was far less, or offered only as credit on your next
purchase with that ITS. There may also be short windows of opportunity to
take advantage of that guarantee, as in only 24 hours. C. If there is a refund it may
only be on the base cost of the room night not including the taxes or fees paid. And
ETC. (Look before you Click)
4. Creative profits… These are definitely unique to the ITS; Billing your hotel at the time of booking which ties
up your cash or credit line, sometimes for months in advance of your stay. Here’s why: First: it’s
non-refundable, and the ITS has profit built into that charge. The ITS receives a merchant discount and generally marks up your hotel night upwards of 25%. They aren’t going to wait until you’ve completed your stay to get
their funds. Second: The ITS attaches a “service fee” to the cost of your room night which covers the tax that
the hotel charges. However, the ITS are obligated to pay the hotel tax on their merchant discount rate, but subsequently you are charged the appropriate tax rate for what you are paying for the hotel. So guess who keeps the additional “tax” collected? Here’s the math: a hotel room costs the consumer $100, however it costs the ITS $75. The ITS collects 15% or $15 as a service fee, sending the hotel its 15% or $11.25 based on the $75. Leaving
an extra $3.75 for the ITS. Third: The ITS, has been the able to place demands on hotels to supply the exact
same price to all the internet sites, allowing the ITS complete control to set their profit margin instead of the hotels. Hotels fearing that their product won’t be displayed if they don’t comply have been known to accept this practice.
How internet travel sites work may not immediately change your opinion about using them. You may enjoy being your own travel agent, sleuthing your way to the very best deal out there, knowing the game and winning at it. However, let’s look at some very valid reasons that support your company’s decision for the traditional managed travel method, (the travel department and a Preferred Travel Management Company, TMC), and how the cost of doing business in this method maintains a set of established goals, creates added value, and preserves direction for the company’s bottom line.
The Eco-system of your company’s travel department
Protecting your company’s interests… Your company designs a travel program for the purpose of consolidating and managing overall cost effectiveness, traveler safety, and efficient business practices. When you book with your agent or your designated online booking tool, such as Concur, all of your company’s objectives and corporate responsibilities are being met, within compliance of your policy. Your company has secured negotiated rates with suppliers, places an experienced TMC in place to organize and achieve these initiatives. Negotiated suppliers can easily be identified, and tracked for performance, ensuring better broad based discounts to the traveler. These negotiated rates serve the whole of your company’s needs with regards to costs, and spreads out a deeper savings based on company volume and not individual bookings. When your trip is flagged as out of policy it only means that your trip counts for your company to attain and maintain ongoing negotiated discounts.
It takes a village… Booking on ITS dilutes your company’s buying power and can ultimately effect a loss of supplier discounts and negotiating clout for the entire company. What you may have saved on your own trip
made outside of the policy, may be paved with good intentions, but can easily result in tens of thousands in added costs to your company, by losing their volume discounts. Your company’s travel data is calculated historically, evaluated by the supplier, and discounted based on meeting the volume from that calculation. Every trip that is booked outside of the company’s provided system will not be included, thus affecting the overall outcome of the supplier’s negotiated, unpublished discounts. Better purchasing power is created from the amount of the corporate spend and the credibility to meet agreed upon goals. Your company depends upon each and every traveler to support their cost effective process.
“Duty of Care”… Your company is responsible for a risk management procedure. The preferred TMC or travel department ensures and protects the operation for duty of care processes being met in an emergency, and while you are on the road. By circumventing the preferred booking method that your company has put in place, and booking outside of your company’s location data, you increase your own personal security risk. Your travel information has not been stored within the travel agency’s data, and would not be included on the list of travelers that may be in a weather disaster, or world event; needing immediate assistance in getting home or evacuated. (That may be worth that extra few dollars and peace of mind you thought you saved by booking on the internet)
There’s more to save than meets the eye… What you don’t get with the online or the airline booking engines you will get with your travel company. Once you’ve purchased the airline ticket out on the internet, the transaction is complete and final. However, your TMC has a window of 24 hours with most airlines, allowing us to “void” your ticket before we have to submit our payment to that airline. This service is more valuable that you may suspect, as it saves companies thousands of un-productively spent dollars on wholly non-refundable tickets annually just by cancelling that purchase in time and saving on an additional cost of a change fee to re-issue it. The other half of this scenario, is once past the 24 hour void time, and you still need to change that ticket, what happens now. You either sit on the phone with the ticketed airline (not to be confused with going back to the ITS..as their contract was completed at the purchase of your “low-fare”) and have them change it to a new reservation, or if you are not traveling again soon, you would now need to keep track of your e-ticket and try to re-use it again in the future (minus a change fee) and accounting for it on your expense report.
Survey says: Over 75% of independently purchased unused tickets never get redeemed for re-use. Not so with your travel company. Your agency issued un-used tickets are automatically stored on your profile and will be applied to the very next trip you take, if applicable. One less expense you have to account for as your travel company looks out for both you and for your company’s cost retention.
It’s called managed travel on purpose … There are many facets in the business of corporate travel and the most efficient and financially solid solution is to capture as much of those features into one consolidated and organized activity. Travel programs are implemented for the collective value they provide. The objective of a travel department or travel management company is to contain and manage data for better performance with accountability for uncovering a lower cost of doing business, and having the wherewithal to keep abreast of each travelers need, pre or post trip. This is the travel company’s specialty. Bypassing this cyclical process results in an overall interruption in the eco-system of your company’s business travel objectives.
Yes, but….you are a good and loyal company person, and want to save money wherever you can for your company. If it’s on the internet as the lowest fare it must be true or it wouldn’t be on the internet………
FACT: Definitely not true. Did you know that whenever you see a “lower” fare on the ITS, you can contact your travel department or TMC and let them know what site you visited for that fare. If you provide a screen shot of the itinerary you reserved your agent will be able to book it for you, too if it proves to be a valid price. The lesson here? Buyer beware.
The real “411” about Airline Pricing Strategy
Air fares are updated in a central database continuously each day. This system allows airlines to have a common distribution point, with an equal circulation to all participating subscribers – including the systems that support travel management companies. This essentially means that your travel management company receives the same information and fares as the internet travel sites.
Participating subscribers can include various distribution channels worldwide: GDS (global distribution systems which also re-distribute to airline websites, call centers, travel agencies, internet sites, tour operators, consolidators etc.
As these fares and rule class change, they are stored and then dispersed equally to their subscribers. At this point of the process, is where loading times will vary, and when you may see a fare on one site but not another. However, it will only be for a very short window of time, if at all.
Each subscriber or distribution resource, including airline reservation systems has specific times throughout the day when their databases will upload. These intervals can range from 2-4 hours with domestic fares and 4-8 hours with international fares. Your travel management company or your travel department is dependent upon the GDS for their upload, which consistently uploads during the day, and generally matches the load times of most other internet sites. This variable in loading time can explain why fares may vary by website and by agency reservation system. Timing is everything, and if comparing prices, this needs to be taken into consideration before committing to a perceived lower fare on an ITS.
How Your Travel Management Service Works for YOU
Fare Comparisons - Your TMC has multi-searching technology, equipped to search for lowest fare options.
Using their GDS system and various 3rd party software, various websites are scanned instantaneously for airlines,
aggregators, and even consolidators, comparing lowest fare options.
There When YOU Need it: 24/7/365 - You can count on your TMC to be there with assistance for your
emergency needs. Studies show that trip disruptions occur 65% of the time. Knowing you are one phone call away from getting solutions can mean all the difference in
the outcome of your trip. There shouldn’t be a panic mode of “what should I do now”. Which always ends up costing much more than if you booked with your TMC, and used the coverage put in
place to respond to disruptions with a calculated structure to maintain your company travel policy. (Saving your company from unexpected costs.)
Umbrella of Service - Booking internet airfares isolate you
level, you are alone in dealing with a solution. Handling refunds, exchanges, credits become your responsibility. Securing your travel with your TMC or travel department leaves the business of travel with the experts and allows you to focus on the business of your company, eliminating unnecessary stress. Additionally
and most importantly is by going outside of your company’s preferred booking resources,
YOU truly are
alone
. Is that worth your well-being?Only YOU know what flights you booked….
Only YOU know what hotel you’re staying at ….
How can YOU be located if adversity strikes and YOU are left without ………
the security of travel experts, pro-actively working on your behalf, getting you to safety?
FACT: Using www.travel.something thinking you’ve saved on your purchase just cost you more than you
know. What seems invisible to you is really a network of travel care givers, company security and duty of care technology keeping you safe. The real savings comes from trusting in your company to have a sound travel management program, looking out for your best interests while you are on the road, and standing behind you when you need it. Supporting the methods put in place with your travel program is worth its weight in gold!
Solving the Case to the “better deal on-line”
Using your experienced Travel Management Company is essential for overall cost savings, benchmarking for better financial bottom-lines, accurate data administration, and employee security and safety.
The search for the elusive lowest airfare is easy; it’s confirming, through controlled processes, the lowest relevant airfare that is applicable to your travel needs, maintaining alignment with supplier pricing, compliance to your travel
policy, and protecting your well-being. – All in one location with one call -
Consequently, the mystery is solved when you call your travel department and leave the sleuthing to us.
Contact Traveline for details on strengthening your travel management strategy
www.traveline.com corporate@traveline.com 888-740-8747
