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Online Business Booking Increases

March 31, 2004|James Gilden | Special to The Times

THE world of booking business travel has moved from bricks to clicks. The industry booked about $19 billion online in 2003, and that is expected to double by 2006.

In response to demand, the Big Three online travel agencies -- Expedia, Orbitz and Travelocity -- have in the last 18 months introduced their own branded corporate travel agencies. Their clients include such companies as McDonald's, General Dynamics and Harvard University.

"Travel budgets are being slashed like crazy, but nobody's lowering sales goals," said David Cerino, general manager of Orbitz for Business. "More and more companies are asking, 'How can you help me manage my company?' "

Increasingly, the answer is online. Nine of 10 companies in the U.S. with managed travel programs were using an online booking tool at the end of 2003, according to a survey by the National Business Travel Assn. and travel research firm PhoCus Wright Inc.

"We provide better prices and lower procurement costs," said Ellen Keszler, president of Travelocity Business, "while giving the traveler a better travel experience."

Companies that have embraced the electronic age say they are reaping other rewards as well: lower service and transaction fees, greater control over policy, better reporting and data collection, and around-the-clock online tools and call centers.

Online agencies have added specially trained and often experienced corporate travel agents whom business travelers can turn to -- albeit at an increased cost.

Online bookings carry the lowest transaction fees -- $5 on all three sites. Talking to a person is extra, from $15 at Orbitz to $20 at Expedia and Travelocity. Making changes to a ticket costs even more. (Orbitz caps transaction fees at $20 per booking.)

But it still generally costs less to deal with a person at an online agency than at a bricks-and-mortar corporate agency, where fees reach as high as $60 a transaction.

Brand recognition is one of the keys to encouraging employees to book online. Many business travelers are familiar with the Big Three websites, because they've probably used them to book vacations.

When employees book their own travel online, they're more aware of prices, and that translates into savings.

When confronted with the dollars and cents on the computer screen, they often choose lower-cost options, managers say.

"The 'visual guilt' is remarkable," said Nancy Garner, travel manager at Extreme Networks, a computer networking company with about 500 business travelers in the U.S.

She said all of its employees "are required to use [Travelocity's] booking tool because it drives the cost of the ticket down. We've seen $1 million in savings. And we've traveled quite a bit more" in the two years the company has been using Travelocity.

Another online money-saving feature is more control over expenditures. About 40% of all expense reports do not comply with company policy, according to PhoCusWright. Online agencies allow companies to program their travel policies into their booking tool, so travel managers can immediately question travel arrangements that fall outside the company's policy before they are purchased, instead of when an employee submits an expense account.

"They have to give a reason [online] if they are booking outside of policy," said Garner.

Travel managers also have access to frequently updated and more complete data on travel costs from the reporting tools at online sites.

"My data collection is four times greater than when we used an agency," said Terry Sullo, travel and meeting services manager at the Cambridge, Mass.-based Akamai Technologies, where two-thirds of the 600 employees travel regularly. What's one of the biggest advantages of online? At the end of the day -- or any other time -- an e-commerce corporate travel agency is always open and almost always available.

"No matter where the traveler may be, so long as the traveler has Internet access, the product is available," Sullo said.

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