The CWT chief executive talks to Paul Revel about digital strategy and the way forward for managed travel
Before joining Carlson Wagonlit Travel as CEO in April last year, Ekert’s two decades in travel in travel include five years as chief commercial officer at Travelport.
He says his GDS-technology background, plus more than five years at Continental Airlines, gives him a “well balanced” perspective on the current debates swirling around NDC (New Distribution Capability).
“The airlines have very successfully become retailers and sold more dynamically direct to the public,” he says. “New Distribution Capability - a new system of technology standards to allow the distribution of airfares and ancillaries through third parties which is being developed by airline association IATA with... is creating that capability in intermediary channels, which is selling more a la carte, allowing them to better differentiate their products and services.
“The Global Distribution System - a major electronic worldwide reservation system used by travel agents to book flights, hotels, car rental and other travel services. The major players in this area are Sab... companies are well positioned to solve this – they already have the infrastructure and connections to the buyers, to the OTAs and TMCs. I think what stands between GDSs and airlines to solving that are commercial issues more than tech issues. I think these will be solved over next couple of years, but it may be bumpy.”
But what about the revenue that TMCs get from the GDSs – is that a concern? “That’s less of an issue than the efficiency,” he insists. “To the extent that if we have to source content outside GDSs, such as certain LCC [low-cost carrier] content that’s not on the GDS, that’s much more inefficient for us. Things like seat assignment, interlining or changing a PNR – the speed of response is not milliseconds, it’s 15-20 seconds, and it costs $10-15 typically to service those bookings more than it would if coming through the Global Distribution System - a major electronic worldwide reservation system used by travel agents to book flights, hotels, car rental and other travel services. The major players in this area are Sab....”
Progress is being made: in October CWT, along with other agencies, struck agreements with British Airways and Iberia Airlines to avoid the airlines’ surcharge on Global Distribution System - a major electronic worldwide reservation system used by travel agents to book flights, hotels, car rental and other travel services. The major players in this area are Sab... bookings.
“My perspective is I want to be a able to sell dynamically in the way the airlines do to consumers,” says Ekert. “It’ll help the airlines differentiate, and it’s fundamental to us offering great, consumer-grade user experience.”
Which brings Ekert on to his favourite topic at the moment; reinventing his TMC as what he calls “CWT 3.0”. I ask, what exactly is CWT 3.0? “In simple terms, it’s about us moving from analogue to digital – becoming an e-commerce company with travel solutions.”
Prime example of this he says, is the TMC’s new hotels division, Room IT, launched in July. “Effectively, we’ve created a metasearch-type capability. In it are corporate negotiated rates, retail rates – plus the two largest ‘hotel companies’ in the world, Expedia and booking.com-Priceline, are fully integrated into our solution. We’ve also sourced a tremendous amount of CWT proprietary rates leveraging our spend, and we bring this all together. As a traveller you get a response that looks and feels a lot like Trivago. We’ll show you 600,000 properties, instead of maybe 100,000 that a typical Travel Management Company: An agency which manages business travel for a company. shows.”
On top of that, he says, for a particular property the tool will show a range of rate codes such as corporate negotiated, best OTA rate and CWT preferred rate, along with the associated cancellation conditions and extras such as breakfast or wifi.
But what if, as a travel buyer, I don’t want my travellers seeing those OTA and consumer rates? “Today our hotel attachment rate is 60 per cent, which is best in class as a Travel Management Company: An agency which manages business travel for a company.. So a third of the time, travellers are going out of programme. Why? Because they think there’s better content out there.
“You can sit there and say ‘we don’t want that content’, but the traveller is mandating it inherently in their behaviour.” And, he says, all the bookings are in CWT – regardless of the source, so security, reporting, profile and policy are all configured. “It’s all about a much better user experience, and it also saves the corporate a lot of money because we’re offering a lot more choice – we think it’s a winning formula.”
A question of value
As the compilers of BBT’s annual 50 Leading TMCs – in this year’s guide, CWT ranks at No1 with UK sales of £1.141bn – we can see what a competitive marketplace it is, with margins squeezed and pressure to consolidate. So how does a Travel Management Company: An agency which manages business travel for a company. survive and thrive in this tough environment?
Ekert says the Travel Management Company: An agency which manages business travel for a company. industry is typical of mature sectors, with margin pressures exacerbated by some competitors chasing volume, which leads to a race to the bottom – “not a healthy dynamic in any industry.” One reason for this, he says, is a lack of differentiation means TMCs are competing on price rather than value.
But, he points out, “the Travel Management Company: An agency which manages business travel for a company. component of spend by the corporate is relatively low, typically low single digits” – so, he asserts, a fraction of a percentage point saved won’t really benefit the bottom line if you’re not running the best possible travel programme.
The key to success is differentiation: “The winners will be those who provide the best solutions – and articulate the value of those solutions,” he says – which brings us back to his ‘3.0’ digital strategy. Another element of his this is analytics. A team of data scientists is currently working on enhancing the CWT Analytiq tool, integrating data from a range of sources to predict outcomes from changes to policy or supplier deals. He says this should be rolled out in the next few months. For the traveller, upgrades to mobile search functionality include results that take into account configurable parameters such as corporate user reviews, loyalty profiles and social data such as where colleagues are staying.
Ekert agrees staying ahead in the tech game involves heavy investment, but says: “Our approach to technology is to be open architecture – investing in a number of third party relationships with early-stage tech companies that have done really cool things,” bringing these products to CWT customers – and bringing economies of scale to the venture. “Our perspective is, if it’s the right thing for the user, it makes sense for us to integrate, effectively be a general contractor in that process.
“When you try to do everything yourself, you get into trouble,” he says. “I’ve no pride of authorship, I have pride of delivering great solutions.”
CWT CEO Kurt Ekert’s 20 years of experience include senior roles at Continental Airlines, eNett, GTA, Orbitz Worldwide, and Travelport. He is a director of Passur Aerospace and the World Travel & Tourism Council, and serves on the boards of the US Department of Commerce Travel & Tourism Advisory and the UNGA Global Partnership to End Violence Against Children. He holds a BS from the Wharton School of the University of Pennsylvania, an MBA from the University of South Carolina and saw active duty as a US army officer.