Dear industry colleagues.
It appears to me that our market has a blind obsession with “Online”. Everywhere I turn, we seem to see it as the ultimate solution for today’s travel management issues. Yet, as I trawl through reports and case studies I am yet to find an answer to a simple question: where are the proven, rounded financial benefits for the corporation?
We all know that online is sexy, anything technology-related is always aspired to, and featured in almost every travel management discussion. But still no one can demonstrate a clear calculation with the exact benefits and the true costs.
We all understand there is one (so far only one that’s repeatedly identified) financial benefit: an average lower transaction cost.
But each process and every model (and online is not an exception) has a fully considered financial balance: P (profit) & L (losses/costs). In this case: “P” stands for the benefit of lower transaction fees and/or head-count savings reflected in transaction costs.
And “L” should stand for all direct and indirect, clear and hidden charges – including the cost of training, IT, HR and operational implementation, the cost of communication and adoption, ongoing operation and future upgrades. And the cost of self search and select as client travellers undertake the role of the agent themselves etc. etc.
I do understand where the benefit of online products lies for the suppliers. For those owned by the GDSs, the self-booking tool products act as conduits to gain greater market share. I also understand where the benefit lies for the online TMCs, as they are new business models designed to attract their target audience and taking a share of the market.
But I still cannot see the proven financial benefit for the corporate customer. I would love for somebody to present me with an example of such financial analysis over a number of years so the true cost is reflected? It should be a very simple, proven story: of the P vs the L.
Such analysis should help to identify:
From what level of number of transactions does online starts to be beneficial for the savings for a corporation?
And with what adoption rate?
And at what level of difference between offline and online transaction fees?
Our obsession with online will continue – of that I’m sure. But we should not make mistakes through poor analysis. Whatever experience we can garner from matured markets where you, colleagues, have already taken this road and gained valuable experience will greatly help us in less matured markets to have the right understanding of the subject.
Otherwise, I remain open-minded as to whether online is really the solution to all our woes.
Kostyashkin Stanislav, CEO Continent Express, Moscow