Interview: Data, the GDS, and metasearch in corporate travel with Carlson Wagonlit CEO Kurt Ekert

After taking the helm of Carlson Wagonlit last year, Kurt Ekert has had a busy year. Externally, there have been notable shifts in airline distribution economics, with several high-profile moves by airlines to introduce mechanisms encouraging more direct bookings. Internally, there’s been an increasing focus on data, the launch of CWT For You in India, and the shuttering of WorldMate. These moves were part of a shake-up across the company, with the leadership team setting a bold vision for the next era of corporate travel — or CWT 3.0.

I sat with Ekert to explore where the company sees itself in today’s travel ecosystem. Ekert doesn’t mince words. He’s opinionated and well-informed, offering clear viewpoints across the variety of changes he has both implemented and experienced outside of his own company. Coming from a GDS background, and with a position on the U.S. Travel and Tourism Advisory Board, Ekert also understands the importance of balancing security and trade – something increasingly important to the travel industry in today’s polarized world.

Read on for the wide-ranging interview from this year’s GBTA Convention in Boston.

You’ve been busy this year! What’s new at the show? 

There are several things we announced over the last few days. I’m most excited about RoomIt, which is our new brand for our hotel division. RoomIt is a discreet operating division of the company but it’s also the product set for hotel.

In very simple terms, what we’re doing is bringing together traditional TMC type of content, such as corporate associated rates and retail rates through deals with Booking.com and Expedia.

On a property level basis, it’s sourcing unique inventory similar to what an online travel agent or bed-bank does, bringing that into a rules engine and then present that to the user. The user can do that offline, they can do that through third party corporate booking tools who can shoot that through our XML. And we now have a hotel-only browser platform, which basically is an extension of the CWT To Go mobile app. And so what that does for the user is it gives us an experience that’s akin to being in perhaps a Trivago or a Kayak.

And we now have a hotel-only browser platform, which basically is an extension of the CWT To Go mobile app. And so what that does for the user is it gives us an experience that’s akin to being in perhaps a Trivago or a Kayak.

In hospitality, there’s massive content fragmentation and there’s great arbitrage that happens, which is why booking and Expedia are the two largest hotel companies in the world.

We’re basically bringing that arbitrage into the corporate market. We provide personalization of that experience to the end user. What that should do, is give the user a much greater confidence in the content set and in the UX. We think we’ll be able to dramatically improve the attachment rate of hotels, and save the company significant amount of money.  From our perspective, it’s a pretty unique and different offering than what’s there.

The other thing is that, while that will be captive to our 11,000 corporate customers, there are many out there who don’t do business with us and may not want to do a full switch of their TMC, but are maybe not fully happy with their hotel program. We’ll be able to go in with a full offering, which is again mobile/browser/offline and basically do the entire suite of the services for them. So we’re really really pumped up about that. I don’t think anything like that exists in the marketplace today.

So this sits next to any existing booking services or does that require a standalone experience?

If it’s a TMC client of ours, we serve it through whatever technology platform they’re using. If they want to use our hotel platform, that’s great. If clients want to integrate to their corporate booking tool, then they write to our XML API. And then the search is done against our API. We return results to include sort order. And you’ll get a ubiquitous experience regardless of the channel you’re in.

That’s great.

It’s pretty cool. A lot of the technology, the sophistication, is behind that XML. And that basically that will feed the agent desktop, feeds CWT To Go, or it feeds any third party technology application. What we’re not doing is requiring the client to change their configuration. If it’s a hotel-only offering, we can basically service those bookings or we can simply be a content portfolio and allow their existing TMC to service those booking. We’re happy to do that either way. Whatever works for them.

It obviously has policy and safety security and all those TMC things that you do surrounding that content set. We have 60 percent effective hotel attachment today, which is pretty darn good for a TMC. We think a natural rate is 80 to 90 percent. So there’s that much not being captured largely because people go outside the programs. They think they get a better deal or the UX is not good enough. So we think we will address a big part of that.

One of my questions is what I’ve started calling ‘channel exhaustion’ or ‘over channeling.’  There are more and more places people can get inventory and content from. It gets really confusing and complex to manage for suppliers. 

And that’s what we’re trying to do. Unlike air, with its centralized command and control, hotel is very different. Which is why the OTAs have so much success. We’re going to solve that arbitrage. For the same property for the same room type, we may have six different sources of rate types from six different suppliers.

Our software will compare and present the relevant, right rates. All things being equal, the corporate negotiated rate will always be shown first. But there’s a point at which, based on price differential, another sourced piece of inventory may be more beneficial to the corporation. And that’s the sort of thing we’re going to do.

We’ll also be introducing loyalty and gamification. So separate from what hotel chains extend in terms of loyalty, we can work with the corporation to influence positive behavior. We can offer points or benefits to the user that are a little bit different. Some companies think that’s a great idea, some obviously are less apt to go there. So will we’ll fit that by user need.

How does this fit into your view of medium-term traveler management? It seems like either customer service or content is harder to compete on. But then you created this way to compete in a new way for content.

There are three things that we need to do fundamentally different and better than what we’ve done before. One is user experience.

Traditionally in this industry, we’ve been guilty of being very good at service, but service with an off-line mentality. And if you think about Amazon versus a traditional retailer, it’s a great proxy for where we need to go. You need to have a user experience that’s fairly common and is backed by technology and software. Service is a fundamental part of that platform, but the experience is what it’s all about.

Second, data and personalization is a huge opportunity. We’ve hired a Chief Data scientist. I think we’re the first in the industry to do that. We went from scratch a year ago, and now we have 90 data scientists at the company.  What we’re doing differently is we’re going to be using real-time data, but not only CWT data but also disparate data sources – credit card, GDS, you name it. We’ll aggregate those data sets and we use that to make on the spot decisions, which procurement can do or they can design the software to enable them to better optimize their program.

For example, we have information about people in your company and what they are doing, their history, their preferences. And we can offer more relevant content. Say you’re traveling to London, we can see the last time you were in London you stayed at the Savoy. And we see that 60 percent of the time your colleagues like the Savoy as well. We have a preferential rate — would like to book it? Yes. And we automate the booking.

And the third I think is that, as an industry, TMCs traditionally have nailed car and air. But have not done as good of a job with hotel because it’s been a limited data set. So we’ve dealt with chain-centric inventory that we get through the GDS and we’ve been missing the property-level data that you get through OTAs or through direct sourcing. That’s what we’re introducing.

This is all going beyond the booking.

Yes, there’s a lot more than we do other than just a booking itself. The travel manager considers safety and security job number one. But I think beyond safety and security the other fundamental things are: One, it’s user experience and then two, it’s about a balance of employee productivity and the cost of running a travel program and the T&E costs themselves. We’ve got to get all those things right. But again at the core of it: user experience, more informative use of data and personalization, and three is becoming world class in our hotel offering. We can really differentiate and stand out from the crowd by doing those things. It’s not a revolution but it’s a strong evolution relative to what we’ve done traditionally.

But again at the core of it: user experience, more informative use of data and personalization, and three is becoming world class in our hotel offering. We can really differentiate and stand out from the crowd by doing those things. It’s not a revolution but it’s a strong evolution relative to what we’ve done traditionally.

That must have been quite a lot of work to get this data. I’m assuming a lake and pulling from there. How did that work? What was the timeline and what have you learned?

On the data front, we’ve been at it for about the last nine months. Today, corporate travel managers are buying disparate data sets. And again, they’re generally backward looking to say what happened and what lessons can we learn going forward. They’re not used as much for the administration of policy or to make decisions about how do you optimize your program vendor-by-vendor, that sort of thing.

We’ve hired a team that largely comes from outside of travel and who have built these sort of platforms in other industries. They’re not taking a travel-centric view to this. They’re simply saying what are the data sets. So we’ve now got feeds with various credit card companies or data providers. Once we get that, we can amalgamate that. And what we’ve done to date is largely professional services engagement with clients to build stuff uniquely for them. We’re beginning to productize those where we’ll be able to roll them out more broadly.

On the personalization front, it’s really looking at the lessons of what retailers do or e-commerce companies do. We have all that data sitting right there. We have captive travelers that we interact with every day. We ought to be able to offer a similar experience. And so that’s what we’ve been after.

Has there been any tension with suppliers? They’re still getting the benefit of additional bookings but it also seems like it’s starting to become one of those typical travel scenarios. There are benefits to hotels but also this might be negative that you can now see all the rates a supplier offers. If they’re gaming the system and you’re helping un-game it.

Look at where we’ve signed deals. With Expedia or Booking, they’re very interested in the distribution and the eyeballs that we have access to. We have about 11,000 corporate clients around the world. These are high-yielding type of customer than perhaps they get through their dot.com sites. So there’s been great interest by them in us being a distribution vehicle, and a good partner.

With the hotel chains, those are great partners of ours, great clients. We want to push more and more business to them and we’re interested in understanding how we do that. But in hospitality, sourcing with chains versus sourcing through properties is quite a different conundrum — technically and commercially.

To me, if you say, why is hotel attachment not close to 100 percent, part of it is because people believe there are better deals out there.

There’s an inherent mandate therefore for us to go source that and put it in front of the client. We’re not trying to disintermediate anybody. What we want to do is make sure that the arbitrage, the fragmentation that exists in the market, we address and solve that for our client and then for the end user.

So I think anybody ought to see this is very pro-competitive and good for the industry. And really drive towards compliance with the programs because people can become happier. But it is our intent to drive as much traffic as we can to our preferred suppliers. This is very pro-competitive and good for the industry.

There’s always a new way to connect hotel supply to demand. It goes back to the idea of ‘channel exhaustion.’ I have sympathy for revenue managers!

What will be interesting to see over time, is if you look at retail that’s not how retail works. Retail tends to be much more preferred relationships. And so you know not all content is created equal.  It will be interesting to see whether the TMC world moves at all in that direction as we go forward.

I think our perspective is to put that content on the shelf and let the client make the choice. But, let’s say a hotel chain can offer certain benefits to our clients for booking through them, we want to make that available and we want to let that compete with other content sources. We’re in this two sided marketplace where we’re trying to marry the two together.

And if the traveler in the corporation is saying “I can go get a better deal there where they have content that’s not available through my TMC or my program”, that’s unacceptable. We have to go solve that. I think it’s up to the chain to determine where they want their content distributed. But to the extent it’s out there in the marketplace, we’re going to go grab it and make sure we show it to the end user.

What about Airbnb? Is that ever something you could pull in as an OTA itself and book within that same flow? Or are you already working on something streamlined like that for P2P accommodations?

Airbnb is a bit of a punch out technically. I think we’re testing our way into that. There are some issues around safety and security and compliance. That content is competing against chain hotels with great products and loyalty programs which are generally valuable to the corporate clients.

We think Airbnb does have a place. Right now the adoption has been somewhat limited. As they fit their product better to the corporate marketplace, I expect the adoption will grow and together we’ll find a better technical integration.

We think that both air and hotel will see three to four percent price rises next year, while, globally, we think black car/rental car will be nearly flat. One of the reasons for that is the impact of the sharing economy. Uber and Lyft have basically flooded the market with supply. So any pricing leverage that black car providers have is really muted in that environment. So that’s not been the case with corporate hotel. So Airbnb while it’s certainly been quite impactful on the leisure side of travel, a little bit less so on the corporate side today.

Let’s talk about airline distribution and fees. You know there’s this stick and the carrot: the I’ll give you two dollars if you book direct. What does that mean for a TMC. Do you care? Does it matter? Direct connect, all that whole fun discussion.

Let’s ground a couple of comments first. Direct connect is a connection between the entity making booking and the end supplier. And that’s a fairly rudimentary thing to put in place. I think a GDS has 450 airline directs on average, something like that. Everything that goes around that, which is the shopping, the back office integration, all that sort of stuff, is where there’s much more sophistication. NDC is basically an XML distribution standard. It’s a technology standard. It’s not the way you distribute.

Let’s talk about different scenarios. If a carrier introduces a surcharge, similar to what Lufthansa did or what IAG has announced, barring anything else, that’s simply a price increase for the intermediary channel. I would think that any supplier in any industry, if they could raise the price $20, they would. So my question is if they were able to do that before, why didn’t they do it. What does it mean for the corporation or the buyer? It means you’re paying $20 more for the same ticket that you were buying before with no added value. That doesn’t seem like a good outcome for the buyer.

As an industry, we should be focused on helping the airlines solve that and helping our buyers, our corporate clients, solve for that sort of content to replicate the consumer experience.

The tectonic plates of the GDS and the airline bumping into each other. And I think there are a couple of factors there. One is that many airlines see OTAs as direct competitors and they may not like that the GDS is onward distributing content to the OTA. And so I think there is a commercial disequilibrium between the airline and the GDS today around OTA distribution. I think the TMC and corporate world is getting caught in that crossfire.

Second thing obviously is comparison shopping. I think if you’re a supplier, comparison shopping – and the GDSs are marvelous at this, it’s what they do so well and it’s good for the corporate buyer it’s good for the consumer –  commoditizes and limits the differentiation of your product, as a supplier that’s probably difficult. Whereas if you look at low-cost carriers who have more direct distribution, they’ve limited comparison shopping.

They have a halo or a belief that they’re cheaper. And in fact, they’re not. And largely it’s because they mitigate comparison shopping. That’s part of it. And the last part is obviously cost. The GDS, if you look at corporate distribution, GDS costs only about 1.5 to 2 percent of the gross ticket sale. In most industries, that’s a very effective cost of distribution. That’s a lesser issue, but I think, all things being equal, if you’re an airline and you have limited opportunities to take costs out of your P&L, that’s something you would look at. But I think the control of distribution is a much bigger issue than the cost of distribution.

And is that enough money? Is this carrot big enough? Especially if it costs you X dollars more to distribute?

I’ll use a very bad analogy. If you go back in time 10 years ago and let’s say you had your cable box at home and you had access to 100 channels and your favorite one was ESPN. And ESPN said we’re no longer going to distribute through your cable provider. We now are going into our new technology provider, it’s called Netflix. But the only piece of content that Netflix has is ESPN. Now if you want Netflix, you have to sign up. It’s $9.99 a month. And you have to figure out how to technically integrate it yourself into your box. Well, why would I want to do that?

Now if Netflix came out and said I have the same suite of content that you can get from your cable provider, and it’s whiz-bang cool functionality, then hey I might throw out my cable box and I may go to this new thing. But I’m not interested in a piecemeal approach which technically may be a big step backward. So for example, if you look at what certain third parties are proposing with ‘NDC’ the PNR would be housed in the airline, not in the TMC.

As a TMC, my number one responsibility is duty-of-care, safety and security. If I have to go make a change to the PNR, and I can’t do it because it’s in the airline, or I have to develop a workaround to be able to do that, that’s either going to mean a degradation in service to the corporation or an increase in cost. And what value do we derive for that. That’s unclear.

We’re unclear about is who’s actually approved to do this NDC stuff, whether it’s GDS or other tech companies, who we should work with, or how it works. Because it’s sort of like go back to my bad analogy of ESPN. If ESPN comes and says we’re now available through certain technology companies or we will be in the future…OK well, who are they and how do I make this work. Because the last thing I want to do is waste my time integrating this content that’s already there.

It seems like a little distraction.

Correct. What I’d love to see is a conversation with airlines, TMCs and corporate buyers sitting at the table saying, how do we help your airline differentiate and do dynamic selling. How do we get that from the buyer without increasing their cost? And we’re in a position to help broker that conversation.

In the meantime, there’s a lot of uncertainty and confusion with buyers about what this stuff means. The airlines are very genuine in their intent to differentiate and to sell more dynamically but what they’re going to market with it doesn’t necessarily align exactly with that objective.

What about incentives? Are we going to keep seeing incentives exist, period? Or is it an old model, a subsidy, that should be sunsetted? What do you think about that?

Incentives are very common in B2B industries. In fact, we receive incentives from airlines and hoteliers. With our clients, there’s an economic exchange for the value of what we do. So it’s no different with the GDS or any other technology entity we deal with. There is a commercial exchange of value. In any B2B industry, incentives or that economic exchange are a very common form of business. Everybody’s fighting for share in volume and so forth.

Will the model remain that GDS receive income and that they pay incentives to TMCs or travel agencies? I think so. Will that model change a bit? I’m sure it will evolve over time. But I think it’s unlikely, that as long as the GDS are competing as vigorously as they do for agency share, that they will eliminate them.

And again, that’s a pro-competitive behavior by those companies to compete for the volume of the share. So I see them as sort of healthy and pro-competitive for the industry.

What’s it like serving on TTAB in today’s environment?

Obviously, we have an administration now that’s very focused on security and the message around security. And very rightly so. On the flip side, there are national objectives in the U.S. around inbound tourism in terms of numbers and sort of impact of GDP. And I think that the middle-ground we’re trying to find is how do you be very respectful and help the administration solve the security concerns they rightly have. But also making sure that the rest of the world knows we’re open for business. And we’re working on that with the Secretary of Commerce and we’re trying to advocate for the right middle-ground there and obviously, it’s a bit of a balancing act. We’ve not been in this situation before.

And I think that the middle-ground we’re trying to find is how do you be very respectful and help the administration solve the security concerns they rightly have. But also making sure that the rest of the world knows we’re open for business. We’re working on that with the Secretary of Commerce and we’re trying to advocate for the right middle-ground there and obviously, it’s a bit of a balancing act. We’ve not been in this situation before.

One final question. I have this theory that we’re kind of moving from ‘heavily managed’ travelers to ‘lightly managed’ travelers. But these are still corporate travelers. So it’s trying to make it so that the travelers feel less heavily managed. Would you agree with that, or is it just kind of a technology-friendly fulfilling the promise of helping travelers?

I wouldn’t say it’s heavy versus light management of the traveler. I think it’s building capabilities that were off-line into software and into technology. You know, safety and security for example. We can track travelers around the world with our app. Some people may not like that.

There’s a lot that you can do today that 5 or 10 years ago you couldn’t do. That’s where you go back to our perspective is: Give the user the the feeling that they’re in a B2C environment, in terms of the user interface, the content, et cetera, and the bells and whistles you put around that, such as safety,  security and policy compliance, can be done behind the scenes without interfering with the mindset of the younger traveler.

And so I do think that technology has a lot to do with the ability to make that happen. But I actually think there’s more and more influence by the corporation over the traveler because of the intelligent use of software. So we have to provide those things but we can’t do it in a way that introduces friction to the traveler. I think we’re lessening that but we’re not lessening it in terms of the impact or the visibility and the control by the corporation.

We’re just being much more intelligent about it because software enables us to do that. There’s probably more novel ways to approach these issues and problems than we’ve had before.

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Nick Vivion

About the Writer :: Nick Vivion

Nick is the Editorial Director for tnooz. Prior to this role, Nick has multi-hyphenated his way through a variety of passions: restaurateur, photographer, filmmaker, corporate communicator, Lyft driver, Airbnb host, journalist, and event organizer.

 

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  1. Evan Davies

    Was a great read and a very interesting initiative! Will Roomit also help the independent hotels or is it just the large chains and groups?

     
 
 

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