Where Do We Go From Here?

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» Posted by on Jun 6, 2014 in Airlines, Electronic Travel Systems, Global Distribution Systems, Hotels, Payment Methods, Rental Cars, Travel Management Centers | 0 comments

Let’s take a look at where government travel will be in the future. To see what a government traveler will experience, we’ll need to look at the various aspects of the travel system covered in our course, and extrapolate the current trends ten years down the road.

The major trends in the Global Distribution world are connections across the internet and controlling distribution costs. In the next few years we are likely to see suppliers using focused distribution channels rather than the GDS to control their costs. By distributing on more effective channels, the suppliers not only safe, but gain more control over their inventory. No doubt, these channels will be internet based as the new systems coming online now are all web riding. This trend will impact travel management providers and electronic distribution systems as they will have to connect to multiple data sources rather than the single GDS systems they currently use.

For airlines fuel costs, consolidation and increased competition loom on the horizon. Regardless of the source, all data shows air traffic growing across the globe. With oil approaching $100 per barrel, airlines will be forced to manage better. Fuel and labor account for more than 75% of an airline’s costs, so profitability will be a constant issue. This is going to result in government loosing some of the perks of the city pairs program. Already, fewer airlines are bidding on the city pairs program. In the future, this trend will continue with the additional caveat of less and less un-restricted fairs. Government travelers will be forced to book further in the future to obtain more limited seats and as they become a smaller portion of the airline’s revenue stream it will be harder for government to command it’s most favored contractual status. In addition, open sky legislation will move more foreign carriers into U.S. airspace and visa-versa. With code shares blending airline routes between multiple carriers it’s going to require new creativity in contracting for government to control their costs in regards to air travel.

Once a traveler gets to their destination, their rental car will be waiting. It will cost more. The rental car industry is probably the best travel value available to a traveler. While car prices have increased 10 fold since 1970, rental car prices have not kept pace. This trend has to change for the industry to prosper, so look for higher rental costs soon. One positive trend that will result is more fuel efficient cars will be added to rental fleets and help move the country to cleaner, more fuel efficient vehicles. With new green initiatives spreading through government, look at these requirements to be added to the rental car contracts sooner than later.

Lodging will be easier to find in the future for government travelers. The fastest growing sector of the lodging industry is limited service and in most cases the price point of these hotels is closer to per diem than full service. In addition, the gap between guest rooms in limited service and full service is rapidly being eliminated, so government travelers will enjoy the comforts associated with the high priced hotels without the cost. Packages offered by limited service hotels (free internet, free breakfast, etc) will extend the per diem dollars for the traveler and as these brands spread around the globe – it’s going to be easier for government to accomplish their mission and sleep well.

The electronic travel systems will change in two major ways. First, they will be adapted to work with multiple distribution channels in order to bring more content, more efficiently to the traveler. This will reduce costs and increase choice. Secondly, they will become much more user friendly and act more like commercial booking tools than they do currently. These systems must improve so they can compete with commercial products. While travelers can be regulated into using the system(s), they will tend to defect to more efficient systems until the government’s electronic travel systems are as good as those available in the commercial world. We saw this as computer operating systems evolved and we will see the trend again with the e-Travel systems.

The role of Travel Management Centers, contracting for services and data management will evolve and blend together in the future. As travel agents handle less of the travel booking’s their companies will find new ways to provide services for their accounts. Analyzing data, pinpointing errors and opportunities, planning and strategic recommendations all flow out of the data already being collected by TMC’s. Until now, little has been done with it. In the future, it will become the bread and butter of the agency. As this function evolves, data management and contracting will also change to improve delivery of these services to the government.

The biggest change in payment systems will be the personal implant. An ID device will be implanted under the skin, and coupled to your medical records, bank accounts and permanent data files. No more wallets, no more driver’s license. Just wave you hand over the scanner, confirm your purchase and the computer will take care of the rest. This may seem far in the future, but dogs have the chip already. Universal ID’s are being discussed as a response to global terrorism and BP gas stations already let you wave your “ID Stick” and pay for you gas. In the meantime, government credit cards will be used for just about everything and reimbursement will be almost immediate, reducing the government’s interest expense and keeping their accounting clean.

The greatest change in government travel is starting to happen now. Government has started to recognize the fact that travel must be actively managed and this function can’t be left to travel agencies, auditors, rules & regulations or the travelers themselves. Travel crosses too many disciplines and costs too much money to be left without leadership. While the current systems do a fairly good job of getting people where they belong, even in emergencies, and the DoD system has great accounting functionality, no one, until now, has really looked at the overall government travel system, travel experience and travel costs, because the individual jobs involved in travel have been split among so many siloed functions.

The Defense Travel Management Office is the first organization to have purview over all these areas for the DOD. Even DTMO will go through years of change management and culture shift to gain control over these functions, as organization by organization and functionary by functionary must give up power and control. A similar change will come to the civilian side of government and as Travel Managers are developed for the agencies, more and more of the changes discussed here will take place. One major change that will occur is GSA will have less and less to do with travel. Agencies will find they can have more control over their budgets and get better response from vendors when they deal directly with them rather than through GSA. Just as in the commercial world where “consortia pricing” is available to most large companies better pricing and services are available when spend is focused with the right partners. Government will reach the same conclusion once some is in place to evaluate everything that takes place under the travel banner.

So, look for many, many changes in the near future, from implanted ID’s to Travel Manager’s with power. It’s on the way for government travel and it’s happening faster and faster every day.

by Scott Lamb

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