Casto Travel CEO Marc Casto is over the transaction-based model
that has dominated travel management company pricing for so long.
Like a few other advocates for a shift, including Am Trav Corporate
Travel and Executive Travel, he is attracted to a per-traveler, per-month
“membership” model. Thus the TMC is pursuing revised pricing with
clients and prospects, part of its efforts to be more traveler-centric.
While the TMC isn’t abandoning per-transaction pricing yet, each
new bid includes a membership model. While only a “small number of
clients” have opted in so far, it’s early, Casto said. Research conducted
last year by The Beat, which like BTN is owned by Northstar Travel
Group, shows that transaction fees remain the dominant compensation
method for TMCs. “The per-transaction basis is fantastic from a pro-
curement perspective,” said Casto. “It’s wonderful for cost allocation.
It’s terrible for traveler service.”
As he sees it, the model penalizes travelers for interacting directly with
TMCs, as each phone call and “touch” racks up a charge. “If we’re fo-
cused on trying to ensure that the traveler sees the TMC as the conduit
of their traveler experience, as their advocate, as the person they want
to reach out to, then we need to remove the financial hurdles,” he said.
The more the traveler interacts with the TMC, the stickier the relationship becomes and the more satisfied the traveler is, Casto reasoned.
Casto bases the subscription fee on how much it costs to service travelers and what bundle of services each client uses. Clients are charged
on the number of profiles they have on file with the TMC each month.
It is not one-size-fits all.
The basic model includes reporting, some light account management
and online booking tool support, but there could be add-ons. “If they
want to have a very complex policy management tool built into it or a
third-party approval system built into it, then that is an additional cost
item,” said Casto. Simplicity is essential. Instead of a “20-point list of
charges,” he said, “the total fee should be within five lines.”
Also, because clients would pay for each profile, “it results in better
data quality,” said Casto. “A scourge within our industry is inactive
profiles. People make their traveler profile once, and they get forward-
ed from TMC to TMC as migrations occur. No one ever looks at it
again unless they fundamentally have to.”
Casto expects to fine-tune the pricing structure and expects “a long
and iterative process,” he said. “This is our first stab at it.”
TravelBank, which aims to corral travel
spend among small businesses in order
to gain supplier discounts, has launched a
commission-sharing program. The company
started as a free expense management system for small businesses and segued into
travel booking in May.
Its model is to pool small companies’ book-
ing volume and leverage the total to negotiate
with suppliers for discounted rates. In addi-
tion, the commission-sharing program will re-
turn as much as 1 percent of an enrolled com-
pany’s gross travel spend. CEO Duke Chung
said TravelBank can negotiate discounts with
suppliers that are deep enough to share with
corporate clients because it has its own ARC
ID and International Air Transport Association
license. “We are basically an OTA,” he said.
Amid competition with low-cost carriers
and their one-way fares, traditional car-
riers have lowered their own one-way
fares. That’s the primary reason ARC
managing director of enterprise informa-
tion Chuck Thackston offers for the find-
ings in ARC’s new report, Myth Busting
the Cost of One-Way Tickets.
“We noticed that there was a little bit
of a spike in [the purchase of] one-way
tickets” over the past three years, he said.
So the air travel intelligence organization
analyzed 350 million tickets—booked
across a variety of airlines, U.S. travel
agencies and markets—and found that
trips using one-way-tickets formed 29
percent of tickets in 2014 but 42 percent
during the first five months of 2017.
The explanation, Thackston said, is that
in many markets, two one-way tickets no
longer cost a huge amount more than one
round-trip ticket does. The premium for
one-way fares shrank by at least 25 percent in 59 of the 200 U.S. markets with the
highest volume of travel agency bookings.
Thackston said of the idea that it’s better to book a round-trip, “That myth is no
TravelBank Introduces Commission
Sharing for Small & Midsize Enterprises
BY AMANDA METCALF & JOANN DELUNA
The company does have a relationship with a large travel agency to provide 24/7 support for bookings, however.
Like TripActions and Rocketrip, TravelBank also incorporates a behavioral incentive function based on a trip cost
estimate. TravelBank calculates trip cost from air, hotel
and car rental costs collected via an application programming interface with Sabre. When a traveler beats TravelBank’s estimate, the traveler pockets half the savings in
the form of reward points to be used with vendors like
Cots Group, Lyft, Uber and RedAwning.
To motivate travelers further, TravelBank has just
started displaying the points travelers can earn on each
booking. Additionally, bookers no longer also need to use
TravelBank’s expense system in order to earn rewards.
BY AMANDA METCALF
Use One-Way Tickets
A TMC Angling for