BOSTON—The broad, burgeoning global travel industry is like a crowded passenger train, according to CEOs of some of the largest hotel, airline and distribution companies. The vehicle is big, gaining momentum and is largely headed in the right direction.
But as more people get on board, it’s becoming increasingly difficult to manage them.
“All of you who manage travel, this is when you earn your stripes,” Arne Sorenson, president and CEO of Marriott International, told the thousands attending Tuesday’s “Luminaries of Travel CEO Panel” at the Global Business Travel Association Convention.
The travel industry has never been so large, all-encompassing and fragmented, the panelists agreed. With more ways than ever to shop and search travel, more businesspeople are “going rogue” and purchasing travel outside of corporate policies.
Suppliers, buyers and managers need to reverse this trend. But doing so is easier said than done—especially for a younger generation of corporate travelers who want to feel liberated and empowered.
“Value can be delivered by managing travel,” Sorenson said. “I don’t think that’s changing at all. I think there are still powerful reasons to manage travel.”
The carrot is much more effective than the stick in this respect, according to David Cush, president and CEO of airline Virgin America.
“You’ll have to build something they want to go to,” he said. “You have to have the carrot. You have to have something that they know is an effective tool to manage travel as opposed to, ‘This is something my boss wants me to do.’”
That means developing intuitive platforms that allow travelers to effortlessly search, book and manage their corporate travel.
“Our goal is to create, using technology, an offering that allows corporate travel buyers to make the best possible use of that constrained resource,” said Barney Harford, CEO of Orbitz Worldwide.
Technology can enable and inhibit those efforts though, said Luis Maroto, president and CEO of global distribution system Amadeus. With so much information available today, corporate travelers often become overwhelmed and frustrated.
“There’s a clear need to integrate this content to see what is relevant. … We need to really make sure that the real content and the content that makes sense to the traveler is offered to them,” he said, adding each traveler has different needs and the search process should be personalized.
Sorenson agreed. “Data and technology and mobile are so broad … There are places where it’s a much more basic question, and it’s a question of which data do you need and how do you use it?”
Suppliers and buyers should concentrate most, if not all, of their efforts on mobile, Cush said. Corporate travelers need to search, book and manage travel while away from their desks.
“The (personal computer) is dead,” he said.
A growth market
The fact that maintaining control of corporate travelers is even a concern is a very good thing, the CEOs agreed. That means travel, by and large, is increasing.
“The world economy is doing fine,” Maroto said. “Overall, we should be optimistic about the traffic volumes.”
While he is optimistic about the “medium-term” outlook, he admitted the next six to 12 months will prove difficult in Europe.
But even in the volatile eurozone there are highlights, Sorenson said.
“Even if you look in just Europe, which is clearly the part of the globe we are most fearful of, you see positive signs about the state of the global economy,” he said, highlighting London and Paris as particularly strong markets.
Cush said uncertainty surrounding the euro crisis actually is proving beneficial to the U.S. economy, where Virgin does most of its business. Interest rates are low and commodity prices are soft, he said, which has allowed his airline to expand its fleet.
On a global scale
While regional dynamics certainly impact the travel landscape, the CEOs said, the travel industry today must be viewed on a global scale.
“It is important to be everywhere. Travel is global,” Maroto said
“The new golden age of travel is a massive force globally,” Sorenson said.
As an example, he pointed to the 100 million outbound Chinese travelers projected to flood the market during the next few years. If the U.S. hotel industry was to take its fair share, that would equate to approximately 10 million of those travelers. With an average length of stay of one week, that constitutes a considerable feeder to the 5 million nightly hotel rooms in the U.S.
“That’s one country,” Sorenson said. “That doesn’t count Brazil. That doesn’t count India.”
Maintaining an all-encompassing global perspective is crucial when developing corporate travel networks, the CEOs agreed.
“When we face our supplier partners, particularly on the hotel side, we see a global network,” Maroto said. “… The travel is at the center of everything we do. … There’s so much opportunity to use technology to transform that travel experience and the way consumers around the world plan and purchase travel.”