Federal eTravel: Towards Industry Standards and Certification

What is the eTravel Vision?

A unified, simplified service that delivers a cost effective travel experience, supports excellent management, and results in superior customer satisfaction.

What are the eTravel Goals?
  • A government-wide web based end-to-end Travel Management Service that integrates: a self-service reservation system, a self-service Travel Authorization and Voucher System, and Agency financial, travel card and human resource systems.

  • A cost model that reduces or eliminates capital investment and minimizes total cost per transaction for the Government.

  • Policy environment based on the use of the best travel management practices.


What are the Federal Government eTravel Objectives?

To provide Federal Civilian Agencies with a common customer-centric web based Travel Management Service by December 2003. eTravel will consolidate travel at the federal agency level and simplify end-to-end travel for federal employees.

Supplied by General Services Administration September 2002.

The following "White Paper" is in response to the eTravel Vision of the GSA, opening the dialogue on Industry Standards and Criteria for Certification.

An SGTP panel, chaired by Ted Lawson, National Travel, Charleston, WV was formed to study and respond to the above GSA vision, at the suggestion of Mr. Tim Burke of the eTravel Initiative.

SGTP eTravel Perspective

eTravel, in its reservations process, has been evolving with market speed. Market speed is the ability to change and adapt. It is our contention the efficiency of the marketplace is already operating at market speed in the government sector and is running parallel to the private sector in the reservation and travel service area. In fact, the government already has eTravel in the entire travel reservation area. TMCs have been the driving force in this efficiency in serving the government.

Achieving maximum cost efficiency is already being realized by those federal agencies whose travel is managed by a TMC providing both cost-effective and superior customer service, regardless of TMC size. The benchmarking of this efficiency can be measured by comparing the transaction fees paid by the government agencies to the TMCs and the fees paid for by the private sector (US) on the open market. Our research suggests the transaction fees are as much as 40% below what corporations pay in transaction fees for travel services. These statistics/information are based on the Runzheimer Report and Business Travel News, compared to information on GSATask Order Awards.

Client satisfaction of service has dramatically improved with the GSA's Master Contract and defaults of TMCs have become a rarity compared to the early days of Government Travel Management.

In reviewing the GSA fact sheet we could not determine how the new eTravel Initiative was going to reduce capital expenses. Government needs to identify which capital expenditures its initiative would actually reduce, over consecutive periods of newer technology, and what systems the Government would exclude from purchase as a result of this eTravel initiative. There should be no capital expenses for contracting with the TMCs since the equipment of the reservation process is essentially free and requires no capital investment. Even the online booking tools are usually provided by the TMCs. Current TMC capabilities also provide efficient and low/no cost solutions to later steps in the "end-to-end" process.

The On-site Travel Management that some government agencies have required is an expensive requirement that would be hard to justify with today's technology and cost advantages of centralized travel centers. But, this has little to do with eTravel and could be reduced by counseling various government agencies that feel they need this enhanced service.

The eTravel goals of 'creating a policy based environment on the use of the best travel management practices' again can be accomplished without a single source online booking and GDS system, which we believe creates a set of problems that can be avoided by setting specific standards of technology.

The eTravel Initiative by the federal government does have the ability to improve travel efficiency while reducing costs. The end-to-end solution certainly has benefits for the government in that the integration of the authorization, reservation and reimbursement process reduces redundancy and improves data collection. This is a worthy pursuit for the Federal Government and it does appear the professionals within GSA are utilizing the best efforts in this attainment. However, there is cause for concern in seeking a single source provider for the reservation process.

There is evidence in the public market place that the pursuit of a pure electronic travel solution has failed to meet the needs of the travelers, as electronic travel providers have moved to offer more traditional travel management services and the traditional "brick and mortar" agencies have developed and offer a full range of electronic solutions. This middle of the eTravel Spectrum does include online booking with full service centers, as opposed to fulfillment centers, that meet the needs of the financial considerations and the service to their travelers.

The extrapolation of the eTravel initiative to a single source end-to-end product with the coupling of the expense reporting, travel approval, and reservation process would not fulfill the stated objectives outlined by GSA in their fact sheet. We believe there is evidence that an end-to-end product has advantages; however, the extrapolation to a single source for the government, rather than a connective interfacing product, could prove expensive for the various government agencies as well as create an environment that has a negative impact on travel businesses. In addition, this end of the spectrum perspective will cause a deterioration of travel service by increasing, not decreasing, cost to the participating government agencies.

The following outline reveals the impact of a single source travel system. We believe this is a design system element that does not need to be part of the eTravel initiative and in fact could flaw an otherwise excellent approach of the government.

Evolving of Electronic Travel

The evolution of electronic travel in the private sector offers empirical evidence of the need for a multi-dimensional approach to develop a comprehensive, cost effective travel system.

The leaders of on-line travel services, Expedia and Travelocity, provide valuable insight to the evolution of Internet booking and subsequent related travel product and services. Both of these travel companies started out at the end of the online travel spectrum, while the "brick and mortar" travel agencies were at the other end of the business spectrum. Several years of operation and severe economic losses to both Internet companies precipitated the addition of personal travel services to their travel system and the deletion of their original fulfillment center concept. Both companies have evolved from a fulfillment center concept to their delivery of full service travel and in fact Expedia purchased a large traditional travel company in order to enter into the private sector business travel service.

It is more than interesting that in the private sector, a large, tech-savvy company such as Microsoft does not utilize its own travel site(Expedia) for their corporate travel solution, but has contracted with a traditional Travel Management Company (TMC) for a blend of both online and personal service travel.

The fact sheet of the GSA advocates a single source system and does, in our opinion, reduce the TMC(s) role to little more than fulfillment centers. This must be GSA's conclusion since the TMC is deprived of its own technology which it supplies in customized and evolving technology to its clients. The scenario that one size fits all and that a single source will deliver, will not meet the needs of various government agencies who have specific travel needs necessary to accomplish their overall mission.

The GSA would attempt to realize a new revenue source from the GDS company. These booking fees are currently being captured by the TMCs. However, the retention of this money by GSA would simply be a reallocation of costs since the TMCs transaction fees would increase once the revenue from the GDS system was lost. Therefore, the client federal Government agencies utilizing the system would incur increased costs.

The economics of depriving the TMCs of their own or procured booking engine and their own GDS contract will have a direct monetary impact on the Government. The booking fees currently are part of the pricing models used by virtually all TMCs. In other words it is part of their income budget. This TMC revenue area would have to be made up with additional transaction and or management fees. If these fees, for example, amount to an additional $10.00 per reservation, a typical government agency with gross airline sales of $10,000,000 or transactions of 30,000 would incur $300,000 in additional fees. This projection is based on the current transaction fees and the revenue needed to make up for the loss in fees from the GDS, which the government would retain. It is our projection that fees for on-line bookings could average approximately $25.00 versus today's average cost of $15.00.

For each billion dollars of air travel purchased, which would amount to 3 million transactions, the additional fees to the government agencies would be $30,000,000. While this reallocation of expense to the client agencies would be dramatic, it is not necessarily the most dramatic effect. The appropriate type of service would be most dramatically affected. As stated previously, the variety of federal agency mission objectives requires a variety of services for its business travel.

However there is evidence that a combination of online booking with full service travel companies does offer the efficiency and high quality travel services that are needed. TMC(s) are deploying technology to increase the efficiency of their personnel. Most travel companies are offering clients their own customized client software that includes on line booking tools and provides their clients the capability to retrieve data necessary for their travel management and expense reporting.

Presently the market forces are already operating at maximum efficiency and it is our contention there is no waste because of the competitive environment. This efficiency can be evaluated by comparing the bidding process for new accounts; the number of participating bidders; and, the leading edge technology being deployed by travel management companies in order to attract new accounts.

The single source element of the eTravel initiative itself is a paradox in that there are only four GDS systems and the bidding process of one versus four, without fee, the retention would be virtually identical. However a single source leaves the government with both security issues as well as a non-evolving competitive technology environment. It is the TMCs or travel management centers that are driving technology. If the government's focus is solely on fulfillment centers, these innovative businesses will disappear from the government market and by default the government will be left with fulfillment centers whose employees don't offer the service levels currently enjoyed by the government clients.

All business - small, medium and large, would be dramatically impacted by any single source technology contracted directly by the government. The result would be consolidation for efficiency to fulfillment centers, with specially trained personnel. Traditional-type travel companies simply could not and in some cases would not want to compete in this narrowly-focused business environment, which emphasizes volume production of airline tickets. Companies of all sizes have proven, in this technology evolution, that technology itself is the great leveling component in competing for business, but they must have this access to technology access so that they can compete successfully.

The government would suffer from a homogenous type of online booking sites that would not necessarily meet the mission of its individual federal agencies. This could be readily assessed from reviewing the current differing objectives and requirements put forth in GSA task orders from government agencies. The transference of the labor would not provide the efficiency unless the well-qualified TMCs are still offering their services and the associated efficiencies.

The last concern with a single source is the area of security. Does the government really want a single source for their travel planning and execution? In today's environment, this should cause great concern. The potential vulnerability of a single government travel system is dramatically amplified in a single technology source, especially when one views DoD contracting policies.

Recommendations

The Federal Government should continue to pursue an end-to-end travel management solution for federal agencies, recognizing that these federal agencies currently have access to electronic travel reservation system in place with the technology being provided by their TMCs, who drive the evolution of technology.

In the spirit of fair play, and free and open competition, DoD has leveled the travel management playing field for all size travel agencies and other suppliers. Certification with basic standards allow all size travel suppliers/agencies to compete in DTS. The recommendation would be that GSA adopt a standards approach similar to the solution proposed by the Department of Defense.

These standards would include:
  • Security issues
  • Government fare access, inclusive of all government contract airlines
  • Reponse time and reality factors
  • Communication standards
  • Profile integration
  • Other value added features
  • Interfacing expense system
Summary

The TMCs should play an integral role, like they do in the private sector, by providing technology to the government travel programs administrated by GSA, to maintain what has developed into an efficient and effective travel management system for the government, and for its travelers.