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Growing Number of Companies Drop Travel Agencies,
Switching to Consumer Travel Web Sites

By Todd Pack, The Orlando Sentinel, Fla.
Knight Ridder/Tribune Business News

Aug. 5, 2004 - Employees of Ace Hardware take about 600 business trips in an average month, and until just recently, every one of them was booked through a conventional travel agency, staffed nine hours a day, Monday through Friday.

But a couple years ago, Ace began to notice that employees were looking up fares on the Internet and then asking the agents to book specific flights.

So this month, Ace joined the growing number of companies that allow employees to book their trips online. Ace dropped its travel agency and switched to Orbitz, which is best known as a consumer site.

Corporate-travel Web sites were a big topic this week at the National Business Travel Association, which met at the Orange County Convention Center. The group published a report on Monday predicting Web sites such as Orbitz, Expedia and Travelocity would continue to siphon clients from conventional agencies.

Soon, booking trips online "will become as traditional a method of procuring business travel" as calling a travel agent was a few years ago, the report predicted. Online corporate-travel management companies didn't exist a few years ago, but Orbitz and other consumer sites are now trying to expand by reaching out to business travelers. Besides making it easy for travelers to book trips, the Web sites offer businesses special features so that managers can track spending and keep up with employees.

Consulting firm PhoCusWright Inc. predicts that online corporate-travel bookings will climb from $18.8 billion in 2003 to $36.5 billion in 2006.

Cost is a big reason that companies are going online.

Since Ace began phasing in Orbitz in July, its average fare has declined nearly 30 percent, while transaction costs have dropped about 60 percent.

"You can't tell me this wasn't a no-brainer," Ron Gregg, Ace's travel manager, said from the company's offices in Oak Brook, Ill.

Orbitz gives Ace access to Web-only fares that conventional agencies don't always see, he said. Orbitz also includes discounted rates that Ace has negotiated with various hotel chains -- rates many of Ace's employees didn't know about before.

During a panel discussion at this week's convention in Orlando, Orbitz Chairman, President and Chief Executive Officer Jeffrey Katz said business-travel Web sites are growing at least in part because employees already use them. People who log on from work during lunch to book a family vacation now expect the same low fares and flexibility when planning a business trip to Poughkeepsie, N.Y.

"I think business travelers have tasted the heroin of low prices, and I don't see them going away," he said.

Conventional travel companies aren't giving up, however.

Carlson Wagonlit Travel, one of the nation's largest corporate-travel managers, introduced an online tool this spring called i-Select that it says combines the convenience of online purchasing with the service of a traditional agency. "We're not rookies," Robin Schleien, president of CWT North America, said at the time. "We know business travel."

Besides, some businesses aren't ready to give up their established agencies.

Darden Restaurants Inc., the parent of Red Lobster and Olive Garden, is satisfied with its agency, WorldTravel BTI, which has 13 agents staffing a travel office in Darden's Orlando headquarters.

Darden employees take 1,200 trips a month, spokesman Joe Chabus said, and WorldTravel "gives us the service levels our travelers require."

Still, he said the company is considering ways to add online booking as a way to complement the existing agents, who work weekdays from 8:30 a.m. to 5:30 p.m.

Joe Monaghan, WorldTravel's senior vice president for marketing, said the company sees "a significant online opportunity with our clients."

Currently, about 30 percent of the Atlanta firm's clients let employees book online, but that figure could reach 80 percent within two or three years, he said. Already, "I can't think of a single client that doesn't have some percentage of online booking."

ONLINE BOOKINGS

U.S. online corporate travel gross bookings 2003 -- $18.8 billion

2006 (projection) -- $36.5 billion

Percentage of U.S. travelers who booked at least one business trip online in past 12 months: 2000 -- 22 percent

2004 -- 51 percent

SOURCES: PhoCusWright Inc., and Yesawich, Pepperdine, Brown & Russell & Yankelovich Partners

-----To see more of The Orlando Sentinel -- including its homes, jobs, cars and other classified listings -- or to subscribe to the newspaper, go to http://www.OrlandoSentinel.com. (c) 2004, The Orlando Sentinel. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. ORBZ,

 
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