If there is a bellwether industry for the Internet, it would have to be Travel (with a capital ‘T’ that rhymes with ‘P’ that stands for price, profit and performance). Approximately 90 million people or about 44 percent of the U.S. adult population qualify as online travelers, meaning past-year travelers who currently use the Internet. Two-thirds (66%) of these or 59.4 million U.S. adults have used the internet to make travel plans in the last year getting information on destinations as well as checking prices and schedules.
Already the largest category of online purchases, Jupiter analysts forecast that online sales of travel (air, car, cruise and hotel) will grow to $64 billion by 2007 — more than double the $24 billion transacted in 2001. Even after the events of September 11, the Internet as a channel for booking travel is not only growing stronger but becoming the method of choice for consumers and businesses. Managed online travel — with airline tickets accounting for the bulk of all online bookings — will grow more than 400 percent to $27 billion by 2007 — up from only $5 billion in 2001. Channel share for the managed business travel sector will quadruple from seven percent in 2001 to 26 percent by 2007.
Helping businesses to leverage Internet technology and reap unprecedented savings in corporate travel across the board is the mission of Highwire, a Seattle HQ’d company that was purchased by Cendant just two years ago. To call Highwire well-poised to capitalize on the Internet travel phenomenon is a major understatement. With clients like Microsoft, Deloitte and Touche and Nike, and a corporate parent (Cendant) that owns the premier backend travel reservations engine (called Galileo), Highwire is a company that is creating its destiny by design. Lately, the company has found itself at the outset of an aggressive hiring campaign, eager to grow its roster of 130 employees by another 70 this year alone.
A key part of this success story is reflected in the passion and experience of its protagonist, Highwire CEO Marka Jenkins. In a fairy tale-like rise to corporate star chamber, Marka began her travel career as a flight attendant, eventually becoming the president of Seattle’s Metropolitan Travel. We asked Marka to file Highwire’s winning flight plan with us in this interview.
Seattle24x7: What’s ailing the airline industry and does the Internet have the power to correct the current flight pattern, or has it created the turbulence?
MJ: One trend that we are seeing in the airline industry right now is the emerging success of low cost carriers like Southwest and JetBlue. The Internet is providing a new distribution channel that allows low cost carriers to find ways to distribute their product that they could have never imagined before. Ways that allow them to lower costs. As a result, corporations are willing to pick those carriers today versus five years ago when they didn’t know who they were. Add to that the fact that the newcomers have done a good job of not repeating some of the mistakes that the larger carriers made, some of them as far back as ten years ago.
Seattle24x7: You’ve been involved in Seattle travel from the beginning of your career, including teaming up with Microsoft as a kind of ground floor customer. How did that unfold?
MJ: I started out as a flight attendant right out of college. The airline I worked for at the time, which was PSA, was acquired by USAir and I moved into their offices as a sales representative. Seattle’s Metropolitan Travel was one of my customers. I became so intrigued with the travel agency business that I eventually left the airline and joined Metropolitan in an account management position where I spent a lot of time growing the company. After a brief departure to American Express I got an offer to go back to Metropolitan as president and CEO. While working with Microsoft, I met a lot of very bright, technical people who really influenced my way of thinking about corporate travel. I brought some of those folks back with me.
At the time, the corporate travel business had not seen many positive corporate computing technology advancements. The environment was all mainframe-oriented and hard to access. People usually had two different systems on their desks. My colleagues from Microsoft infused the company with a completely different perspective and we ended up growing the business from about $20 million to $160 million in revenues.
Seattle24x7: Then came the Internet?
MJ: In 1999, when I was CEO of Metropolitan, I went and heard Bill Gates speak at Lakeside School one night in an after-work lecture. He was talking about the fact that if you’re business isn’t on the Internet yet, it better be. I’d been working with people who were literally pioneers in online travel. We decided that we really needed to do it ourselves.
Seattle24x7: You started to build one of the first travel management systems for business?
MJ: Our first version at Metropolitan Travel was a booking engine. We spun out that whole operation and created a new company in January 2000. That company was Highwire. We sold Highwire to Cendant in July 2001 and I’ve stayed on as CEO.
Since our acquisition, the company has evolved even more rapidly. We started as an online booking tool company for corporations. Our technology would drive policy and lower costs for companies, and that was our value proposition. Cendant Travel Distribution owned several different pieces of technology that were also applicable to serving corporate customers. Cendant realigned to focus on “customer-facing” business and, since we’re the corporate customer business unit, we represent the reservations systems technology, and the data warehousing. It allows our customers to have a single port which we think really differentiates us. The key benefit for us is that with our parent owning these different companies we actually can influence the product direction and control all the layers. Before, we were just an online booking company and could only control our part of it.
Seattle24x7: What is the size and scope of the corporate market you’re serving with Highwire technology?
MJ: The managed travel market in the US alone is about $171.8 billion. Corporations are continually trying to manage that travel expense. Online booking is a solution that drives down costs for companies. The documented studies,show a 20% – 40% savings when a company moves to an online program.
Seattle24x7: How do you measure the cost benefit?
MJ: The efficiencies come in two areas. The first is “policy enforcement.” Let’s say your [corporate travel] policy is showing who your preferred vendors are, and they’re right there online so the corporate traveller can make a good buying decision. When there are choices up on there on the screen that are $200 or $300 lower, right in your face and you have to write a reason why you’d take one that isn’t there, people tend to make the right choice. If they’re with their travel agent over the phone, and the agent mentions a non-stop that’s 5 minutes more convenient and if they feel like no one’s watching, they might be more inclined to take the more expensive ticket. If [the better fare] is right there online and its documented and then the policy is right there, they make the right choice. That alone brings documented 25% savings every time. It ranges as high as 40% depending on how bad your travel program was before you got online.
The second money-saving component is the actual transaction cost. Corporations today typically incur the cost of the travel agent’s time. Some receive a fee per ticket. The average agent offline transaction runs about $45 where the average online is falling right between $15-$20. That’s over 50% savings on the actual transaction cost.
Seattle24x7: You work with travel agencies as partners?
MJ: Right, our technology is used to make the reservation. The travel agency buys the ticket and handles the offline transaction. Therefore, our customers are both travel agency customers that resell our product to their corporations and then we have corporations that contract with us directly.
Seattle24x7: With clients like Microsoft, Nike, Deloitte & Touche, ConAgra and many others, you’re on a very aggressive growth curve.
MJ: Yes, we definitely have aggressive growth plans. We’re really able to leverage Galileo which is owned by our parent company, Cendant. Galileo has a large global footprint as the number one reservations system throughout the Europe, Middle East, Africa and the Asia Pacific region. We use and sell their services to corporations through Highwire. We’ve gone from an online booking tool company to a single source corporation for all travel needs. Cendant also owns CheapTickets and Lodging.com.
Seattle24x7: The travel industry has been one of the true pioneers in computer-mediated commerce and marketing, including the concept of Frequent Flier programs. Are loyalty programs as prominent in corporate travel?
MJ: Typically, corporations look to make sure the Frequent Flier programs are aligned with the Preferred Carrier Programs so that travelers have the same incentive to pick the preferred carries that will save money versus the ones that are going to earn them frequent flier miles. Large corporations will still negotiate specific discounts and they’ll promise a returned market share to get the stated discount. What our tool does is make sure that those are the carriers that come up first in a corporation. If you’re XYZ Corporation, and you’re supposed to use United, my tool makes sure that United is placed 1-10 versus the Continental non-stop to Europe that you might have wanted but it costs $1300 more. The logic is all built into our business layer to do that filtering and sourcing.
Seattle24x7: What are Highwire’s foremost priorities for the future?
MJ: Our job is to make our product more useful and usable by the corporate customer and accessible anyway they want to access it. That means PDAs, in-flight or anywhere a person wants to contact us. We’re migrating all of our technology to a .Net infrastructure. By doing that that allows us to achieve incredible flexibility in localization. On the desktop what you will see will depend on the country you are associated with — without our having to redevelop Web pages. Because of our multi-tiered structure and the fact that we were developed later than some of the early folks in this industry, we were able to come up completely on an XML select platform. That translates to more options at a faster speed and that’s something that our product has offered differently for the customer from its inception. [24×7]
Larry Sivitz is the Managing Editor of Seattle24x7.
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