Expensive Incidentals

By John Pallatto  |  Posted 2006-11-15 Print this article Print

For the corporate customer the key benefit is that it can give employees a menu of preferred merchants for all travel services. This gives the organization greater visibility and control over how much it is spending and how it is spending T&E dollars.
Travel service managers can add and revise preferred merchants based on the latest discounts and service agreements.
They can also maintain an online guide of travel and expense policies that employees must follow. The ancillary services represent nearly 50 percent of the typical business travel expenses, McGraw noted. But these expenditures are largely unmanaged and uncontrolled and "therefore customers do not have any opportunity to derive savings from them," he said. These services drew the interest of American Express, McGraw said, because if anything they offer more opportunities to generate savings than the core airline, hotel and car services. Most of the airlines are still struggling to come out of Chapter 11 reorganizations, while huge demand and a shortage of hotel capacity in major markets means that it is hard to find substantial discounts in airline and hotel reservations, he said. The two companies actually signed the partnership and investment agreement back in July. However, American Express wanted to train its marketing staff and actually start selling the service before it actually announced it. To read about travel services sites relaxing privacy rules on personal data, click here. As a result, American Express has already sold the service to 15 customers. The company had previously beta-tested the service at one of its customers as a proof of concept, McGraw said. American Express and Rearden Commerce has gained a significant market advantage by focusing on the other 50 percent of travel expenses that have heretofore have been beyond the reach of management tools, said Bob Offutt, senior technology analyst with PhoCusWright, a travel industry analysis firm. Offutt said he believes that the rising generation of business travelers who have grown up working on the Internet will be ready to use an online travel management platform that gives them access to a wider range of services. A system "that provides convenience in terms of airport parking, event tickets and dining…will actually be a natural draw to further use," Offutt said. These services give them an advantage over services such as Travelocity, Expedia or Orbitz because the Rearden "platform treats all of the services equally as opposed to the other platforms which are air, car and hotel with some add-ons," he said. Whether Rearden can turn its travel service to a commerce platform on par with an Amazon.com or eBay really depends on whether they can keep growing and branching out beyond this latest deal with American Express, Offutt said. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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