Pursuing the Art of the Possible

Danielle Cavnor

Eric Gray

Senior Managers of U.S. Procurement, Business Services and Travel

PwC U.S.

In 2018, the world couldn't stop talking about blockchain. The so-called "immutable ledger" technology prized for creating transaction security and traceability had become synonymous with the hype around cryptocurrencies, and maybe that's why it didn't catch on too much in the more conservative corporate travel space. 

What other reason might there be that the technology powering "smart contracts" didn't make a stronger showing in procurement-heavy corporate travel? It wasn't for lack of trying—or lack of fortune-telling. One corporate travel industry executive in 2018 predicted smart contracts would "crush" the hotel request-for-proposals process that year. Spoiler alert: It didn't. Other industry voices foretold of digital traveler profiles enabled by "the blockchain" or loyalty schemes and airline seat-swapping tools all driven by the transparency provided by "the blockchain."

Some of those concepts are still in play—and starting to get some recognition. But in certain quarters, blockchain-based innovation was very much in focus. Maybe you heard a little about it prior to the pandemic—if you have a taste for process innovation with a side of airline distribution disruption. The intel went something like this:

"Did you know there's a company doing a blockchain pilot with United and a startup company called BlockSkye? It uses an airline direct connect and settles payment from a blockchain ledger. I don't know what corporate is involved."

That's about all the industry learned of the project for a long while, and that was in January 2019. A handful of players knew the corporate in question was consulting giant PwC, running a small pilot on reservations from 100 travelers that tested direct booking and payment settlement facilitated by BlockSkye's blockchain ledger. But the experiment seemed to start and stop there. To an observer, it looked like a smart play to disintermediate airline distribution and credit card processing fees. It seemed designed to save serious coin for a super-large travel program. After all, process innovation on a blockchain solution is a laudable achievement in itself, right?

Maybe—but PwC U.S. had much bigger plans. 

The Broader Vision

PwC's U.S. firm—supported by top executives—had undertaken the challenge to rebuild corporate travel into a more digital, more intuitive experience for its traveling employees. Managing director and chief procurement officer Bob Schott put the task in the hands of two leaders: Danielle Cavnor, previously on the meetings and events operations team, and Eric Gray, who sat squarely in procurement.

The move was part of a full travel team restructure that merged operations and procurement into a two-sided job function for each individual role. Everyone on the new travel team had ownership of the outcomes for traveler experience and corporate efficiencies. Their goal was to radically improve both.

"We presented them a really audacious challenge," said Schott. "We wanted to basically double the traveler experience but halve the cost." He clarified that PwC wasn't looking to halve the cost of travel per se, but instead wanted to realize dramatic process innovation efficiencies and return that value to the experience side of the equation. 

"In some people's mind it seemed extreme," he continued. "But we didn't want a couple of incremental steps; we wanted to get people working on how we really define [the travel] experience and to work out how to get to that, without getting distracted by what others say you can't do [with managed travel]. We wanted to foster these questions and conversations, and then build the solutions."

The magnitude of the challenge presented to Cavnor and Gray, according to BlockSkye co-founder and co-CEO Brook Armstrong, was formidable. It would demand total transparency in supplier relationships, in supplier-to-supplier commercial agreements and at the level of the transaction. That's especially hard, he said, when "everyone around you is monetizing opacity," in terms of fees, distribution channel incentives and overrides that have resulted in hidden revenue streams that run through the managed travel ecosystem. 

But just as the firm was taking its next step toward its broader vision, the world plunged into a global pandemic. Travel may have stopped, but Cavnor and Gray dug deeper.

The firm already had keyed into the possibilities of airline direct connects as a starting place where suppliers would be receptive to new ideas. But it wasn't all about distribution costs or saving on credit card transaction fees. 

PwC's concern focused more on how traditional distribution channels had locked up the corporate travel experience by limiting access to service and amenities. Prior to the pandemic, progress toward more consumer-style retailing, using New Distribution Capability schema, still was the purview of the most radical carriers and mired in conversations of surcharges and who-will-pay-for-what technology development. With a successful pilot on how to book direct and settle payment on a blockchain ledger, PwC was poised to go a different direction. 

"There's so much in this story that I've been waiting for the industry to discover," said Patrick Linnihan, CEO of Gant Travel, a travel management company that plays an important role behind the scenes in this effort. "As brilliant as the strategy and vision for this program is, it couldn't have been accomplished without leaders like Danielle and Eric. The history of corporate travel is littered with efforts to innovate at this scale. The missing piece was having practical leaders who know each other's strengths and have their hands on the pulse of their internal customers. They managed up, they managed down, and they brought practical leadership to highfalutin concepts like blockchain and direct connect. And they got the job done."

A New Sourcing Strategy

PwC U.S. didn't jump straight into direct connects. Indeed, that strategy was underpinned by something more fundamental, which was a question of how to align suppliers more strategically to serve the right experience to PwC travelers. 

"One of the first things we did when I got into the role in 2019 was roll out our first set of requirements," said Cavnor. "We went to airlines and hotels with a list of questions on what they would provide to our travelers. I think that set [the stage for] various suppliers to understand our strategy to do things differently and how we would be asking them to be a part of this initiative with us." 

Given the airline industry's moves to unbundle ticket attributes and to sell services and amenities a la carte, the PwC team saw the opportunity to build a requirements-based supplier scoring system with an eye toward added-value elements. 

This strategy allowed Cavnor and Gray to remove PwC U.S. from the periodic RFP merry-go-round traditionally associated with corporate travel relationships. The firm moved both airline and hotel agreements to dynamic pricing. 

"This was a big win for us and our suppliers [to reduce] the time and resources required" for the RFP process, said Gray.

Supplier scoring now hinges on adhering not only to commercial requirements but also the technical and distribution elements that underlay PwC's strategy. While PwC told BTN the scoring always will be a mix of requirements that includes commercial, value-added and technical requirements, the degree to which suppliers are able to participate fully across all requirements will influence their placement in travel search returns through PwC's online booking tool. The result is competition among suppliers to appear on page-one results for PwC travelers. 

The Platform Strategy

BTN's Corporate Travel 100 research estimates PwC in 2022 spent $116 million in U.S.-originating airline volume, with much of that volume heavily condensed in the second half of the year. While the rankings are still in progress, PwC could land among the top 15 business travel spenders in North America, based on that air volume metric. The company could jump into the top 10 with 2023 data, if historic patterns are any indication. 

Given the magnitude of PwC's travel spend, the services firm questioned the rationale behind paying for individual bookings via credit cards that bake interchange and merchant fees into every transaction and then require an expense reporting process once the payment is made.

Depending on the card used, processing fees can cost merchants, like travel suppliers, up to 3.5 percent of the total transaction. Every airline ticket also could precipitate an expense report, which becomes a large expense line in itself for PwC. Removing card payment from the business travel equation removes millions in processing fees for PwC's suppliers—and same goes for PwC, if expense reports can be reduced. The firm has removed expense reporting for bookings that go through its new ecosystem—more on that later.

Global distribution system distribution fees have been another under-the-line cost for corporate travel programs. perhaps as much as $10 to $20 per ticket, if you pin the surcharges that IAG, Air France and Lufthansa levy for GDS bookings as a rough guide. GDS suppliers would argue those estimates are out of line with reality, but for the sake of argument, let's assume the lower part of the range.  

PwC's direct-connect strategy sidesteps those distribution costs for airline partners, as long as they have the capabilities to feed content directly into a TMC or booking tool. With a two-way API, the direct-connect booking lives within the airline's booking systems and is serviced directly by the airline, but hold that thought for a minute because this is where PwC's ecosystem excels.

Most TMCs are waiting for traditional GDS providers to get up to speed with NDC before piping its more complete service and amenities content into their systems. These TMCs are hesitating for a lot of reasons, including technical ones that prevent most agencies from being able to service those bookings without time-consuming workarounds. But another reason may be to preserve incentivized commercial models. 

Common booking tools are using aggregators like Travelfusion to receive amenity-rich NDC content directly, but they aren't necessarily able to prioritize that content except according to cost or whether the supplier is preferred by the corporate. Some can sort by "agony" or time spent traveling, and more are sorting by carbon emissions. 

PwC U.S. for its supplier-scoring strategy, which goes deeper than preferred status, couldn't wait for a traditional TMC or booking tool to get up to speed. The company had completed its proof of concept with United and BlockSkye in 2018, which addressed the distribution costs and credit card payments. The next step was to integrate that with a TMC that would innovate alongside the firm, and an agile corporate booking provider that could accept a direct-connect strategy and preference supplier options according to PwC's methodology.

Unfortunately, neither of those pieces were available to the PwC travel team. There was no alternative for Cavnor and Gray other than to help create the products they wanted to see in the market. 

The Booking Tool

In 2021 Kayak for Business was an online tool available to individual business travelers or small and midsize companies looking for a free tool to help them manage key business travel expenses and access discounts. Like the consumer site, it was an aggregator. You went direct to the supplier site for booking. 

The idea that the fledgling business travel platform would attract an enterprise client the size of PwC U.S. was a long shot for sure, but that's what happened. 

PwC U.S. was drawn to the platform's mobile-first approach and the to the user experience that hewed close to consumer travel tools. Accessing content from multiple sources would be a critical component, not only because of the company's direct-connect strategy but also because not all airlines and hotels would instantly connect to the program in that manner. PwC needed a partner that was comfortable accessing content from a variety of nodes and bringing them all together in a single shopping workflow. 

"We wanted an agile booking partner who could radically think outside the box and see the vision that we did in terms of enhancing the booking experience and allowing the travelers to book direct and have that leisure look and feel of the booking process we wanted," said Gray. 

The idea of working with a metasearch expert, and not a traditional corporate booking tool, caught the team's sense of the possible, said Kayak director of product management for flights and business Anthony Salomone.

“Kayak was certainly aware of corporate approvals, policies, profiles and those things. But our background is all metasearch, so there was a little bit of learning about what they were trying to solve in their requirements,” Salomone said. On the other hand, Kayak had “all these existing relationships, so we could bring components of metasearch—being able to shop multiple carriers at the same time and being able to inject those into one shopping flow—and help them understand what that looks like. For them, it was like, ‘Wait, if that's possible, what else can we do together?’”

“There was a big opportunity in the marketplace for the booking experience and the functionality that we were looking to build, and they wanted to be part of that journey,” added Gray.

Executing on “the possible” took clear-eyed collaboration. Key to success was Kayak’s airline relationships working hand-in-hand with PwC’s preferred supplier relationships, bringing the airlines, the booking tool and the corporate all into sync. 

“So if something is not working—I'm not seeing this airline content or that airline functionality is not working the way expected—we can turn around a solution,” said Salomone. For example, he offered, in booking seats, there are questions about how traveler status and company status are reflected in the seat map display. “We can resolve those very quickly with the airline and PwC at the table together—about how to make this work and is there a solution that we can all come together on? So that that's been a great, great experience.”

Kayak has turned that experience, and the tools developed in tandem with PwC U.S. into new layers of business. The company rolled out Kayak for Business Enterprise, which is now promoted on its website.

The Travel Management Company

At the beginning of the PwC U.S. experiment in 2018, BlockSkye served as the booking record and immutable ledger for payment for the United direct connect. With still just a single airline implemented in early 2022, PwC and the rest of its innovation coalition realized it would need more than a direct connect strategy to provide a full travel program. 

"[We all] figured out it was smarter not to [require every direct connect] because people want to shop. They still need to shop, and we need [to deliver] a 360-degree program," said BlockSkye co-founder and co-CEO Michael Share.

To service that shopping and booking, the company would need a willing TMC to function as the hub for the program. It would be no ordinary TMC, and no ordinary agent set and no ordinary servicing environment, however; and no existing agencies were up to the task.  

The key that brought it all back together was BlockSkye's blockchain ledger. In mid-2022, the team stood up a new TMC in the space of four months to serve 65,000 PwC U.S. travelers. 

They didn't start from scratch. Gant Travel serves the traditional agency tech stack to support ticketing and provide call center technology, mid-office services, a method of managing and training agents and after-hours support. Gant's Linnihan had invested in Salesforce.com for profile systems and enhanced customer capabilities during the pandemic—an investment that paid off here. 

Over that technology, BlockSkye has created an environment where every booking—no matter what content channel it comes from—is etched in a blockchain ledger unique to the individual trip. Each ledger serves as the single source of truth for that trip in that it records every "touch"—that is, every transaction, whether it involves money or not. Each "player" in that blockchain record also gets access to the details of that trip, making it possible for any player to understand how the itinerary has changed over time and potentially to service the traveler, if required. The airline mobile app, for example, shares the same data as the agent desktop.

"We let everybody in the ecosystem tell us whatever they think happened and what's going on," said BlockSkye's Armstrong. "We bring that into a universal data model on chain, and then what we have is [visibility through] all the changes over time as a way to deliver a single version of the truth." 

"The blockchain allows us to have a single source for data accuracy and transparency, where all suppliers are connected to the chain in real time and can access verifiable truth about their transaction," said Gray.

"This allows the TMC to service direct bookings," added Cavnor. "The ability to have this source of truth allows us to do what no other organization to date is able to do."

Where the Program Sits Today

Corporate travel innovation at the size and scope that PwC has implemented isn't a one-and-done affair. That said, the company has processed more than 400,000 bookings through the new ecosystem since it fully launched the program to more than 65,000 U.S.-based travelers in November 2022. The success rate through the ecosystem is 99.9 percent. 

"I watched it," said Linnihan. "I watched them do the rollout and just achieve success that I never thought was possible so quickly. When they turned it on, it just started ramping. Danielle and Eric had their fingers on the pulse of those consultants and every subgroup that uses the program—the admins, everyone. They had everyone's trust and they got responsiveness in return. It was clear they would keep advancing."

Cavnor and Gray continue to implement new suppliers and realize new capabilities with their partners. The team has onboarded United, American Airlines and Southwest Airlines in the direct-booking, direct-payment strategy. Avis Budget Group is currently on deck as the first car rental company to be implemented. There aren't any hotels in the program yet, but the team is turning their attention to that category, where ownership structures make it more complex than airlines and car rental companies. 

In terms of supplier preferencing in the booking tool, PwC currently delivers supplier scores to Kayak for Business Enterprise to impact the page-one displays. The companies have discussed the potential for a more dynamic connection where day-of deals and value-added elements could impact more spontaneous supplier scoring and preferencing. 

With the main pillars of their vision in place, Cavnor said the next step in the program would be finding ways to "share in the savings" that suppliers are realizing through the program, and pass that back to travelers on the experience side. 

"As we continue to roll out our new travel strategy and ecosystem—including direct booking," said Gray, "we invite all our suppliers to join us in maximizing the traveler experience."