SAN FRANCISCO -- Rosenbluth International's Biztravel.com made a
splash last week with its headline-generating refund and money-back
guarantee for airline performance that is a first of its kind in
the industry.
Competitors said it is also likely to be the last of its
kind.
Although some praised the company for its cleverness in drawing
attention to a relatively small ($50 million in revenue a year)
on-line travel agency, they said it was an odd marketing gimmick to
highlight something an agency has no control over -- airline
on-time performance.
And, it is likely to be an expensive undertaking, they said.
Biztravel.com's air service guarantee raised eyebrows at ASTA
and ARTA, but the agent trade groups separately predicted it
wouldn't start a trend.
"I think [Biztravel has] built a business strategy where the
agent and the supplier are more closely related, and I think that
is wonderful," said William Maloney, ASTA executive vice
president.
He added it would be difficult for other traditional and on-line
agencies to match the Biztravel guarantee.
"I don't think that everyone has the clout of [Rosenbluth chief
executive officer] Hal Rosenbluth, but it is clearly a [viable]
business model," Maloney said. "I know of many instances where
travel agents have reached into their own pockets to do something
the supplier wouldn't do."
"It is hard to bet against Hal Rosenbluth. He is a smart
businessman," said ARTA president John Hawks. "The assumption we
have made is he is making up, or hoping to make up, [the
difference] in overrides or in [gained] market share with on-line
travelers. It will be interesting to see how it turns out."
But Hawks said he didn't expect his membership, largely
comprised of independent agencies, to follow suit.
"It is a unique promise that someone in his position can make,
but this certainly is not something we expect would become a trend
for independent retailers to offer," Hawks said.
"Bottom line, legally it is the suppliers' responsibility to be
on time and honor its promises as far as service is concerned. But
if this helps Biztravel become a solid No. 3 behind Travelocity and
Expedia, good for it."
A Carlson Wagonlit Travel spokesman wondered whether
Biztravel.com's program would "make it through the summer, since
most prognosticators are saying air traffic control delays are
going to get a lot worse."
He said he found it odd that an agency would choose to draw
customers on the basis of something they don't expect from an
agency.
"There has always been an understanding with our customers that
these things [delays, flight cancellations] are beyond the agency's
control."
He said the Carlson Wagonlit agencies have little to worry
about.
"It's not something you'll see our agencies losing business to.
Our customers need and want personalized service from agents they
know and who know their profile."
But there is no doubt that Rosenbluth succeeded in getting
attention for Biztravel.com, which it acquired in August 1999 after
starting its Rosenbluth Interactive division.
Two of the five airlines covered by the guarantee program --
Continental and British Airways -- have minority stakes in
Biztravel.com.
Not only is the company offering $100 for late arrivals of more
than 30 minutes and $200 for late arrivals of more than an hour, it
is also offering a host of refunds for lapses in other airline
service, such as lost luggage, failure to get a seat assignment or
to be served a promised meal.
And there are guarantees for agency services, such as $10 if a
customer has to wait more than 90 seconds to talk to a reservations
agent on the telephone and $10 if their e-mail inquiry isn't
answered within two hours.
Scott Shadrick, president of Sundance Travel, a regional
corporate agency headquartered in Irvine, Calif., called the
Biztravel.com promotion "the kind of marketing approach to draw
traffic to a site that dot-com companies are using."
He said most business travelers care more about good customer
service than such promotions, which he likened to the "find a lower
fare, and we'll pay you $100" offers that are often in the
marketplace.
Those types of offers draw attention for a time and then fade
away, with many customers eligible for the offers forgetting to
follow through and collect their rewards or refunds, Shadrick
said.
Biztravel.com probably will draw customers who normally call
airlines direct for bookings, rather than those who use
brick-and-mortar agencies, he said.
So far, the on-line travel agency has been unable to capture
market share from traditional corporate agencies, he said.
However, that could change with Biztravel.com's ambitious
promotion of its services, which includes links to live customer
service agents from its mega-agency parent company.
Travelocity.com, the largest on-line agency, has no
intention of matching the "guarantee" for late and canceled flights
because Biztravel is offering a guarantee on something that the
agency has no control over -- airline schedules, said Jim
Marsicano, Travelocity's executive vice president of sales and
service.
He questioned whether the program "is sustainable."
"What happens if a majority of customers are traveling through
the Midwest during a snowstorm" that forces large numbers of
cancellations and all ask for full refunds?
"We very much believe that there are ways to set yourself apart
through customer service, and the initiatives we consider are those
in which we have control," said Marsicano.
Biztravel.com's other "guarantee" involves the company's own
customer service, but Marsicano said Travelocity also has no plans
to match that in any way.
"What insures customer loyalty is not $10 here and $20 there but
who delivers good customer service," he said. Roughly 30% of
Travelocity's bookings are made by business travelers.
Erick Blachford, Expedia.com vice president of marketing, called the
Biztravel.com offer "a promotional stunt" and also said his on-line
agency has no plans to offer a similar program.
"People don't want to be rewarded for being late, they want to
get there on time. Our philosophy is to help our customers get
there on time," he said.
Expedia, which estimates between a quarter and one third of its
users are business travelers, lists on-time performance statistics
on display screens.
Blachford said Expedia has no plans to offer a service
guarantee, calling Biztravel.com's plan a "bureaucratic
policy."
Expedia prefers to deal with "the rare cases of customer
dissatisfaction on a case-by-case basis and treat [customers] as
individuals," he said.