Mark Pestronk
Q: With NDC bookings becoming more prevalent, I have to assume that the airlines are paying the GDS vendors somewhat less than they used to. I also assume that GDS incentives must be declining because of the vendors' loss of revenue. Are my assumptions correct? Also, our agency's GDS contract is going to expire in about a year; is now a good time to start getting ready to negotiate?
A: Deals for some travel agencies are better than ever these days. So, I would not assume that the growth of NDC means that your negotiations will be less successful than last time around.
In my experience, there are the six keys to getting the best GDS deal for an agency of any size:
• First, you have to start early: at least six months and ideally a whole year before expiration of your current contract. The negotiation process is lengthy, and it is getting lengthier because the GDS vendors appear to be chronically understaffed at the sales level.
• You have to be patient. Be prepared to wait months between responses from your vendor. Offers tend to improve with age, so expect to go through several rounds of negotiations before you get what you want.
• Don't be afraid to let your current contract expire while you are negotiating. In my experience, vendors do not cut off travel agencies while they are still negotiating in good faith.
• Don't take your vendor rep's word about what a good deal is. Compare notes with colleagues and retain an expert who knows what the latest and greatest deals are these days.
• Don't be swayed by any vendor's pitch about technology. Even if one vendor has a superior bell or whistle, the others will have the same thing soon. Go for the best financial deal, not the best technology.
• Create a credible threat of conversion. Get competing offers and show your incumbent vendor that you are serious about the possibility of converting. If you are a Travelport agency, this means getting a conversion offer from Sabre and vice versa. I omit Amadeus because few large agencies have that system, so getting an offer from Amadeus will not be as credibly threatening to your vendor.
I am not recommending that you show competing offers to competing vendors, but you can create an aura of credibility just by hinting that a competitor's offer may be superior. If you have a nondisclosure agreement with your vendor, you would be in violation if you disclose the business terms.
Some large agencies create an extremely credible threat of conversion by having dual systems in place before negotiating (typically Sabre and Travelport) and giving the impression that shifting share from one vendor to the other would be fairly easy. So, if your agency is in a position to bring on a second system now, you will have a better negotiating position when the time comes to negotiate with your current vendor.