Rosenbluth Int. and Biztravel.com

1. Rosenbluth Int. and Biztravel.com internet business models text and cases ANUP SHARMA

2. Rosenbluth Int. • Introduction • Rosenbluth • Biztravel.com • Market studies and scenario • Acuisitions • Competition • GBF • conclusions

3. Market and industry • Traditional brick and mortar agencies served business and leisure travelers. • Additional information was being provided such as car rental, cheap hotels and amusements etc. • Agencies were primary distributions channels for airline companies. • Late 9O’s agencies focused on providing lowest fare information and getting the tickets confirmed

4. Market Conditions cont. • Primary source of revenue was commission on sale of tickets from airlines as well as car rental and hotels. • Market was divided in two major segments- business and leisure travels. • Leisure travel was not very popular where business travel market was huge and companies were looking for reliable one stop travel agency for long term contracts.

5. Rosenbluth Int. • Started as Rosenbluth travel in 1892, by Marcus Rosenbluth, a Hungarian immigrant, to provide a way to help Europeans emigrate. • 1984- companies such as DuPoint realized the need of one single agency for their needs rather than multiple agents. • Rosenbluth travel became a travel management company and catered to business travel needs.

6. Expansion phase • 2 major strategies. • To collect the travel data for businesses and analyzing patterns to do further negotiations. • Gaining ability to manage call centers efficiently and effectively. • 1988, company realized the geographical limitations of this business and thus adopted the latest computer technology to connect all the offices. • This helped in providing correct information when needed and gave company better control in terms of traveler’s itinerary, travel preferences etc.

7. Expansion phase cont. • 1994, opened first “IntelliCenter”, a centralized reservation facility in Fargo, North Dakota. • Located in low real estate cost areas and highly productive human resources. • This improved the customer by far and reduced the issuing cost of a ticket by one-third. • Launched DACODA {discount analysis containing optimal decision algorithms}. • Helped clients to compare airline pricing, optimize their travel spending, negotiate favorable airline contracts, create holistic travel cost saving startegy. • Launched @Rosenbluth, helping clients book tickets on their intranet.

8. Major competition • American Express and Carlson Wagonlit Travel. • Characteristics: • Managed mostly business travel sector and minimal leisure travel. • Provided ticket screening and best suited fare options. • Worked together to reduce the price of specific careers through discounts. 53% success.

9. Inside Rosenbluth • Operations: • Highly connected IntelliCenter, network operations center and other offices. • Network operations center handled the major travel contracts and provided information for associate offices. • Smaller reservations were handled by local account management. • All travel service associates were monitored through the network center. Information about the service level and performance was transmitted on a consistent basis. • Concentration on value added concept and removal of functions which were using up the resources for nothing.

10. Inside Rosenbluth • Human resources: • Biggest emphasis on the selection process. • Complex and detailed interview process to determine different skills of the potential hire. • Classroom based training and hands on as well. • Scripts and directions for all activities to guide the associate while making a successful sale.

11. Cont. • Corporate culture: • Very Employee centered and friendly. • Flow of information through office bulletin boards and flyers • Only 2 employees had offices, hence pretty horizontal • Employee bonus based on client satisfaction and productivity. • Event celebrations such as valentine day and birthdays • Recognition of achievement thus creating incentive.

12. The result… • Lowest employee turnover • Increase in customer satisfaction levels and sales. • Reduction in mistakes or refunds showing improved productivity. • Listed as one of the “Best places to work in the US.” • Call answering timings were fastest among all competitors.

13. Biztravel.com • A result of online appearance of a travel agency names Middlegates. Changed to new name. • Personalized profile set up options • Tracking everything from 20 frequent-flier plans to hotel discount programs. • Clients could choose itineraries that take advantage of specific bonus plans and optimize your rewards. • analyze client eligibility for seating upgrades on the flights clients have selected--and then go ahead and request an upgrade when the availability window opens

14. Industry information • 3% of total U.S. travel was done online and half of them was through online travel agencies. • Online travel booking grew from $4.2 billion to $16.6 billion by 2OO3. • Estimated sales online for air travel was highest among other transportation up to 73%.

15. The need to go online.. • Online sales were getting popular day by day. • Convenient and time saving ways to manage travel was getting extremely popular within corporate clients. • Competitors were having strong online presence. • Online business proven as a beneficial for the core company and its operations. • All in all moving with the trend….

16. The decision. • In 1999, Rosenbluth decided to buy major stake in Biztravel.com in a deal believed to be worth more than $100 million. • Major reason of this purchase along with the need was to target the SOHO {small office, home office} market. • Rosenbluth itself could not cater to this market because it just could not cost effectively serve it.

17. Cont. • Other investors included Accel Partners, British Airways, Comcast Corporation, Continental Airlines, Hummer Winblad venture, Marriot Int., Sun Microsystems. • Benefits from these partners: • They were leaders in air travel industry. • Better access to airline inventory • Provision of frequent flier programs • Goodwill

18. Value to the client • live agent support through a well set up IntelliCenter by Rosenbluth as a back up to the website. • Emails, live chat and other online communication methods were adopted based on the need of the client • 85% of calls were answered in 3O second period, email response within 6 hours and online chat was almost instantaneous. • Reduction in cost and errors due to trained Rosenbluth employees thus increasing efficiency

19. Cont. • All Biztravel.com customers received up to 5O percent discounts on some fares because of new partnership. • Rosenbluth provided the technological support to the website and thus enhanced the quality of service. • Examples include addition of features like “Fareguard” and “My company.”

20. Cost and Revenue analysis Primary source of revenue were commissions and sponsorships and advertising. • Biztravel.com charged airlines a fee for communicating with its customers. • Ads companies were charged $35 per 1OOO views which was above industry average of $7-$15. • Biztravel.com’s relationship with airlines was based on effecting their market share hence they had more compensation than competitors.

21. Cost and benefit analysis.

22. Some concerns.. • Clint associate and website booking wasn’t looking as a great mix. • Clients were still requesting personal attention for information which could be easily obtained on the website. • Frustration and confusion among employees due to huge loads of emails and phone call on wait • Increase in errors and miscommunications. • Website was not serving the purpose it was taken over for a long time.

23. The death • Biztravel.com staff could not adapt to the changing environmental needs and issues. • The costs were increasing faster than revenue sources. • September 11th attacks was the final nail in the coffin. • Rosenbluth Int. terminated Biztravel.com on september 22, 2OO1.

24. Mangement comments “The Web site was struggling from the slumping economy, but the drop in business after the terrorist attacks was the final straw. After the actions of Sept. 11, we've seen up to a 70% decrease in bookings, and that was basically the last blow we could take," Marc Kaelin, vice president of Biztravel

25. GBF? • Network effects: • None to minimum Economies of scale: • Absolutely there Customer retention: - yes . High switching costs, Profile set up

26. conclusions • Rosenbluth was acquired by American Express 2OO3 • This mega merger was to support the success of these 2 major competitors. • Depending on client retention, American Express could wind up managing close to $11 billion in annual travel by both associations and corporations. • Acquisition or mergers were the next steps for any major players in the market after gaining successful market share.

27. Q U E S T I O N S ????/