Could company-paid leisure travel be a new distribution channel?

Finding and retaining talent has become increasingly challenging for many industries in the post-COVID world. So much so that according to a recent BBC article more and more companies are offering to pay towards the cost of an employee’s holiday, including well-known brands such as Calendly.

As the post-pandemic travel booms seem to fade, any chance to increase sales should be welcome for travel companies. But how should the industry respond to what might become a whole new B2B2C distribution channel? Some employers will opt to just refund the employee’s spend up to a certain allowance, but many will be offering actual travel products, meaning that they either have to source them directly or – more probably – bring in a third party to arrange this.

Whether you are a supplier, a travel intermediary or a tech provider, there is opportunity here if you can create products this new niche will require that are distinct from other sales routes.

In some places this happens already

In some parts of the world this isn’t as innovative development as it might seem. In France – where Digitrips is headquarted and I live – employers with a staff base of more than 50 already give a percentage of their payroll to well-being perks and benefits, earmarking around 50% of that towards leisure and travel. 

That in part is because France has one of the highest rates of staff turnover in the world; companies need to be innovative and generous with perks. We also have rules that make this perk attractive – as part of the country’s long-term commitment to improving access to travel for everyone, it is not taxed. 

Additionally, it is forbidden for an employer to ask employees to work during their holiday time, so there are no hidden catches with offering such benefits. Companies in other countries looking to offer free travel perks to staff could learn from and replicate France’s model.

Let us not forget too that many travel professionals, certainly those working in hotels or airlines, might already have long been familiar with the idea of free travel products as an employee benefit too.

Supplier pricing – a comparison game

For travel intermediaries looking to get into this growing space in markets where it is new, consider a B2B2C sales strategy. Targeting corporations with the right travel packages will help you reach a new audience of travelers. Travel intermediaries should enroll corporations as direct clients and work with them to determine the rules and conditions of the benefit allowance and what travel options are available. Bespoke is the key word here, though; no two companies will be alike.

Of course, pricing is always going to be important too – especially at a time when the cost of global travel is so high. Employees will want to make sure they’re packing as much into their employer’s travel program as possible. While there will be a certain level of loyalty to employer white label portals, in part because in many cases travelers are obliged to purchase via the portals to qualify for perks, they will still want to know they’re getting the most value out of their perk. 

Based on our experience with such progams, the average basket amount of these types of portals is typically higher than that of consumer online travel agencies. Nonetheless, travel packages should still be priced competitively – consider how special branded fares and deals can be tailored to certain employee groups.

Duty of care, an ancillary revenue opportunity?

Some may argue that holiday perks could create duty of care issues for employers. But companies shouldn’t need to get involved in their employees’ personal time, nor should they seek to control any aspect of this through such plans. So in most foreseeable cases and markets this shouldn’t be an issue.

Nonetheless, responsible employers could instead look to providing optional assistance to employees on their holidays – presenting an opportunity for travel management companies to offer duty of care services to corporations as ancillaries.

For example, a travel management company could offer video medical consultations for employees before their trips or a helpline service while they’re away. Likewise with insurance products, a company can negotiate a good rate and perhaps one that includes all employees regardless of health or personal circumstances (something individuals sometimes can’t get for a reasonable price due to age or prior medical conditions).

Adopting white label channels

To enact such a plan, a personalized and secure voucher system is the easiest way, while a more complex option would be creating a full loyalty program dedicated to employees. Employees would be given an allowance – or can earn points – and can then burn through that by booking travel through the system. This exists already and it works, but it does hinge on having a large employee base and needs to be carefully managed. 

A white label travel portal – an online booking engine that allows travel agents to sell flights, hotels, transfers, sightseeing and other travel products under their own brand name – would be the most effective way to market travel under such a plan. There’s opportunity here for travel intermediaries to tailor their technology towards employee travel plans, and for travel companies to sell expertise and support alongside this.  There’s definitely room for technology innovation around this new trend – the more it becomes commonplace, the larger the demand will be for adaptable, attractive systems that can offer employees a consumer-grade booking experience. 

Needless to say, travel suppliers will want to get their content into these portals just like the do with loyalty programs. The potential market could be huge.

ew way of incentivizing sustainable travel

Another consideration is sustainability. Flights are under increased scrutiny and offering travel plans to employees may go against a company’s sustainability goals. However, it’s difficult for employers to control what their staff do during their private time. What we could see more of is companies financially incentivizing employees who choose sustainable travel options like rail or eco-hotels.

In conclusion, this is a trend worth exploring for suppliers and intermediaries (and tech providers too). It’s a great way of diversifying and opening up new revenue streams.  Granted, it will require careful consideration, innovation and planning to carve a successful niche in this space, though the rewards could be significant for those who can think longer-term.