Can startup unicorns fly in business travel?

The recent flotation of Lyft for a valuation of $24 billion - or five times the current valuation of U.K. retailer Marks & Spencer - has reignited the conversation about the value, or possibly overvalue, of tech startups. 

Lyft is one of many tech businesses that has a short operating history, has never made a profit and yet is valued in billions.

Is this another tech bubble, how much is hype, and how much are these businesses truly changing the world?

The business travel industry has attracted a number of its own tech startups.

In the last couple of years there has been an influx of businesses that describe themselves as fundamentally changing the model of business travel - and raising a lot of investment capital to do so.

One Silicon Valley-based example is the firm TripActions, the first such travel tech business to describe itself as a "Unicorn" (a term used for tech startups with a valuation of $1 billion), which recently raised $154 million from investors based in its home area.

There are others out there, all seeing a similar opportunity.

Ambitions and reality

I am often introduced to owners of fast-growth tech businesses both inside and outside of business travel.

One common feature of these owners is that they will all say they are changing the world.

So in business travel what are they doing differently?

Let’s look at how they are approaching the market:

1. They recognize that there are many different stakeholders in business travel, and the traveler is a key one.

We’re all used to having a fantastic online booking and buying experience outside of our business lives, and when we don’t get it, we’ll give up on the supplier in seconds.

2. They know that more travelers want a great self-booking option.

Travelers are increasingly booking trips themselves - so the process needs to be simple and pleasurable.

The days are numbered for the traditional procedure where the procurement department alone makes the decision about their business travel supplier, imposing clunky B2B software on users and mandating their use.

The startups know that if the booking experience isn’t exceptional, travelers will vote with their fingers and use the superior experience offered by a consumer website, leading to leakage. 

3. They know that the future of business travel lies in technology.

As the market develops, there will be fewer players - all of whom will be tech companies and they are betting on themselves to be in the line-up.

Not all of them will survive, but what is undeniable is that they will be part of the future of business travel. 

Things to consider

They are doing a few things very well. But is it a fundamental shift in managing business travel? And are they changing the world? 

I don’t think so.

These businesses are wrestling with the content challenges that all business travel companies face, but they have had less time to solve them.

As a result, the booking experience may appear smooth on the front end, but the back end processes by necessity are manually patched together, and this will impact on the customer experience.

The work they are doing is an evolution of the sector, but they’re grappling with the same issues that have always been there.

They also need to deliver exceptional customer service at every level so that the customer can depend on them to rescue a traveler stranded at an airport at 2 a.m..

I often feel that the business I run is part technology and part consultancy, with business plans and data-driven recommendations presented to boards being a clear part of our relationship with our customers, and the reason we retain them.

Having 20 years’ experience providing these bespoke data driven consultancy solutions gives a head start. 

A shake up of the business travel industry is inevitable. The new tech startups entering the sector are making a few points very well and I find their message refreshing, inspiring and long overdue.

Only businesses with progressive technology will survive - that much is clear.

And it’s businesses that blend technology with track record and customer service who will take flight and change the world.