Business travel is big
business.
The Global Business Travel Association estimates
the industry represents spending of $1.4 trillion worldwide and predicts that
number will rise to $1.7 trillion by 2022.
In its U.S. Corporate Travel Report 2018-2022, Phocuswright says managed travel represents a
third of the total travel market in the United States and will reach $138
billion by 2022, with 86% of that spending taking place online.
“Corporate travel in the U.S. is solidly and steadily
increasing, helped by rising business confidence and despite recurring
geopolitical challenges like tightened immigration policies. The online segment
continues to grow rapidly and dominate corporate bookings,” the report states.
And that online segment is broad and diverse –
ranging from self-service booking tools to platforms from travel management
companies and suppliers and incorporating newer technologies such as machine
learning, chatbots and virtual assistants.
But while managed travel solutions – both legacy
providers and startups - continue to innovate, with a focus on providing an optimal
user experience, leakage remains an issue faced by companies big and small.
Generally defined as bookings
made outside of a company’s contracted TMC or online booking tool and/or without
compliance to a company’s travel policy, leakage may account for
nearly half of business travel bookings, it's estimated.
According to Phocuswright 2017
report, Inside
the Mind of the Modern Road Warrior, respondents in managed travel programs
say they follow policy just 45% of the time when booking hotels, 47% when
booking air and 49% for the type of booking method used.
For the fourth piece in our series
on business travel - which will be divided into two parts this week - we explore why leakage happens and how data-driven
solutions can help to manage it.
The source of leaks
A 2018
study from GBTA in partnership with RoomIt by CWT found that nearly 70% of
travel buyers say that enforcing policy compliance is among the most
challenging aspects of their job.
The reasons bookings are done outside
of prescribed tools or policies vary. One of the most common reasons is a desire
among business travelers to earn loyalty points, which may not be available through
a TMC or online booking tool.
Another issue: Travelers
accustomed to having nearly unlimited choices when booking their personal trips
may not like the limitations of their company’s plan.
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For example, Phocuswright’s U.S.
Corporate Travel Report 2018-2022 found that only 26% of travel managers explicitly
allow private rentals in their current policy and yet the Phocuswright
U.S. Business Traveler Survey found 40% of managed business travelers said
they currently use home-sharing services, regardless of the corporate policy.
“The other trend we noticed is
that every supplier is on a mission to get as many direct transactions as
possible,” says Andres Fabris, founder and CEO at Traxo.
“They are getting more
aggressive with their loyalty programs and guaranteed lowest rates and web-only
rates and incentives and upgrades and all these things they are using. That trend
that is never going to stop.”
Business travel also is often
done to attend a conference or meeting, yet access to the host hotel or rate may
only be available when booking through a designated portal.
And then there’s the fact that
– despite the ongoing innovation – some of the current options for managed
travel lack the convenience and efficiency today’s business travelers demand.
“You can’t talk to a millennial or Gen Z-er and show them
what the GDS looks like without them kind of laughing at you and saying what? It’s
just mind boggling to them,” says Suzanne Boyan, operations coordinator for
travel at consulting firm ZS Associates, during remarks on a panel at the
Global Business Travel Association convention in Chicago earlier this month.
“I watched someone struggle through an online booking tool
- ours - for an hour to book a flight, car and hotel. What a waste of time.”
Startups such as TripActions, Travelperk and Lola are
focused on creating better user experiences, but Fabris says those solutions may
reduce - but won’t eliminate – out-of-policy bookings.
“You may be able to chew away at the leakage ... and get folks to search a little bit
less often outside if you have a really intuitive, slick interface and lots of
content. But I think you’re going to adjust it 10 to 20%, you’re never going to
get to 100% compliance,” he says.
Now what?
Traditionally, companies have
used TMCs and online booking tools because that has been the only way for them to
have access to data, which in turn enables them to fulfill duty of care, to
negotiate rates with suppliers and to control costs.
But in recent years, many new options
for accessing travel data have emerged.
This behavior keeps happening and it’s growing. So it’s either put your head in the sand or how do we manage this.
Daniel Senyard - Shep
Data Visualization
Intelligence (DVI) works directly with corporations that have at least $5
million in annual air spending to aggregate all of their travel and expense spending
from multiple sources.
This improved visibility, says
CEO Brian Beard, allows travel managers to shift from a focus on “compliance”
to a focus on data management as a strategy to reduce leakage.
“I do
not think you can actually solve the problem completely. I think you can manage
it and monitor it and the data sources that are out there give you a much more complete
view,” he says.
And many of the newer players in this arena – companies such
as Traxo, Shep, Tripbam, Freebird, Yapta, Rocketrip and DVI - provide
complementary solutions, creating an opportunity for what Shep CEO Daniel Senyard
calls a “fully managed open booking.”
“The ecosystem of travel is moving away from everyone
looking at one company to provide every single solution possible for their
travel stack,” he says.
“More and more companies are realizing that working with
startups, doing pilots and integrating smaller players means they can get best-in-class
functionality from multiple different vendors, and the travel manager then
starts to weave together a better solution.”
An example of this is Boyan’s participation in a pilot
between Traxo and United Airlines that allowed some of ZS Associates’ employees
to book directly with the airline. Response to the pilot was so positive that Boyan
says she is now rolling out direct bookings for all employees on United Airlines and with
some hotel partners.
Through Traxo’s marketplace, which has more than 20
participating companies, ZS Associates’ direct booking data goes to TripBam for
price assurance on accommodations and to Freebird for rebooking of flights that
are cancelled, delayed or missed.
"We enable the same data workflows for these
supplier-direct bookings that a TMC enables for the on-channel bookings made
via the company's booking tool or agency,” says Traxo chief commercial officer
Cara Whitehill.
“So, just like a TMC can sync data to TripBAM, Freebird or
even duty of care providers and expense management solutions for on-channel
bookings, we can provide the same service for a company's off-channel bookings
made directly with suppliers, ensuring they have the same coverage and
visibility to those bookings as they do for their TMC bookings."
Broad benefits
Access to that data enables a broader understanding and
smarter decision-making for travel managers.
“We tell you market rate on every single booking and it’s
all specific to dates, bed type, room type,” says Tripbam founder and CEO Steve
Reynolds.
“With having accurate data and it being captured at a per-booking
level for every single reservation, you can know the value of a hotel program
and is it worth investment of time and effort.”
Technology is also improving
timing when it comes to managing leakage. Rather than waiting weeks after a
trip to identify rogue bookings through expense reports and credit card bills, the
data can be captured and acted on in real-time.
Shep’s Senyard says this
enables education in addition to enforcement.
“So when
someone tries to book on their own, we can pop up a module to say if you book back
in the online booking tool you’ll get the same option but it includes free Wi-Fi
and late checkout, for example,” he says.
“Some TMCS have wanted us to be a big red stop sign - as
soon as someone gets to Expedia, for example, to tell them to turn around. And
we’ve pushed back against that and said if the employee should book in-channel,
let’s educate them as to why, tell them what the benefits are.”
And yet, with so many tools available to manage leakage,
adoption is still low.
A 2017 study from GBTA in partnership with Concur, How
to Close Risk Management Loopholes, found only 20% of travel managers say
they use technology to capture traveler data booked outside their travel
program.
“This behavior keeps happening and it’s growing. So it’s either
put your head in the sand or how do we manage this,” Senyard says.
“And whether that means getting people back into preferred channels
or opening more options, we don’t care either way, but we can’t pretend it
doesn’t exist anymore.”
*Check back in on Wednesday for opinions on how a mix of emerging technologies such as artificial intelligence,
coupled with new business models, can improve business travel and reduce leakage.