BTN's annual answer book for business travel managers.
The development of new technologies always has posed something
of a challenge to midmarket and smaller travel programs. New technology often offers
the promise of lower costs and greater control of or visibility into traveler behavior.
These are real benefits especially for lightly managed programs that could justify
the price easily, considering the lack of other controls. But if that technology
is immature, poorly deployed or implemented, or a bad fit for a program, the buyer
risks significant investment without realizing any advantages. As such, evaluating
new tech opportunities carries real stakes for the midmarket, as the potential risks
and advantages are arguably greatest there.
So it is with 2017's shooting stars of travel technology: the
chatbot travel assistants fueled by artificial intelligence and predictive technology.
Several startups have entered the market promising personalized alerts and booking
capabilities with machine-learned preferences. Travel management companies, too,
are deploying chatbot assistants, offering clients natural-language messaging with
How effective or vital a technology this proves to be is a story
only time can tell, but one thing is certain: Chatbots from suppliers like TripActions,
HelloGbye, 30SecondsToFly, Mezi and now Lola (see sidebar, below) are targeting
midmarket companies in particular as these service providers seek footholds in the
market. For example, TripActions focuses primarily on corporate clients that spend
$500,000 and $5 million on travel annually, while Mezi concentrates on companies
with spend $10 million or less.
It has to be a cheaper channel. Or it has to add some sort of service component. ... If you do either of those two things, then you've got a really interested audience."
These firms now are converting midmarket prospects into actual
paying customers. 30SecondsToFly CEO Felicia Schneiderhan told The BTN group's The
Beat that a few clients are set to launch beta programs, and TripActions has named
a couple smaller corporations as clients, including business intelligence software
provider ThoughtSpot and Jive Communications, which began using the platform in
Jive HR director Paul Thatcher said TripActions, which enables
bookings and allows travelers to collect reward points for cost-conscious decision-making,
has helped reduce Jive's domestic hotel cost per night from $115 to $103.
"We try to stay very conservative with travel spend," said Thatcher,
crediting TripActions' traveler incentives and its ability to find and rebook lower
rates. There have been a "few times where a traveler schedules a trip, and
the fares for that trip went down or a better option was made available. There were
several instances where we've saved money because TripActions was actively looking
out for our interests."
Any supplier must consider the midmarket's consistent hankering
for solutions that lower the cost of travel, 30SecondsToFly's Schneiderhan said,
but she also hopes to push travel managers to think beyond the bottom line.
"Especially small and midsize companies are more price sensitive than larger
corporations. However, we want to move away from the static type of policy and look
at the context of the data, so we can propose that this trip is a high value for
the company and I don't want my salesperson who is about to close a deal for $1
million to have a layover for four hours."
She continued, "We are not there yet," but noted 30SecondsToFly
is developing such an algorithm.
Potential Versus Current Capability
Before committing to chatbots, midmarket buyers must balance
the technology's existing functionality and ability to reduce travel cost against
their potential and the cost to implement, said GoldSpring Consulting partner Will
He acknowledged "tons of interest" among his clients
in learning more about this kind of capability but cautioned that the technological
maturation necessary for many corporations to actually invest in a solution is
"further down the road." "I think it has to be a cheaper channel,"
Tate said. "Or it has to add some sort of service component. You're either
going to take the cost down or you're going to raise or enhance the service level.
If you do either of those two things, then you've got a really interested audience."
Not everything in today's world is at a point where you can have a complex experience completely automated through a mobile app."
Lola is likely the most
pedigreed foray into artificial intelligence-powered, chat-based travel assistants.
It started its journey on the leisure side, officially launching a year ago. It
was positioned as a juiced-up agency, with highly experienced human agents transitioning
to a messaging platform and supported with AI recommendations. Fast forward to May
17 of this year, when Lola founder and CEO Paul English, who also co-founded travel
content aggregator Kayak, announced that Lola will "pivot" to business
travel, and specifically to the small and midsize market. Phocuswright SVP of research
Douglas Quinby interviewed English onstage at Phocuswright Europe.
Quinby: When I hear the word "pivot," it
usually means something wasn't working.
learned that] the people who really love the Lola vision are the people who travel
a lot. If you travel twice a year like the customers of Kayak, then Lola isn't that
exciting for you. If you travel every week or every couple of weeks and Lola gets
to know your preferences, it works unbelievably well. It's like you have an executive
assistant who knows you really well.
Quinby: You sound like you are talking about business travelers.
English: We have
11 companies in Boston that are users as a company. They are the most rabid about
[Lola]. They need something that knows their preferences; they need duty of care;
they need last-minute [support]. That is causing me to spend a lot of time with
small and medium-size businesses and to [ask] what else isn't working for them:
Are there other opportunities in SMB that are different than what Egencia and Concur
or other companies are trying to serve SMBs?
Quinby: What about the more traditional suppliers in the space:
the travel management companies, the expense reporting tools ...
are not known for innovation or for building consumer-grade software. I actually
asked someone I met [at Logan Airport], "How do you like Concur?" It was
amazing how much this guy disliked the constraints, violations, rules and policies.
There is a better way to do things than … the apps put in place by the finance department,
which are very different than what the traveler wants. I'm spending my time looking
at [what frequent business travelers want]. Ignore their boss, ignore the finance
department. What would work so well for the business traveler that they would use
the app all the time? That is what I am thinking about.
Some travel buyers are comfortable with the maturity of their
programs' cost-effective practices, considering the midmarket's perennial focus
on these issues. Those buyers, Tate said, are ready to bolster their programs in
other ways. "In the midmarket, [there] is the concept that procurement has
done a pretty good job of getting things in the right cost space. For more mature
programs, that's handled, basically," Tate said. "The next phase is:
'How do we take that to another level?' And [it's] the customer experience that
people seem to be happy to pay for as long as they can see a tangible improvement.
If the chatbot enables a more efficient process, either the booking process or the
research process or just the experience then the market's ready for it and the market
would support it."
Partnership Travel Consulting CEO Andy Menkes is more skeptical
of chatbots' utility, at least until their technology matures: "I don't see
it having an application until it's faster and more economical than using an online
booking tool or talking to an experienced agent. That's my bottom line. They all
look very cool, but no one has said they got it nailed." He continued,
"The tools have to be better," noting that calls and traditional online
bookings "are not ready to be replaced by AI yet."
What About TMCs?
Nevertheless, Jive pushed its chips all in on TripActions, replacing
its travel management company with the startup. Thatcher said Jive has more than
$1 million in annual travel spending and about 70 percent of its travel is U.S.
A company with a larger travel spend or a more international
footprint, though, would have many factors to weigh if considering replacing an
agency with a startup. FCM Travel Solutions chief strategy officer John Morhous
said technology hasn't matured to that level: "Travel in our opinion is still
at a point where today—I'm not saying it will always be that way—there's not enough
of it that you can completely automate without human interaction, and that's just
based off our experience of dealing with customers of all sizes and shapes: the
travel patterns of road warriors, what they do, the different types of changes,
the different types of advanced things that they're looking to get—preferred rates,
different types of airfares or different carriers they're looking to purchase, for
example. Not everything in today's world is at a point where you can have a complex
experience completely automated through a mobile app."
FCM parent company Flight Centre—which, Morhous noted, invested
in 30SecondsToFly last year via its Little Argas incubation fund—is one of several
large agencies rolling out chatbot functionality. Flight Centre's Sam technology
is intuitive and will learn traveler preferences as it offers assistance throughout
the trip. Sam joins chatbot technology from agencies like Carlson Wagonlit Travel
and Travel Leaders Corporate.
"We certainly do believe that there is a future with some
of the AI and app-based type of components that are in there," Morhous said.
"We do believe that we are building some of the best-in-class technology, and
we are investing in the marketplace in areas that we don't have full solutions with
just yet. But we have people and we have expertise and we have the human element
that we still think is there and necessary."
Whether this type of technology will become entrenched in midmarket
travel management practices can't yet be known. GoldSpring's Tate, though, noted
that the midmarket tends not to invest heavily in most travel management initiatives.
Thus opportunities will exist for suppliers who can automate inexpensively.
"Putting in some sort of a system that accomplishes some of the bigger parts
of travel management and doing that robotically in a way that is a low-cost channel
and offers a customized travel experience is, to me, a real win for that market
space," Tate said of midmarket or lightly managed organizations. "To automate
that process and cover a large part of the value proposition, which would be managing
to compliance, could be a real win. The market would respond very well to something
—Additional reporting by Elizabeth West
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