Seeing Big Opportunity, Intermediaries Think Small

Several Expedia-owned brands, from its namesake online travel agency to Hotwire and Trivago, target leisure-oriented and unmanaged business bookers. Meanwhile, its Egencia travel management company goes squarely after the managed business travel category. Sensing an opportunity in the middle, Expedia in May launched Expedia+, a loyalty and travel management-lite program for small U.S. businesses.

The online travel giant is not alone in its attempt to seize an opportunity in the small, lightly managed or unmanaged travel sectors. Priceline’s Booking.com this spring launched a small business hotel loyalty scheme called Booking.com for Business, while corporate TMC HRG in February came out with Fraedom for what it calls the “unmanaged” corporate sector. There also is an upstart in the bunch. This year, NexTravel launched with an out-of-the-box, turnkey travel-booking tool for the lower end of the market.

While each of these entities has a different approach, they all provide free (at least in their basic forms), Web-based tools for small businesses, travel administrators, startups and others looking to streamline, centralize and save on travel without all the trappings of a full-blown managed travel program.

They are going after a market that is vast but varied. On the whole, it’s lucrative, even if no individual account is a big moneymaker.

“The total U.S. online travel market is a $145 billion business, and unmanaged business travel makes up roughly 25 percent of that,” according to Expedia chief marketing and strategy officer David Doctorow, citing PhoCusWright research. As such, he called the unmanaged business segment “a $36 billion opportunity.”

Suppliers and intermediaries have grasped at that opportunity for years, often in the form of small business programs that require no upfront cost, are easy to administer and are simple to use. Just about every travel supplier, from airlines and hotel companies to rental car operators and payment systems, have some sort of small business offering.

Expedia and Priceline have molded their approaches on similar small business loyalty schemes, but theirs seek loyalty to the intermediary, not the individual supplier.

Expedia+

Expedia’s U.S. small business loyalty program offers no-fee access to a dedicated travel site where travelers can book and administrators can manage—at least lightly. The play is for the lowest end of the market, as Expedia prompts users that spend more than $100,000 per year on travel to use Egencia.

The savings aspect lies in hotel bookings. Enrolled companies invite employee travelers to join. The company can earn a $100 hotel coupon for every 10 prepaid hotel room nights booked for more than $50. The rebate “can be used by the company immediately, saved for future travel or given as a gift to an employee for personal leisure travel,” according to Expedia.

Employee travelers get their own perks like personal Expedia points, access to priority customer service and, for some hotels, rate-inclusive hotel amenities. They also still can earn loyalty points from the suppliers they book.

While business rewards apply to hotel spend only, “all enrolled employee travel booked on Expedia.com automatically appears in your company’s Expedia+ business account,” according to Expedia.

With that, administrators have at their fingertips simple reporting tools to view employee travel plans, track travel spending and manage rewards.

Booking.com For Business

Released this spring just before Expedia+, Booking.com for Business follows similar contours. It provides at no fee the ability for administrators to set budget filters and view and manage employee-booked hotel reservations worldwide. Canned reports also review business hotel spending booked via the site.

“Our tools let you link travelers to the company account or book on their behalf, without ever losing oversight,” according to the service’s website. The program offers more than 600,000 properties in 212 countries at savings opportunities of 10 percent off “select properties.”

Fraedom

While Booking.com for Business and Expedia+ have parentage in OTAs and take their cues from supplier loyalty programs, Hogg Robinson Group’s Fraedom grew out of the corporate travel management sector and positions itself as an end-to-end travel and expense management solution. In short, it is a more complete management tool. The offering bolts together its HRG TMC booking technology with tech from expense management division Spendvision.

Fraedom Travel & Expense, available only in the United Kingdom but planned to expand, enables users to book travel online and flow transaction data into an integrated expense management system. While free to users in its most elemental form, there are fees to load and book negotiated rates or to use agent assistance.

Like Expedia, HRG is targeting a customer set separate and distinct from its TMC business. HRG CEO David Radcliffe called it the “unmanaged” sector, even if, he acknowledged, providing travelers with an integrated booking and expense tool denotes some level of management.

“There are about 1,000 large corporations in the world, of which we manage 200,” HRG marketing director John Harvey told The Beat earlier this year. “There are companies in the rest of that 1,000 we don’t want because they are heavily commoditized. The 1,000 are relatively static, but we are a publicly quoted company and we don’t want to stay static. If you move down from there, there are tens of thousands of companies. There is a large opportunity if we can build an attractive offering.”

NexTravel

Also seeing the opportunity, Web-based booking tool NexTravel incorporates spend tracking, reporting and policy controls and houses traveler preferences and profiles. The firm fleshes out its core booking technology by tapping into partners, including TMC Atlas Travel for travel fulfillment or agent services as needed. Basic bookings are free, but agent assistance, higher-volume users, expense system integration and other premium features would incur costs.

“We are a technology company,” NexTravel CEO Wen-Wen Lam told The Beat earlier this year, “but because the market that we have is smaller, we position it as an online travel agency for the ease of marketing. Also, if you look at the size of our [target market], they have no idea what a TMC is.”

Where NexTravel, HRG, Expedia and Priceline see an unmet market opportunity, others aren’t quite sure how—or even if—they should angle services to the lowest end of the corporate travel spectrum.

American Express Global Business Travel, for example, has a small and midsize offering for companies spending at least a couple hundred thousand dollars a year on travel. But does it have any plans to think even smaller?

“We are still looking at this domain, and I don’t know what we’ll do,” said chief commercial and technology officer Philippe Chérèque. “I think the number-one concern of these guys is cost. Do we want to be a cost competitor to the OTAs? I don’t think so.”

This report originally appeared in the June 1, 2015, issue of Business Travel News.