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Business Travel Trends and Forecasts Toronto
Westin Copley Place - September 10, 2019
New York Marriott Marquis - September 13, 2019
Maybe it’s all the money getting thrown at new technology entrants wooing unmanaged and lightly managed travelers—nearly $45 million for Lola, $50 million for Upside, a cool $78 million for TripActions so far and an undisclosed amount to purchase Mezi in January—but the unmanaged business traveler is gaining a very high profile.
Priceline founder Jay Walker’s most recent venture, travel rewards and booking platform Upside—along with The Wall Street Journal, United Airlines, Uber for Business, Hertz and a cadre of airport vendors—initiated a National Business Traveler Day in April, ostensibly to market their products and services to what they estimated to be 25 million unmanaged business travelers traveling domestically in the U.S. each year.
That’s a huge market, and while startups are accessing some deep pockets to make plays for the business (BTN’s 2017 Small & Midsize Enterprise Report covered startups that are gaining traction), major technology and service providers are now eyeing the big opportunity presented by small organizations.
Concur Targets Pre-Travel Management Customers
Concur bought Hipmunk in 2016 but laid low with the acquisition for more than a year. In September it launched Concur Hipmunk, one of the first initiatives from a major industry player to show serious ambition in the unmanaged travel sector.
Concur chief product officer and EVP Tim MacDonald told BTN in September that the company had made friendly overtures to their small expense-side clients “for years” but were met with resistance because many felt they were not ready for formalized travel programs with technology and travel management companies.
It was a market, however, that could not be ignored. “It is our largest and our fastest-growing segment,” said MacDonald. “They have told us they would very much appreciate savings on travel spend but what they really want is increased productivity for travelers.”
Concur Hipmunk leverages the Hipmunk user experience and provides travel supplier discounts to smaller clients. The tool allows users to log in to Hipmunk with Concur Expense credentials, shop for itinerary components and then continue to book on supplier direct websites, just as they do through the Hipmunk consumer site. The user can choose to give the tool access to his or her calendar, and Concur Hipmunk will suggest flights that jibe with meeting times. Concur Hipmunk does not preference or bias content, and there is no policy configuration; however, MacDonald noted, the tool does include lightweight monitoring and will send notifications if travelers make bookings outside standard cost thresholds. There is a fee for clients to add Concur Hipmunk to their tool kits.
Because users log in with credentials, Hipmunk is able to capture the booking data and funnel it back to users’ Concur expense reporting accounts. It also will direct the data to users’ TripIt accounts for itinerary management.
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Given Concur’s somewhat controversial TripLink efforts and now a tool that intercepts potential travel clients before they access TMCs, it’s reasonable to ask where TMC relationships enter the picture.
They’re actually part of the client acqusition plan, MacDonald told BTN in September. “[Concur Hipmunk] is purely an incubation strategy,” he said, adding that the technology company will leverage TMC partners to pass smaller travel prospects onto Concur Hipmunk, with the idea that as the companies grow and increase their travel, the clients will be passed back to the TMC.
He described the arrangement as “an on-ramp for Concur Travel and TMC partners [where] the real benefit for [TMC partners] is the long-term value of being able to create that pipeline and get those customers back when they’re ready.”
A spokesperson for Concur said that a formal incentive program is not yet in place, but is part of a longer-term strategy. TMCs are currently incentivized to refer expense business to Concur, and if it is a fit for Concur Hipmunk the technology company will pursue it.
Flight Centre Will Launch CTGO This Summer
While Concur may be offering an on-ramp strategy for partners, a handful of TMCs are taking small market matters into their own hands. “We call it SSMB or the Super Small to Midsize Business, and it’s a significant piece of the market,” said Flight Centre Travel Group chief experience officer John Morhous.
Morhous gave BTN early insight into CTGo, a travel management “lite” solution scheduled to launch in North America this summer. CTGo will offer businesses with unmanaged travel an easy way to access FCM rates and limited service benefits. The platform will be housed under the Corporate Traveler brand and will offer a mobile-first experience for travelers while providing ad hoc travel managers with simple policy controls and reports. The tool is largely self-serve, according to Morhous, and either initial users invite other travelers in their companies to join or administrators load a basket of users at once. There’s a deliberate consumer feel to the whole initiative, and Flight Centre predicts it will work as a bridge to a more full-service future.
“Everyone’s trying to take aim within that space, and we know all the competitors,” he said. “From our perspective, they fall into two camps: First, a great technology solution that looks cool but may not be good with handling disruptions or even the changes that come with routine business travel. Second, large TMCs accustomed to handling $200 million programs that now want to dabble in this small business space.”
Both new and traditional entrants, he said, have to think more holistically to serve customers that don’t have travel managers or the core infrastructure that allows them to manage travel, and fee structures may need to change, as well.
CTGo will experiment with commercial models this summer, Morhous said, citing transaction-based models and more comprehensive subscription fees. Either way, preferred supplier commissions will support overall revenue streams, although Morhous said CTGo would not limit users to the agency preferreds; they will have access to all FCM content.
Carlson Wagonlit Reformulates Its Small Market Offer
CWT already is operating, somewhat stealthily, a bundled “travel-in-a-box” offer for small customers, though the TMC is refining its approach for the unmanaged market before it makes a bigger splash this year. Early promotional materials described Business Travel Solutions by CWT as “the travel management company built for small, growing businesses looking to keep travel spend down while ensuring traveler safety and compliance. Our free offer provides access to our best-in-class reporting tool, as well as access to the latest digital technologies for online and mobile booking.”
For travelers, BTS incorporates the myCWT intranet portal, online booking powered by Concur Travel and access to the CWT To Go mobile app. “It’s free online; it’s free mobile,” CWT VP of global product marketing Ben Scott told BTN sister publication The Beat last month. “If they call in, which is a minority … they do get charged for that.”
These smaller clients get access to CWT negotiated airfares and RoomIt hotel rates. Additionally, Scott said, clients get “a relationship with the salesperson,” who also serves as a de facto account manager to lighten program management burdens. The core offer also includes post-booking price tracking from Yapta and unused-ticket tracking. Easy setup and quick implementation are centerpieces, too.
“We’re acknowledging that you don’t have a travel manager, so we have a communications suite where part of the value proposition is helping to assure adoption and compliance,” said Scott. “We know this is going to be dumped on an executive assistant who has 100 other things to do. We’re going to do the setup and we’re going to do the setup quickly, but it’s not about implementation; it’s about the activation and adoption. We can help there.”
Scott added that the pricing model is an “easy transition from an OTA to us. If we go in and say, ‘It’s $10 a transaction,’ they’ll be like, ‘What?’ We have the same business model an OTA does, where we expect a lot of this to come from the commission that we earn primarily on hotel and from air.”
We’re acknowledging that you don’t have a travel manager, so we have a communications suite where part of the value proposition is helping to assure adoption and compliance.”
Serko Seeks Traction in North America
CEO Darrin Grafton’s New Zealand-based agency and travel technology company Serko has beefed up its presence in the North American market and is targeting the small to midsize unmanaged segment, as well. The company introduced its Zeno product to U.S. travel managers at the Association of Corporate Travel Executives in April after picking up industry veteran Tony D’Astolfo, who left Deem earlier this year. D’Astolfo joined former American Express and NuTravel executive Rich Miller and former Concur executive Murray Warner on Serko’s North America team.
Serko has been interesting from a content perspective. The company has a similar strategy to many of the startups in the space in terms of aggregating broad swaths of content from online travel agencies. It’s partnership with Expedia in 2015 to access global hotel content predated many other companies’ deep-dive hotel strategies, and Zeno strives to present that content in logical ways with some machine learning in the background to deliver relevant content to the user.
Miller reviewed the tool with BTN at the ACTE conference, underscoring that expansive content. He also demonstrated, as did others playing in this space, a self-service enrollment model and a mobile platform that makes it easy to deliver at scale to the smaller market. Unlike other tools in the market, however, Serko is selling not only direct to the end customer. It’s also selling its technology and aggregated content to TMCs that want to pursue smaller clients and the unmanaged market.
“Our first North American customers will pilot Zeno in June with full deployment scheduled for July,” said Miller, adding that TMC response to the tool has been “overwhelmingly positive.”
Serko also is pursuing partnerships with small and midsize-oriented enterprise technology providers like NetSuite to function as a light travel management technology within the accounting, e-commerce and enterprise resource planning bundles NetSuite sells into the market. It’s a novel way to get in the door with companies that don’t necessarily have a travel manager but may have enough travel spend to begin managing the category through finance or HR.
Customer Acquisition Is Mission Critical
AmTrav co-founder and president Craig Fichtelberg has played in the small-market space longer than many, with a “freemium” model featured prominently on its website. “There’s a huge demand in that sector, and we support a number of customers in the category,” he said. “Cost is definitely important to them. In reality, all the same things are important to this market, but they want no risk and no contract.”
New entrants seem to have figured that part out, given their heavy commercial reliance on supplier commissions. What they also need to understand, according to Fichtelberg, are the high acquisition costs that come with the small market.
“That’s the big challenge with this space: the acquisition cost. I don’t think there is a model where you can reach this customer base without being highly capitalized and willing to spend a lot,” he said, adding that many companies underestimate the challenge of competing with the likes of Expedia and Booking.com to capture the attention of unmanaged clients. Those “have a ton of money to burn and brand recognition.”
Amtrav has aggressive digital marketing strategies and—like Serko, Deem and other booking providers—has established relationships with expense providers to get into smaller (and larger) organizations through finance channels. AmTrav also has provided a booking tool to virtual payment provider Corporate Spending Innovations, formerly CSI GlobalVCard, which is a new boost to its client acquisition engine.
Morhous pointed to an aggressive digital marketing strategy as the primary entry point for CTGo and he said the company would “leverage the digital resources of our retail business to bring [smaller business travel clients] into the tool and the system.” He added that because CTGo is tied to Corporate Traveler, the company has a force of about 70 business development managers across the country that will feed small business leads into the system. “We aren’t looking at our tenured people to go hunt for these accounts, but they do come in,” he said.
Satisfying the Small Market
Both Morhous and Fichtelberg voiced doubts about addressing the small market with a box of stripped-down enterprise offerings, implying a warning for would-be users of, say, a CWT. “Amtrav built tools and service offerings by listening to these types of clients and then built up to manage bigger enterprise clients,” Fichtelberg said. “Some of the larger TMCs strip out functionality from larger enterprise tools to serve this market. We went the other way.”
CWT’s approach to serving the smaller segment, however, is evolving as it engages more with this type of client. “Travel-in-a-box does work for a certain, small percentage of the population, but there are a lot of folks out there that have more complexity,” Scott said. “We’ve adjusted. We initially were getting customers on the lower end of our floor. As we’ve become more flexible, we’ve seen larger, in this context, start to come onboard.”
CTGo’s competitors “fall into two camps: First, a great technology solution that looks cool but may not be good with handling disruptions or even the changes that come with routine business travel. Second, large TMCs accustomed to handling $200 million programs that now want to dabble in this small business space.”
With complexity comes cost. He said advanced policy configurations or even pre-trip approval could come at a cost to customers. “Complexity comes more on the configuration side. We’re dealing with that ramification,” Scott said, adding that CWT may look at a multi-tiered approach to handle more and less complex clients.
Morhous said those segment-specific pain points are actually differentiators for CTGo. “Unlike [the larger TMCs],” he said, “FCM has a premier SME-focused business in our Corporate Traveler brand. We’ve done a great job supporting SME customers, and now we have a great mobility path: You can start off here as a five-person shop with very light booking or very light reporting or light duty of care. As you mature, you can move into a dedicated service model within Corporate Traveler.”
All the traditional players know they have additional competition from emerging technologies pursuing the small market. Most believe their maturity will play a key role in their success. “How many of these venture-funded providers have turned a profit?” asked Fichtelberg.
Miller said new entrants have actually underlined Serko’s innovative core. “We pursued this content strategy early and always put the traveler first. We are now seeing others embrace a similar philosophy, but Serko actually has market share.”
Fichtelberg, too, thinks new competition in the small market will highlight the strengths of experienced players. “The $78 million raise puts TripActions, for example, in the position to invest a lot in marketing. That will increase awareness in the space as a whole,” he said. “In the end, though, I believe that this market is risk averse and will be more inclined to go with a company offering similar alternatives but with a proven track record.”
—Additonal reporting by Jay Boehmer