Torsten Kriedt, Provectus
As we step into 2025, the corporate travel management
industry is on the brink of a profound transformation. This evolution, embodied
in "service sovereignty," signifies a shift towards empowering
businesses with customized, data-driven solutions that enhance control over
their travel services.
From Platforms to Sovereignty
Historically, travel management companies and online booking
tools have been essential platforms in corporate travel, especially for medium
to large enterprises. These platforms centralized travel management,
consolidated spend and streamlined processes across business units and
countries. This approach enabled companies to manage travel spend effectively,
maintain compliance and provide a corporate standard level of care.
However, this model imposed constraints. It created
dependencies and limited flexibility, often "managing" rather than
truly addressing diverse priorities. For example, bookings made directly with
suppliers or other aggregators were labeled "off-channel," despite
potentially offering better service. Travelers in smaller European countries
might need to book domestic rail, or find more affordable hotels independently,
questioning why flights booked through these platforms cost more than on public
sites like Google Flights, with added service charges.
Emergence of Services-as-a-Software
Service sovereignty challenges this centralized model by
allowing companies to tailor travel solutions to their unique needs, breaking
free from traditional constraints. A pivotal development is the emergence of
"services-as-a-software" as distinct from traditional "SaaS"
or “software-as-a-service.” This approach allows digital services to be
provided directly to corporates, bypassing the need for traditional
platforms. In the ideal state, they don’t rely on user interactions but provide
the service as a software autonomously.
Providers that support centralized programs as software,
regardless of the platform used, effectively compete with TMCs and OBTs.
Companies like Oversee and TripBam (acquired by Emburse), which pioneered price
assurance through data-driven services, illustrate this shift. While not yet
fully sovereign, as they rely on TMCs for some integration, they are positioned
to become autonomous service providers when a trip segment can be changed
digitally without TMC processing.
This trend is mirrored in the digital-first generation of
travel risk management providers like Safeture and Riskline, scope 3 emission
management through Thrust and Squake, behavior management services such as
signol, and visa or mobility compliance offerings such as VisaHQ and Workflex.
Most still rely on user interaction to get value from their
systems. And so far, they have relied on TMCs and OBTs to provide them with
travel data. As such, they are mainly add-ons to travel platforms, but with
effort and the right conditions, they can provide services directly as
software, especially if they were to partner with travel data ingestion experts
such as PredictX or Grasp.
Catalysts for Change
COVID-19, the reality of the New Distribution Capability and
supplier direct distribution tactics have exposed vulnerabilities in the TMC
and OBT models, prompting a re-evaluation of their roles. The pandemic
highlighted service gaps and financial strains, while NDC disrupted revenue
streams, increasing "off-channel" bookings or "leakage."
Re-platforming agent and traveler-facing solutions is
complex and costly. Add rising demand for diverse transportation options,
enhanced self-service capabilities, and sustainability in managed travel, and
the platform model is playing catch-up. The content and value-added services
landscape is becoming fragmented. Neither TMCs nor OBTs can assert themselves
as the definitive source of travel truth, creating space for unprecedented
innovation.
Advances in machine learning and AI have lowered the barrier
to capturing travel bookings in real-time and plugging in digital services that
add value to business units, countries, and travelers. This allows
digital-first players, unburdened by established commercial models, to leapfrog
established platforms.
True autonomous agents for orchestrated
services-as-a-software might not appear in 2025, but service sovereignty is
rising now. Watch for more specialized service providers selling directly to
large corporates rather than integrating into travel platforms. And look for corporates
to assign roles like business architect or service orchestrator within travel
management, integrating and managing diverse services, moving away from
reliance on traditional TMCs.
Evolution or Revolution? Evolution Wins in Corporate
Travel. Here’s Why…
As we watch service sovereignty rise in 2025, it will
represent a fundamental shift in how businesses approach travel management,
offering opportunities for those ready to adapt and risks for those clinging to
traditional models.
That said, the transition will be gradual. TMC and OBT
contracts, typically of 3 to 5 years duration, slow the pace of change, as
companies remain cautious about doubling expenditure. Many corporate travel
managers lack the resources and clout to make bold, unconventional decisions.
The question remains: How will the industry respond? Will
TMCs and OBTs collaborate with innovators to integrate into their processes (an
open model), or will they develop their own service-as-software solutions (a
closed model)? We can only speculate on which players will take which path and
how their clients will react.