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.
Digital disruption has been slower to develop in business travel than in leisure, but in the last few years the pace has quickened, driven in part by startups that have quickly gained traction. And the large, legacy travel management companies are also investing in innovation – through R&D, acquisitions and partnerships – to stay on top of the latest digital solutions.
For the second piece in our series on business travel we talk to some of these TMCs to find out more about their innovation strategies – and the challenges of adapting at scale.
With nearly $600 million pouring into business travel startups in the past 18 months – the bulk of that ($455 million) going to TripActions – it’s no surprise innovation is a top priority for the legacy TMCs.
Companies such as American Express Global Business Travel (GBT), FCM Travel Solutions and CWT recognize the need to continually update their platforms and processes as new technologies emerge and customer demands evolve.
But doing that can be challenging for large multinational companies with thousands of clients and revenues of more than a billion dollars annually.
“Everybody that sits in our category – this global, large travel management space – they all struggle with what innovation is and how you actually do it and how you execute on it,” says John Morhous, chief experience officer for Flight Centre Travel Group, parent company of FCM Travel Solutions.
“In general big companies have trouble reinventing themselves. That’s not specific to travel per se. It could be any industry.”
But size, says GBT’s vice president of marketing and product strategy, Evan Konwiser, can also be an advantage.
Konwiser says GBT’s network of 17,000 travel professionals in more than 140 countries and revenue of more than $30 billion annually give it the reach and cash to invest in innovation both through technology and through strong relationships with suppliers.
But he acknowledges much of GBT’s research and development focus is on investing to counteract the complexity that comes with its scale.
“That means really focusing our tech investment on ways that we create a single global platform to harmonize how we operate across the world and ultimately reduce some of the natural complexity that has come in our business when an organization like us grows as fast as we have,” Konwiser says.
Startups such as TripActions and TravelPerk have made names for themselves in the past few years, in part, by touting their focus on the needs of the business traveler – a priority they say has been missing from the legacy TMCs.
But those we spoke to say that’s simply not true.
“The conversation of focusing on the traveler has been around for quite some time,” says Brandon Balcom, senior director of Open Innovation at CWT.
“I appreciate where everyone is looking for a new angle into the space. Certainly there’s always more that can be done for the traveler, because there will always going to be some level of conflict as a company looks to save money and also give people the best experience possible. That’s where innovation is so important, to find the path to achieve both at the same time.”
To emphasize its commitment to the traveler, CWT has redefined its business proposition as B2B4E – business-to-business-for-employees.
“Because even a company that wants to save money, if people aren’t taking part in the program – and in today’s world it’s so easy for them to go elsewhere – and you lose the traveler, then you’ve lost everything. So you have to have that component, and we’re all going to continue to battle it out for who does it best,” Balcom says.
The weapons in that battle come in many forms – a mix of build, buy and partner for all of the large TMCs.
In November 2018, GBT entered into a two-way partnership with Lola.com, a corporate travel management startup created by Kayak co-founder Paul English.
The deal gives Lola access to GBT’s content and exposure to its worldwide client base and gives GBT a simplified, self-service solution to attract smaller companies that have less complicated needs – positioning it to compete with TripActions and TravelPerk in serving this space.
“As we bring our products to more customers… there still was a gap at the bottom where our products were architected to be very flexible and we needed a solution that traded off the flexibility for just an amazing, simple-click user experience. And that’s what Lola was building and that’s why they’re a perfect partner,” Konwiser says.
For FCM, it found one solution in Sam, a travel assistance chatbot-based app that provides itinerary management, push notifications and live chat between consultants and travelers.
After taking a 25% stake in 2017, Flight Centre Travel Group bought the developer behind Sam for about $3 million in March.
Morhous says this represents his company’s typical investment route.
“If something really fits our business and becomes core to what we do, that’s the general pathway we follow – commercial deal first, some sort of investment or development plan or equity seed and then potential full acquisition after that if we really have a strong fit with the overall partner,” he says.
One that may be in the pipeline for FCM is Upside Travel, in which it took a 25% stake in April.
“It’s right in that wheelhouse of TripActions, TravelBank and TravelPerk and all of those guys directly focused on that more global, self-service environment, and we’re working with them to bring their technology into our overall home,” Morhous says.
Both FCM and CWT are also partners with Plug & Play’s Travel and Hospitality program, giving them access to early and growth-stage startups.
Balcom says through this partnership his team evaluates more than 200 startups every year, and they also get a broad view the startup ecosystem by paying attention to Plug & Play’s other verticals such as fintech, mobility, cybersecurity and others.
CWT also hosts “client innovation workshops” at Plug & Play offices, where CWT customers can provide input early in the vetting process.
“We have the startups pitch not to just us but also pitch to our customers and see where the customers lean in, so we’re much more informed as we start a new endeavor and engage perhaps with one of these startups,” he says.
The TMC representatives agree the entry of aggressive, inventive startups into the business travel space is good for all stakeholders.
“We are fortunate to be in a competitive marketplace and that drives the innovation across the ecosystem both from our large TMC competitors, from the OTAs, from the venture-backed startups,” Konwiser says.
“It drives a lot of innovation, it drives a lot of focus on the customer and it makes sure we all stay super sharp in delivering the best products and services to our customers.”
But they also concur that while technology will continue to add efficiencies and simplicity to the services they provide, it will not eliminate the value of their agent-provided assistance.
“Not everyone wants to talk to an app. Some want the comfort of working with an expert. And that applies to every industry across the globe that has had some level of tech disruption happen to them,” Morhous says.
Balcom says with the addition of capabilities such as artificial intelligence, travel counselors will only become better – and more valuable – for business travelers.
“If you can find the right blend of all of those things, your human capital will become a competitive advantage because the level of quality assurance humans can add into the variety and complexity of different problems travelers have at any given moment, that’s a win,” he says.
Adds Konwiser: “Our strategy is to layer automation and AI to make the self-service more confident and to make the agent service more confident and more efficient.
“People still need to walk through airports and go through security, go through customs and border protection. And they still need to deal with thunderstorms and earthquakes, they still need to get home in times of emergency when god forbid something happens to a loved one. … There is a caring capacity in that, and there will always be times of human touch and need. And those are the moments of truth.”