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.
But while managed travel solutions – both legacy providers and startups – continue to innovate, with a focus on providing an optimal user experience, leakage remains an issue faced by companies big and small.
Generally defined as bookings made outside of a company’s contracted TMC or online booking tool and/or without compliance to a company’s travel policy, leakage may account for nearly half of business travel bookings, it’s estimated.
According to Phocuswright 2017 report, Inside the Mind of the Modern Road Warrior, respondents in managed travel programs say they follow policy just 45% of the time when booking hotels, 47% when booking air and 49% for the type of booking method used.
For the fourth piece in our series on business travel – which will be divided into two parts this week – we explore why leakage happens and how data-driven solutions can help to manage it.
The source of leaks
A 2018 study from GBTA in partnership with RoomIt by CWT found that nearly 70% of travel buyers say that enforcing policy compliance is among the most challenging aspects of their job.
The reasons bookings are done outside of prescribed tools or policies vary. One of the most common reasons is a desire among business travelers to earn loyalty points, which may not be available through a TMC or online booking tool.
Another issue: Travelers accustomed to having nearly unlimited choices when booking their personal trips may not like the limitations of their company’s plan.
For example, Phocuswright’s U.S. Corporate Travel Report 2018-2022 found that only 26% of travel managers explicitly allow private rentals in their current policy and yet the Phocuswright U.S. Business Traveler Survey found 40% of managed business travelers said they currently use home-sharing services, regardless of the corporate policy.
“The other trend we noticed is that every supplier is on a mission to get as many direct transactions as possible,” says Andres Fabris, founder and CEO at Traxo.
“They are getting more aggressive with their loyalty programs and guaranteed lowest rates and web-only rates and incentives and upgrades and all these things they are using. That trend that is never going to stop.”
Business travel also is often done to attend a conference or meeting, yet access to the host hotel or rate may only be available when booking through a designated portal.
And then there’s the fact that – despite the ongoing innovation – some of the current options for managed travel lack the convenience and efficiency today’s business travelers demand.
“You can’t talk to a millennial or Gen Z-er and show them what the GDS looks like without them kind of laughing at you and saying what? It’s just mind boggling to them,” says Suzanne Boyan, operations coordinator for travel at consulting firm ZS Associates, during remarks on a panel at the Global Business Travel Association convention in Chicago earlier this month.
“I watched someone struggle through an online booking tool – ours – for an hour to book a flight, car and hotel. What a waste of time.”
Startups such as TripActions, Travelperk and Lola are focused on creating better user experiences, but Fabris says those solutions may reduce – but won’t eliminate – out-of-policy bookings.
“You may be able to chew away at the leakage … and get folks to search a little bit less often outside if you have a really intuitive, slick interface and lots of content. But I think you’re going to adjust it 10 to 20%, you’re never going to get to 100% compliance,” he says.
Traditionally, companies have used TMCs and online booking tools because that has been the only way for them to have access to data, which in turn enables them to fulfill duty of care, to negotiate rates with suppliers and to control costs.
But in recent years, many new options for accessing travel data have emerged.
Data Visualization Intelligence (DVI) works directly with corporations that have at least $5 million in annual air spending to aggregate all of their travel and expense spending from multiple sources.
This improved visibility, says CEO Brian Beard, allows travel managers to shift from a focus on “compliance” to a focus on data management as a strategy to reduce leakage.
“I do not think you can actually solve the problem completely. I think you can manage it and monitor it and the data sources that are out there give you a much more complete view,” he says.
And many of the newer players in this arena – companies such as Traxo, Shep, Tripbam, Freebird, Yapta, Rocketrip and DVI – provide complementary solutions, creating an opportunity for what Shep CEO Daniel Senyard calls a “fully managed open booking.”
“The ecosystem of travel is moving away from everyone looking at one company to provide every single solution possible for their travel stack,” he says.
“More and more companies are realizing that working with startups, doing pilots and integrating smaller players means they can get best-in-class functionality from multiple different vendors, and the travel manager then starts to weave together a better solution.”
An example of this is Boyan’s participation in a pilot between Traxo and United Airlines that allowed some of ZS Associates’ employees to book directly with the airline. Response to the pilot was so positive that Boyan says she is now rolling out direct bookings for all employees on United Airlines and with some hotel partners.
Through Traxo’s marketplace, which has more than 20 participating companies, ZS Associates’ direct booking data goes to TripBam for price assurance on accommodations and to Freebird for rebooking of flights that are cancelled, delayed or missed.
“We enable the same data workflows for these supplier-direct bookings that a TMC enables for the on-channel bookings made via the company’s booking tool or agency,” says Traxo chief commercial officer Cara Whitehill.
“So, just like a TMC can sync data to TripBAM, Freebird or even duty of care providers and expense management solutions for on-channel bookings, we can provide the same service for a company’s off-channel bookings made directly with suppliers, ensuring they have the same coverage and visibility to those bookings as they do for their TMC bookings.”
Access to that data enables a broader understanding and smarter decision-making for travel managers.
“We tell you market rate on every single booking and it’s all specific to dates, bed type, room type,” says Tripbam founder and CEO Steve Reynolds.
“With having accurate data and it being captured at a per-booking level for every single reservation, you can know the value of a hotel program and is it worth investment of time and effort.”
Technology is also improving timing when it comes to managing leakage. Rather than waiting weeks after a trip to identify rogue bookings through expense reports and credit card bills, the data can be captured and acted on in real-time.
Shep’s Senyard says this enables education in addition to enforcement.
“So when someone tries to book on their own, we can pop up a module to say if you book back in the online booking tool you’ll get the same option but it includes free Wi-Fi and late checkout, for example,” he says.
“Some TMCS have wanted us to be a big red stop sign – as soon as someone gets to Expedia, for example, to tell them to turn around. And we’ve pushed back against that and said if the employee should book in-channel, let’s educate them as to why, tell them what the benefits are.”
And yet, with so many tools available to manage leakage, adoption is still low.
A 2017 study from GBTA in partnership with Concur, How to Close Risk Management Loopholes, found only 20% of travel managers say they use technology to capture traveler data booked outside their travel program.
“This behavior keeps happening and it’s growing. So it’s either put your head in the sand or how do we manage this,” Senyard says.
“And whether that means getting people back into preferred channels or opening more options, we don’t care either way, but we can’t pretend it doesn’t exist anymore.”
*Check back in on Wednesday for opinions on how a mix of emerging technologies such as artificial intelligence, coupled with new business models, can improve business travel and reduce leakage.