Covid 19 or not, business travel industry is facing an untangled and rampant disruption

At a glance

International travel departures have more than doubled from roughly 600 million to 1.3 billion over the last two decades (1). Asia has become the epicenter of growth for business travel.

The standards of the industry are rather low and open the door to a rampant disruption.

The conjunction of three phenomena : Asia progression in the market, a new breed of travelers and new travelers’ mindset engendered by digital habits, pleads in favor of a fresh “people-first” perspective on business travel, one that puts the overall wellbeing and satisfaction of the employee ahead of policy and program considerations.

Re-shaping travel tools and policies to better balance cost and compliance controls with employee flexibility and freedom can also help reduce the friction of business travel.

Re-thinking its marketing communication approach is an opportunity for companies of this industry to equally challenge their current strategy

Key Figures

A Booming Market

Business travel spending will reach $1.7 trillion worldwide by 2022, up from $1.33 trillion in 2017 (2)

China and the U.S. were the top markets in terms of business travel spend, followed by Germany, Japan, and the U.K

Driven By Three Engines

Asia accounts for more than a third of the world’s $1 trillion business-travel sector, and the region’s growth is accelerating. It is expected to expand four times as quickly as the North American market and more than twice as fast as the European market ⁽³⁾

Millennials spending will reach nearly 50% of total spending on business flights ⁽⁴⁾

The meetings and events sector, is another driver of growth and optimism ⁽⁵⁾

Main Facts

A Pivoting Industry Due To A Power Shifting

More people are venturing around the globe in pursuit of commercial ambitions than ever before. The bill for the industry dynamism is an unprecedented pressure on prices.

Integration is limited along the customer journey. Then, an increasingly technology-driven generation of road warriors, expecting higher standards challenge the industry to focus more intensely on the user.

New travel options and digital technologies are emerging to help keep business travel productive and enjoyable. So, Titans of the industry are now investing in improving their own platforms, incubating startups while some travel providers innovate.

Market Drivers, a Call For Change

On offer side

The business travel platform TripActions, joined the global unicorn club with a valuation in excess of $1 billion; a recent funding round took that valuation to a staggering $4 billion.

Companies like TravelPerk emerge to make the booking process easier, spend management platforms like Spendesk have made paying for travel simple.

On demand side

Employees are demanding more flexible business travel policies, and better tools.

More companies are looking for new ways to not only boost employee productivity, but to use business trips to help inspire their employees’ creativity and help them come up with the next big innovative idea.

Inibitors, when Venerable Sounds With Vulnerable

Business travel is a conservative industry (outdated technology, in sharp contrast to consumer travel, siloed, out past technology).

• Business travel programs are largely outdated, frustrating employers and employees alike.

• Current online systems or apps are not easy to use.

All managers agreed that, by operating in silos, key industry players limit the value they can deliver to customers. Rather than sharing information about passengers and coordinating to provide them with the most compelling offerings in the most appealing environment possible, travel retail players continue to go it alone in a fragmented market.

Yet the sector is fragmented and complex, and it remains largely undisrupted yet. And, the current economic model isn’t profitable enough to fund the kind of innovation needed to transform the experience.

Major Trends

Business Travel Slowly Evolves To Become People-First

With the increased awareness of risks related to tax and immigration compliance, cost, and security, all types of work-related activities performed cross-border and even cross-state within a country are under scrutiny.

Airlines are also adopting technology that will enable personalized, so-called “dynamic” pricing calculated in real time based on a wide range of factors. Besides cabin class and ticket-purchase timing, the personalized tech may take into account your corporate agreements, elite-tier loyalty benefits, and other discounts.

Business travel startups are transforming the industry, like Lilliputians surrounding giants, introducing new uses.

Into the corporate mind, travel becomes a more strategic and people oriented topic

The standards required by corporate clients on service quality, data security and storage, as well as GDPR compliance are very high .

CFOs play a greater role in business traveler happiness

A new breed of corporate traveler. impact the decision making of these stakeholders in the coming year.

Innovational travel in the meetings sector is rising.

Corporate travel policies are now seen as a “significant” or “growing” factor in retention. Worker frustration in turn can dampen morale, performance and productivity.

Travelers make hear their new voice

The sharing economy moves into the C-suite : services like Airbnb and Lyft have earned growing acceptance among business travelers (7)

Business travelers demand an end-to-end experience : the travel experience is the sum total of many service touch points, all which must be executed successfully and frictionless to produce a happy business traveler, from airlines, hotels, ground transport companies to travel agencies and duty-of-care providers

Mixing business and leisure, AKA bleisure, is here to stay and will grow

Digital, personalized interactions will predominate, with smartphones used not just for tracking and managing flight information but also for buying ancillary services such as hotel rooms and ground transportation.

Customers’ attitudes, behaviors and preferences

Attitudes

• When it comes to establishing and growing the relationships that drive businesses forward, there’s simply no substitute for connecting in person. Ultimately, the importance of these face-to-face connections is the very reason business travel exists (want o meet not want to travel)

• Travelers value employers who support business travel and traveler flexibility, both of which can impact employee satisfaction and work-life balance as well as attraction and retention.

• Travelers believe that it is important for their employers to invest in technology to support them in timesof emergency or travel disruption. But they are conflicted about location-detecting technologies that they feel might infringe on their privacy.

Behaviors

• Travelers tend to model their behavior around booking and expenses after those who are approving them.

• About travel policy, business travelers say that flexibility they have, or don’t have, when it comes to business travel is dependent upon who is approving it.

• Most travelers report not following the rules all the time (see Annexe B). There are many reasons travelers report booking travel outside of their company policy. A top reason across all countries is to be closer to their meeting or event location. The US and France also say they book out of policy to stay in a safer location. Book out of policy to minimize any negative impact to their health and well-being.

• Travelers responded favorably to things like having a percentage of the money they saved by booking within policy put into their paycheck and receiving bonus vacation days or paid time off.

Preferences

• Travelers are more swayed by comfort than loyalty – those whose companies allow for business class flights are approximately 20% more likely to be very satisfied with their overall travel program than those who are allowed to select their preferred travel provider.

• Flexibility is also an important factor in maintaining traveler satisfaction. While travelers certainly aren’t nearly as “very satisfied” with their policy if they are allowed to pay the difference, they still tend to have high levels of satisfaction.

• Travelers’ ability to select their preferred car rental provider is just as important for their level of satisfaction as hotel provider or airline.

• Choice is a key feature of very satisfied travelers. They are 94% more likely to be able to choose their preferred airline, 72% more likely to be able to choose their preferred hotel chain and more than twice as likely to be able to choose their preferred car rental firm than very unsatisfied travelers

New Expectations : Five New Must Have Emerge

• Premium Service – Amazon, Google, Apple, Baidu and Alibaba have raised customer experience and expectations to an entirely new level. At the same time, most executives experience the exact opposite when they travel; business travel is a disjointed, disconnected mess.

• Frictionless Freedom – Increasingly accustomed to the freedom of mobile apps and sharing economy services like Lyft from their consumer lives, they want the same for their business travel experiences.

• Human Experience- In the past, the primary driver of loyalty in the business travel sector was points earned for flights, hotel stays or car rentals. Today’s business travelers are increasingly looking for human experiences that make their trips more convenient and tailored to fit their preferences.

• Privacy on-demand – Capability to choose who, when, how and why I should accept if my employers can localize me, contact me… or not.

• Self Service Approach – Autonomy and ability to choose is a key request from business travelers

Product Offer

The Attack

Niche apps catch a part of the journey

• Lumo predicts delays before you fly, then offers alternative itineraries.

• Railguard helps businesses claim for train delays

• Rocketrip rewards employees for saving on business trips.

• Your Parking Space is an online marketplace for parking

Faster boarding and security check

Biometric technologies such as facial recognition may be used to speed boarding, check-in and other processes that today are still painfully slow and manual—like waiting in line at the gate to board

Solution for employees expenses

Divvy and Expensify, two forward-thinking platforms for employee expense reporting.

More efficient and productive processes

• Corporate card company Brex

• Corporate Uber account

• Access to video conference calling via UberConference

• Virtual access to HR benefits

• Wage Works for commuter benefits via TriNet

• Timekeeping app Function Fox.

Improved services

• Since 2010, Delta Airlines has focused on improving on-time performance and has since jumped from 15th to 3rd on that metric among national carriers.

• The airline now uses this record to differentiate itself from its main competitors.

• Most notably, the airline recently launched an on-time performance pledge to its corporate clients, promising travel credits if Delta’s on-time arrival and flight completion rates fall behind its main rivals.

Aggregator approach

• Flio integrates more than 300 individual airport apps into one.
• For each airport, it provides a vast array of operational information, from airport maps to flight time- tables to lists of shops and services; a one-click connection to airport Wi-Fi; the ability to make in-app purchases for further travel; as well as lounge access and selected promotions from featured retailers.

Innovative communication

• Kimpton Hotels + Restaurants has recognized the need of people first approach with its overarching Stay Human brand campaign

• Room 301, a social experiment in which successive guests staying in the same room are prompted to contribute to in-room activities for the next guest to discover.

Data and AI are entering the game

• Epteca is a prime illustration of data technology. The company partners with travel companies and suppliers of goods and services, and uses profile data and predictive algorithms that match context and intent to send targeted offers to travelers throughout their journey.

• Another example of using data to personalize offers is demonstrated by Optiontown, an online travel solutions portal, which collaborates with airlines to offer travelers class upgrades and other travel perks for a discounted price, thereby optimizing value both to travelers and travel providers. For example, the “empty seat” option with AirAsia X is gaining attention as a novel way to create a business class-like atmosphere in economy, by allowing travelers to purchase empty seats next to them at a dynamic price.

The reaction

Technologie and data to flexibly respond to the unexpected

One clear opportunity for improvement is when things go wrong. Flight delays, the resulting confusion–and lack of alignment between different sources of information (airport, gate agent, airline mobile app)–are among the foremost frustrations for business travelers.  When delays happen, access to timely, accurate information is imperative and business travelerswant it at their fingertips.

Some airlines are satisfying this demand by enabling real-time flight tracking on mobile devices. For example, the FlightView feature on the United Airlines mobile application, allows passengers to see real-time maps of flight paths and weather conditions thereby empowering travelers to make their own decisions over arrival times and potential delays rather than relying on official estimated arrival times. • •Amadeus has launched Amadeus Common Use Service. It allows airport staff to check in passengers from any location using a handheld device and to respond flexibly and quickly to any irregularities.

Concur has developed mobile applications for smartphones that enable business travelers to track and share their travel plans, manage expense reports, and book and change travel itineraries.

The SME as a stake : Both Incubents And Assaillants are Targeting SME

• Hyatt Hotels Corp. is paying more attention to SMEs. Under its new Hyatt Leverage corporate travel  program, small businesses can save up to 15 percent off the lowest available room rate when booking participating Hyatt properties. Hyatt Leverage also includes traveler tracking and spend management tools, which can help SMEs save money on their  travel expenditures.
  

• Best Western Hotels & Resorts’ has launched a new BW Groups RFP Tool. Created in partnership  with online hotel sales and booking provider HotelPlanner, the tool enables online requests for proposal management, email  notifications, auto-response, and reporting and analytics tools to simplify the group booking process.

• Taptrip is free-to-use online booking tool for small to medium sized enterprises (SMEs) allows customers to search and book travel, track employees and record expenses using just one platform

• TripActions, offering a customized booking experience for business travelers which uses machine learning technology to reduce the time to book each trip from hours to a few minutes.

Implications: a Necessary Upgrade

1. Travel companies can no longer solely rely on their traditional corporate contracting functions. They
   must also attract and engage business travelers directly
2. Reviewing and updating company policies around travel and the flexibility associated with it can be a
   way to make employees feel more productive on the road and not as exhausted when they return
   home.
3. Educating your travelers on policy and the options and benefits that are included for them when they
   book through the company booking channels can help them become more knowledgeable. This also
   may lead to incentivizing travelers to book their next trip within policy.
4. Travelers largely report taking cues on travel policy compliance from whomever approves their
   trips/expense reports. What can companies do to leverage this influence approvers seem to wield? One
   way might be to include policy refreshers in manager trainings.
5. Travelers are largely in favor of employers using technology to support their well-being on the road, but
   they aren’t comfortable with employers knowing their every move. Companies may have to do a
   balancing act to be sure travelers understand the importance of managing their travel through the
   company tools and providing the most up-to-date contact information so they can be contacted while
   on the road without feeling that “big brother” is watching them.
6. New customers with new expectations, facing a wide range of relevant offers, need to be addressed in
   new ways
7. The decision making relating to travel will become more ambidextrous including both CFOs and CHRs

Notes

(1) World Bank, 2019

(2) Forecats, Global Business Travel Association , 2019

(3) Asian Business Travellers, McKinsey, 2019

(4) Travelling With Millennials, BCG, 2016

(5) Global Business Travel, GFK/GBT, 2019

(6) BCG / TFWA, 2018

(7) Business Travel Ridesharing Survey, Skift, 2019