Countering critics who say innovation in corporate travel lags that of leisure travel, Troovo CEO Kurt Knackstedt sees a vibrant B2B marketplace. He makes his case by pointing to competition and stepped-up technological evolution.
I’ve never worked for a leisure-focused travel agency or online travel company. I did have three years with a global distribution system operator during which I collaborated closely with travel providers of all shapes and sizes, but that’s about as close as I came. Outside of that, I’ve done two stints at global travel management companies plus a few years as a consultant and corporate travel global category leader. Now I lead a technology company highly focused on the corporate travel and payments ecosystem, so take what I’m about to say with the appropriate pinch of salt.
My point for this view from the field is simple: if I never read another article trying to argue that corporate travel is behind the times, archaic, uninspiring, slow or not as dynamic as leisure travel, it will be too soon.
I am 100 percent confident that this point of view is well out of date. On the contrary, corporate travel is experiencing a renaissance and dynamism that puts leisure travel to shame. It is likely to extend into 2020 and beyond. Let me expand on why I firmly believe this.
First, from an agency perspective, leisure travel is just a few Goliaths at the top surrounded by an army of Davids — the latter, however, without any slingshots. Expedia and Booking Holdings are the giants of the leisure travel industry. They buy any potential upstart competitors. Expedia owns 23 companies and Booking Holdings owns another nine mega-online brands. Together they book over $50 billion in travel each year. From a leisure perspective, there’s a better than even chance that if you searched for or booked a holiday online this past year or two you used a site owned by one of these two companies.
In the corporate agency space we have a huge number of providers to choose from. Indeed, the mega TMCs book a lot more volume in aggregate than the Expedia/Booking juggernaut. But in corporate travel you don’t have to go too far down the ladder to find three or four TMCs that, when combined, are bigger than the two largest. Try finding that in the OTA/leisure space.
Second, corporate travel has diverse and highly motivated technology companies. There is a huge number of players competing fiercely for the corporate travel dollar: online booking tools, expense management systems, mobile solutions, automation providers, TMC/online corporate agency hybrids, business intelligence platforms, chatbots, payment solutions, distribution channels and so on. Competition breeds innovation and a dynamic marketplace is starting to bear fruit for corporate travel.
Third, a significant catalyst driving the newfound focus on corporate travel is the individual business traveler bringing us to the attention of the world’s private equity rainmakers. People want to get as much out of their work travel as they do on their holiday. That means there is a huge demand for innovation that can be driven by the corporate travel program. In leisure travel, the concentration of power in the hands of just a few providers means the individual is basically powerless to drive change. In corporate travel, however, the individual traveler has the leverage of the company that’s paying for his or her journey. That provides the impetus for change and the investment required to make it happen. There isn’t anything more exciting than that.
Fourth, if it wasn’t for business travelers, we’d all be flying in lousy seats. Companies want to see a return on their investment for the money spent on travel. Yes, the debate around travelers’ comfort versus the price to enjoy that comfort continues apace in our industry. But there is a reason why airlines constantly and aggressively invest in the business class experience: it has value.
When there is value in something, the ability to extract revenue and margin is far greater than when it’s a pure commodity. Leisure travel is a commodity for the overwhelming majority of travelers. In business travel there is pressure to generate an ROI on the dollars spent and therefore a far greater incentive for suppliers to innovate. That leads to greater interest among investors.
Last, the rules are changing. There have been numerous attempts to reshape the corporate travel ecosystem during the past two decades. The reason many fizzled out is that they focused on either technical or commercial benefit. This resulted in plenty of technically brilliant ideas with no ability or attempt to change the commercial model. In turn, efforts to redesign financial flows didn’t have the right technical solution or infrastructure. We need to combine technical and commercial benefits to improve business travel. This is now where we find ourselves.
As we head into 2019 our industry has several new technical innovations and concepts that, when coupled with a value-based commercial model, will drive real change. See NDC, virtual cards, corporate traveler incentive programs, API-interconnected solutions, robotics, chatbots and AI, among others. All this is why I predict the corporate sector will shape the travel world.
• Kurt Knackstedt On Fintech And ‘Distributech’
• Why Corporate Clients Share The Blame For Slow Business Travel Innovation’
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• Pedro Ceron On Creating The 21st Century Managed Travel Platform
• Simon Barker On Whether The Corporate World Is Ready For New Technology