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Chicago, IL - August 6, 2019
Business Travel Trends and Forecasts Toronto
Westin Copley Place - September 10, 2019
Fragmentation and consumerization are changing business travel, and travel management companies are emphasizing services that go well beyond their traditional functions of ticketing. Established TMCs have doubled down on innovation and traveler engagement, and many are looking to startups and other tech providers to drive growth in this key aspect of the TMC value proposition.
Those setting their sights on partnerships with tech providers include the mega TMCs, all of which have established business units to identify partners and manage the growth of those alliances. The structures of those relationships vary, but all aim to tap into innovative ideas, to add their reach and scale to bolster the startups' concepts, and to improve the experiences for corporations and their travelers.
An Unprecedented Opportunity
"Technology has created an unprecedented opportunity for TMCs to meet the needs of the modern business traveler and travel manager by developing truly integrated, traveler-centric products and services," said American Express Global Business Travel VP of marketing and product strategy Evan Konwiser. "There are new entrants to the industry every day bringing fresh ways to shop, track traveler data and preferences, and more." Amex GBT made a tech partnership splash in November, when it announced a five-year exclusive tie-up with Lola, a tech-forward, Boston-based startup that offers a mobile travel booking and concierge app designed for use by smaller companies. The partnership enables Amex GBT to offer Lola's small and midsize enterprise-focused technology to clients in the lightly managed travel segment—a key area of focus for GBT, according to Konwiser, who helped lead negotiations for GBT.
Many startup travel tech solutions focus on traveler convenience, a goal in line with that of TMCs, which have shifted toward a more predictive, service-based value proposition, noted BCD Travel director of product planning Irina Matz. "We've seen this through automation, artificial intelligence and even something as simple as developing software for mobile devices and wearables," she observed. "TMCs that embrace and leverage this technology will be better able to serve their clients and the end traveler" by driving desired traveler behavior through seamless experience, which in turn leads to operational efficiencies and optimized program spend, she added.
BCD's relationships with third-party tech providers center around a marketplace platform, dubbed SolutionSource, through which the TMC offers clients access to service provider partners. Launched in early 2018, SolutionSource was conceived in response to the quickening pace at which tech providers were entering the travel space. The marketplace model enables BCD to offer its clients flexibility to choose providers, said Matz, who heads the program. "No two travel programs are the same, so instead of forcing our customers to conform to a preselected, single-source technology, we've integrated a variety of technology solutions so they can select what best complements their program," she noted.
Meanwhile, CWT strategy is to get involved early with promising tech partners. A deal with startup accelerator Plug and Play gives CWT access to early-stage companies in the travel space. Once CWT decides to work with a startup, a dedicated CWT innovation team based in Silicon Valley shepherds the young firm as it develops its offering and tailors it for the managed travel market. "We take a very deliberate approach to identifying startups and how to find the next, best thing out of the pool of those types of companies," said CWT senior director Brandon Balcom, who leads the company's open innovation team. "If you get to a partnership sooner, you can architect something better right out of the gate. From there, we continue to invest in it, and our customers eventually benefit" from that startup's service, he noted.
Making a Match
With so many startups entering the market, it can be a tall task for TMCs to pick which third-parties to work with. Matz said, "The first question we ask when looking at a potential SolutionSource partner is: Do they have a clear value to the marketplace and meet specific needs for our clients?" Companies that meet those standards undergo a comprehensive review to determine how their solution works and to ensure it can be integrated across BCD's platform, she added.
With access to [startups’] data-driven resources, TMCs can better learn about a traveler base over time and make decisions and recommendations built around individual needs.”
Amex GBT similarly places a premium on solutions that meet existing client needs and can be delivered with relative ease. The TMC explores the viability of a startup partner via what Konwiser characterized as an "extended ‘dating' process." GBT assesses proof of concept and whether the technology can indeed solve the problem—or problems—it claims to, as well as whether it can play nice with GBT's existing delivery platform. "A nice piece of tech in a vacuum doesn't do anything," he said. "It has to be integrated and implemented."
Leadership is another important factor. "Talent is always a top priority," Konwiser said, noting that GBT views the addition of talent via partnerships as no different than hiring directly. "That is important because nobody here works in a silo and talented people have a multiplier effect on what they can do inside our organization." The Lola deal serves as an example; the startup's founder and chief technology officer, Paul English, also co-founded metasearch giant Kayak and served in executive leadership roles there until Priceline acquired the company for $2.1 billion by in 2013.
But innovation partners aren't limited to startups working in the business travel space, Balcom noted. CWT's partnership with Plug and Play brings the TMC into contact with a wide range of startups, many of which begin with their sights set elsewhere. "We see a lot of companies that are initially focused at the leisure travel space or even fintech whose products could have a great business travel use case," he observed. Such startups often can benefit from zooming in on business travel and leveraging CWT's standing within that sector, Balcom added. "We can offer a startup access to the industry and to our customer base," which can serve as a ready-made audience to help drive growth quickly out of the gate while allowing the startup to focus more on perfecting the platform and less on scaling up the business side, he noted. Startups that pivot from the consumer side often also bring a traveler-focused perspective to the table. It's that seamlessness and service that TMCs are eager to capture.
What's in Demand
So what types of tech are the most transformative? Konwiser cited AI and machine learning tools that optimize preferences and customize for businesses and their travelers. "With access to these data-driven resources, TMCs can better learn about a traveler base over time and make decisions and recommendations built around individual needs," he said. AI also enables TMCs to shift employees from manual processes to higher-value services, such as customer interactions, resulting in a higher-quality experience for the client, he added.
Matz added blockchain, chatbots, virtual reality and the Internet of Things to the list of promising travel technologies. Balcom said CWT has seen success with fare tracking and price prediction startups, including companies that initially targeted consumer travel. Other services with promising applications on the corporate side include automated flight delay compensation and bots that can make proactive recommendations to travelers shopping for hotels or flights, encouraging them to book within travel policy parameters. "Those types of services offer a real opportunity to drive efficiency and productivity while also catering to the needs of the individual traveler," he noted.
Once the TMC identifies the right tech partners and completes the so-called courtship, it's time to bring trusted travel buyers into the innovation lab. The ultimate end users of a startup's service, they provide valuable input on functionality in the "real world."
CWT's innovation team lets its corporate clients browse from among its tech partners and pick the services they're interested in exploring via experimental implementations and pilots. "Clients can step in and learn about a feature, gain an understanding of the opportunities and then attach themselves to the right ones," Balcom said.
BCD's marketplace approach with SolutionSource also incorporates travel program input when fine-tuning a third-party service. "We are continually working with our partners to identify opportunities that streamline and optimize their offerings to our clients," Matz noted. "There have been cases when clients requested capabilities to address specific challenges. In those cases, we work with our partners to assess the viability, feasibility and investment required to create solutions that meet these needs."
But when serving as a matchmaker between startup partners and corporate clients, TMCs are careful not to be squeezed out. Balcom noted: "Buyers are smart. If we don't add value that's noticeable, they're just going to go directly to those companies to cut out the middle man." A TMC needs to offer "something more than a buyer would get from a direct relationship" with a startup, Balcom advised.
BCD's marketplace, for instance, positions the company as an ever-evolving one-stop shop and clearinghouse for the latest innovative third-party services, said Matz. "The SolutionSource model lets us bring in new partners quickly and provide many options for our clients to customize their programs," she noted. "We want to be agile and continue to add new partners to the marketplace as great new solutions emerge."
Walking the Line
For startups in the business travel space, partnering with an established TMC can offer a clear path to scale and a ready-made audience of potential customers. But in pushing products and services that could disrupt the industry's TMC-centric model, those startups must walk a fine line, offering innovation that complements TMCs' services and commercial models rather than interfering or devaluing.
Rocketrip CEO Dan Ruch, whose startup has seen success with many TMC and travel technology partnerships, told BTN the company still gets pushback from potential TMC partners who view the product as an interloper in traditional TMC commercial agreements. In its simplest form, Rocketrip encourages travelers to spend less on travel even if it means staying with a friend, and that, he said, means lower returns for the TMC. "I've literally sat around a table with a corporate client and a major TMC, where the TMC told the buyer that an airline partner wouldn't allow the agency to properly leverage our product." The buyer asked the TMC to bring the airline into the discussion, at which point the TMC acquiesced to the buyer's request to enable a successful Rocketrip deployment. "TMCs that work to protect financial territory instead of serving clients may win the battle, but over the long term, they will eventually lose the war. We should all be focusing on enabling customers to build better travel programs."
Startups are ready to play on this field, though, and one way to do it is to focus on narrow functionality, noted Daniel Senyard, CEO of Shep, a startup designed to reduce booking leakage via a browser extension that applies corporate policy restrictions to consumer travel sites. While the company does sell directly to corporate clients, it also has targeted the TMC distribution channel and last year struck a reseller deal with Flight Centre Travel Group. "Travel management is entering an era of microservices, not monoliths," noted Senyard. "We believe that to be a successful startup in the space, your best bet is to find a spot in the ecosystem that is underserved, innovate and integrate into the existing stack, and then learn where to grow to from there."
Because Shep's service captures information a corporate travel program would not be able to get from its TMC—in this case, out-of-channel bookings—it doesn't step on any TMC toes, Senyard observed. "Neither of us can provide that total picture alone, so it's a very natural fit. In addition to integrating our leakage data with TMCs' reporting, they have the tools and the people to take action, whether it is providing duty of care, enforcing policy post booking or renegotiating supplier agreements based on the improved view."
Another company aiming to innovate in business travel without obviating TMCs is Roadmap, a Europe-based tech specialist that builds traveler-friendly mobile trip management apps. Though Roadmap sells only directly to corporates, TMCs remain a key part of the equation, according to CEO Jeroen van Velzen. "We believe in ‘and' not ‘or.' The TMC will never disappear," he said, adding that Roadmap's various corporate clients have relationships with all major TMC players. Roadmap draws booking and traveler data from a given client's TMC into its own app, where it's presented in one central location. "We help the buyer get in control of their program by giving them control over traveler communication and insights in behavioral data," he noted. "We don't fulfill travel distribution functions. We just simplify the process, liberate the data from the incumbent silos and overlay it with a very sexy corporate interface."
While working with clients' TMC partners does sometimes present "strategic, commercial and operational challenges," he said, those challenges can always be overcome by keeping buyer and traveler needs paramount. Shep also has had to navigate pitfalls when collaborating with TMCs. "Because we can move quickly, it can be easy and tempting to be swayed by big, influential partners," Senyard said. "Most TMCs we talk to are very excited about what we could become and have slightly different visions for our road map. In order to not get distracted from our core path, we have to stick to our beliefs and convictions while still being a good, collaborative partner."
In the world of managed travel innovation and traveler engagement, the flip side is also true, according to Amex GBT's Konwiser. Working with shiny tech startups that distact from core objectives or that don't integrate well isn't useful because TMCs must focus on the same goals they've had for decades: "Supporting travel managers as they work to keep travelers productive, happy and safe while managing costs."
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