First Free Story (1 of 3)Join Skift Pro
Companies within the sharing economy, such as Airbnb, Uber and FlightCar, are looking to cater to managed business travelers because the opportunities are significant.
Euromonitor International estimates that managed business travelers spent US$175 billion globally in 2013 on travel services through travel management companies.
Managed business travelers are business travelers that have to abide by travel policies set by their employers and usually have to book through a travel management company. Because of the rules surrounding their travel, the sharing economy companies not only have to have to win over the actual business traveler, but also their employer.
If these companies can adapt to meet both of their needs, it is likely that they will experience growth in this segment but not necessarily to the degree that they eliminate traditional suppliers entirely.
Corporations Are Already Testing the Waters
Despite the many issues facing the sharing economy, such as regulatory and tax issues, managed business travelers have been using the services of these companies. For example, in May 2014, Google stated it had spent $2 million with Airbnb in the past year. Concur, a software provider for business travel and expense management, has seen the spending on Airbnb through its software quadruple since 2010.
Miriam Moscovici, Director of Emerging Technologies for BCD Travel, a travel management company, observes that clients with entrepreneurial and innovative mindsets, such as technology companies, are more likely to embrace the sharing economy companies and travelers tend to use these services for specific reasons, such as saving money, as alternatives to sold out hotels or for unique space needs.
Ensuring Safety and Security Is Imperative
Employers are obligated to provide a safe work environment for their employees, which is known as “duty of care,” and extends to business travel. Stewart Harvey, Group Commercial Director of HRG Worldwide, a travel management company, says “almost every corporation that we deal with has safety and security as front and center in their tenders for travel.” Because the sharing economy companies are marketplaces that rely on people to provide the service, the main obstacle for these companies is to assure corporations that their employees are safe and secure while using their services.
Simple Integration Is Another Must
Managed business travelers typically have to book through a travel management company which accesses suppliers through a global distribution system. At this time, FlightCar is the only sharing economy company that has an agreement with a global distribution system (it signed with Worldspan in December 2013). However, it is not necessary for these companies to be in the global distribution systems. Harvey explains that as long as these companies can harmonize with existing processes and standards for booking travel, corporations will be open-minded about working with new suppliers.
Growth Depends on Adapting
Corporations will certainly evaluate the sharing economy companies as potential suppliers, and some have embraced them already, but the sharing economy companies will have to overcome the obstacles of safety assurance and simple integration to grow in the managed business travel segment. There are likely smaller issues, such as cancellation policies, that may need to be modified as well. Overall, though, these issues are not insurmountable and it is likely that the sharing economy companies will be able to adapt.
Airbnb took steps to adapt to business travelers and their employers, which were announced on July 28th, 2014. The first was to appeal to the actual traveler with a new website. The listings on the website are curated to appeal to business travelers with features such as Wi-Fi, instant booking and no shared spaces. The special website may also help unmanaged travelers, those who do not have a standardized booking policy, because of its curation.
To meet the employers’ needs, Airbnb announced its integration with Concur’s TripLink product, which will go into effect this fall. This will allow travelers to book directly with Airbnb, but have the charges automatically added to their expense reports for reimbursement. The connection with TripLink will ensure that travelers are booking according to their corporate travel policy and let the employers know where their travelers are—a key step to address safety and security concerns. It is also an example of the simple integration needed to appeal to the managed business travel segment.
Airbnb said that it is working with 35 companies on managed business travel bookings. These include Salesforce, Eventbrite, Evernote and fellow sharing economy company, Lyft.
…As Well as Uber
Uber followed in Airbnb’s footsteps with an announcement to court business travelers in the same week and its plan is very similar. It created the product, Uber for Business, with a new website (which is not up yet). Employers can create a business account and invite employees to that account. The account allows employees to use Uber while charging rides to their employers. The website will also have a dashboard for the corporate travel managers to monitor the expense data and of course, their employees. Again, this address the needs of the business traveler and their employers for safety and ease of use as well as appealing to unmanaged business travelers with a custom website.
Like Airbnb, Uber signed a partnership with Concur to work with its TripLink product for companies that would prefer to use TripLink to integrate with their existing travel management instead of setting up a single account on Uber for Business
Travelers Need to Come First
Although the sharing economy companies are facing regulatory battles in some of their markets, these are not expected to play a significant role for some companies in their decision on whether or not to work with them as suppliers. A bigger risk with the business model may be that the sharing economy companies, as marketplaces, have to balance their own needs, the needs of the traveler, and the needs of the actual service provider. For corporations, their travelers come first. If sharing economy companies cannot assure corporations that they will always put the needs of the traveler first, especially during times of crisis, they may not be able to gain significant traction.
If sharing economy companies adapt their services to the specific needs of managed business travelers and positon themselves as dedicated partners to corporations, it is likely that these companies will gain greater acceptance as suppliers within the managed business travel industry but not to the degree that they will make traditional suppliers obsolete. There will be corporations and managed business travelers that will continue to prefer traditional suppliers for many reasons, including guaranteed security, standardized service, and loyalty programs.
Euromonitor International is the world’s leading provider for global business intelligence and strategic market analysis. We have over 40 years of experience publishing international market reports, business reference books and online databases on consumer markets.
We deliver market research solutions to support strategic planning for today’s increasingly international business environment. Our research offers in-depth market analysis on consumer goods and services industries worldwide, as well as economic, demographic and socio-economic data and insight on countries and consumers.