Yet more business travelers are making booking decisions that clash with company policy, opting instead to stay at their own preferred hotel brands and use sharing economy services like Uber instead of corporate-mandated car services.
Dan Ruch, founder and CEO of Rocketrip, says that allowing business travelers to earn money or perks by choosing travel buying decisions in the best interest of their company makes for happier workers and smarter travel policies overall.
“This will be a little bit provocative,” Ruch told Skift, “but I think corporate culture matters way more in terms of what we’re building at Rocketrip than anything else. It’s not about saving 10 or 15 percent on corporate travel expenses, it’s about fundamentally creating a better world for employees to live in and work in. We can create a model where employees are loyal to the company they work for not because they’re forced to save money, but because we’ve opened that freedom of choice and we’re rewarding them for smart decisions.”
Skift spoke to Ruch about points of friction in the corporate travel ecosystem, why travel managers aren’t incentivized to make the best travel decisions for their travelers, and the upside to a company’s culture of empowering business travelers to make their preferred travel choices.
Skift: Rocketrip is taking an innovative approach to changing traveler behavior. Why haven’t larger companies and travel management companies tried similar methods to affect how their employees travel?
Ruch: Large companies move slower than smaller companies that are more nimble, so large companies either respond to innovation by acquisition or partnering. I don’t think it’s any different in this stage. I do think that the business of travel procurement is not a technological proposition. It’s a customer service proposition, how we buy and transact travel inventory, provide duty of care services, and negotiate rates.
There hasn’t been the need for much technological innovation in the space, and therefore the large organizations in the space don’t have the DNA to iterate and innovate the way that new entrants do.
Having said that, the companies that have the technical chops to build new products have done a remarkable job. Say what you will about Concur; I don’t think that their technology is inferior. Many people talk about how terrible of an experience the corporate online booking tools are. It’s a function of the workflow and how corporate travel managers force us to build products and services that cater to the concerns of the travel manager, meaning pre-approval, risk-assessment, and locking employees out of booking anything other than the lowest logical airfare.
Skift: It seems like the main focus for travel managers is often enforcing policy compliance and taking care of travelers when they’re in danger. But do you see any movement in travel management companies moving towards a model more focused on the desires of their individual travelers?
Ruch: We’re moving to a model where employee-centricity actually matters, because the rate of technological innovation in the consumer space has proven that technology can be very beneficial to the travel experience.
It starts with policy noncompliance. What’ll happen is more and more employees will just stop complying. They’ll start using Uber. They’ll start using Airbnb. They’ll start doing things that they believe are in their best interest and in the best interest of the company, not understanding why the corporate infrastructure for travel is set up the way that it is.
Skift: Travel management companies are extremely risk-averse. How are new services forcing them to come to grips with how employees want to travel?
Ruch: I can give you a really good example of that. What we’re seeing now is Airbnb following in Uber’s footsteps. It was very difficult for Uber to get adoption early on because of black car service industry relationships that were decades old. That’s how this industry has worked for a long time. But eventually, if enough employees push back and enough employees speak up, you’ll start to see those technologies begin to permeate our industry, not because we’re pulling them in, but because employees are pushing.
At some point, travel managers will have to adapt.
What they’re realizing is if they don’t cater to the modern traveler, the modern traveler is going to force their hand. It’s going to create more friction than they need, so why not get out in front of it? Why not be an early adopter, because we know it’s happening. There’s no way that Airbnb doesn’t become a mainstay of the corporate hospitality ecosystem.
We can spin around and have the duty of care conversation until we’re blue in the face, but eventually, when enough employees – who, by the way, are the top-line producers for the companies they work for – are pushing back and saying, “I represent 10 percent of my company’s top-line revenue. I want to stay at an Airbnb. I really don’t care what my company thinks about that.” Those voices are going to be heard more loudly than the travel managers who are trying to prevent them.
Skift: Here’s the thing though. Doesn’t the status quo of how travel management companies earn money, from both their corporate clients and commissions from the suppliers they buy from, make it really difficult for change to happen? Even if services like Uber and Airbnb are creating cracks in the system.
Ruch: This is where we get into that murky water, but it’s a very difficult conversation for a travel management company to have when they don’t necessarily just have the best interest of the traveler in mind, because they make money not only from the service fee that the client corporation pays them or books through them. They also make money from commission, discounts, and overrides from the vendors where they influence booking behavior.
At Rocketrip, the focus has always been providing truthful service to change the way employees behave, and do so in a way that’s very employee-friendly and always with their interest in mind. We never force an employee to have a sub-optimal experience. We offer employees the opportunity to make choices and give up some element of flexibility or comfort in exchange for some tangible reward of equal or greater value. That’s been our core focus.
I think not everyone in the industry is aligned with what is in the best interest of the traveler or the best interest of the organization they serve, because so many players in our space make money in completely different ways.
Skift: Rocketrip, essentially, incentivizes individual corporate travelers to make decisions that save their company money. Why don’t companies already reward business travelers for making preferred bookings? Is it because travel management companies themselves make money from both sides of the equation?
Ruch: It’s the travel management corporations that provide those services to companies, right? They’re in the business of making money, as well they should be, although unfortunately not every way they make money has the best interests of the traveler in mind. It is what it is.
The challenge at the corporate level is that very frequently we encounter travel managers who don’t travel. It’s a fairly ironic problem, and we see it all the time. That product innovation idea that we have at the company comes from our own employees traveling on the road, using our products, finding friction points, and eliminating them.
We think of noncompliance as a message of employee friction or employee unwillingness to accept our program. What we should recognize noncompliance to be is an indication that there’s something wrong with our program. If our programs were perfect, if our programs worked, we wouldn’t have a compliance problem. The reason we have a compliance problem is we’re creating programs that fundamentally don’t meet the needs of the traveler. It’s nothing more than a mentality issue, right?
It’s forcing policy. If you don’t like the policy, so be it. At Rocketrip our position is we need employees where they are, and in some cases those rules need to be bent, and other cases they need to be broken. As long as we can track employee behavior and understand when they’re not meeting our budget and when they are meeting our budget, they’re rewarded for it. We’ll be in much better shape.
Skift: You’re saying the role of a travel manager should be to find a balance between serving employees and meeting the needs of the corporation, right?
Ruch: It isn’t about saving money at all. It’s about finding the right intersection of placating both the companies and the employees that work for them. It’s not always going to mean that both parties come away completely happy, but it’s about finding the equilibrium point, finding the right point at which both the employee, who’s traveling, and the employer, who’s employing the employee, are satisfied with the choices being made. It may not be perfect, but it works, it scales.
The danger is that it threatens to undermine the value of [the corporate travel ecosystem], which keeps employees safe, that make sure calls are controlled, that make sure employees are making the right decision and getting all the data in an aggregated platform. The modern day corporate travel infrastructure is being threatened a little bit.
Skift: Do you see any difference in how younger business travelers book travel and act when on the road?
Ruch: No one’s right or wrong, and millennials don’t represent a new species of human being that is particularly maladjusted or has the propensity to break the rules. I’m not suggesting that at all. What I’m suggesting is that millennials grew up in a world where Liberty Travel wasn’t a shop around the corner that you went into when you book a vacation. You just went online and went to Booking.com.
We’re testing that same level of flexibility in a corporate travel way, and when they don’t get it, it’s going to create friction. Whereas the Gen Xers and the baby boomers that are now retiring are used to a different level of service and a different way of booking travel.
One or two things will happen. Without choice, you’re going to create friction. What we always recommend to clients is don’t eliminate your corporate travel management company relationship. It’s there for a reason, and it provides a value.
In many cases, the corporate travel management companies have been very good partners for Rocketrip in many ways. What we’re suggesting is to allow some degree of flexibility for employees to make other choices. If they want to stay at an Airbnb, don’t force [them not to]. Just allow it. We have to figure out a way to get the data so they can be tracked, but give employees the freedom and flexibility, so that millennials can do what they want to do, and the older folks can do what they want to do.
Skift: It seems intuitive that business travelers traveling in a manner they prefer should be happier and more productive. But this seems to be completely opposed to how corporate travel is actually booked and conducted today.
Ruch: Travel is a very, very emotional process. We care very deeply about how we’re treated when we’re on the road, and those decisions should not be left up to the companies that we travel for. It should be left up to us.
Now we’re way outside the scope of what a modern day travel manager worries about, right? We’re talking about human resources kind of things, we’re talking about culture, we’re talking about work/life balance. What the individual culture of the company that we work for is and how we can improve the daily life of the employee, which again isn’t inconsistent with the mandate of what a travel manager has to worry about.