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We recently launched our weekly Corporate Travel Innovation Report, a newsletter focused on the future of corporate travel, the big fault lines of disruption for the travel managers and buyers, the innovators emerging from the sector, and the changing business traveler habits that are upending how corporate travel is packaged, bought and sold.
As part of our increased attention to corporate travel, we’re sitting down with a handful of industry leaders for our new Corporate Travel CEO Listening Series to discover what the people at the top are concerned with now and where they are looking for inspiration.
The tension between responsibility for traveler safety and the need to innovate is palpable in the corporate travel ecosystem.
New sharing economy services and other back-end solutions are becoming popular, and it’s a challenge for travel managers and buyers to assume the risk of experimenting with something new when so much is at stake.
Kurt Knackstedt, current president of the Association of Corporate Travel Executives (ACTE) and founder of corporate travel automation technology provider Troovo, understands the trepidation with which many corporate travel managers and buyers consider change.
In his role at ACTE, Knackstedt has seen forward-thinking corporate travel professionals moving towards an approach that allows experimentation in order to provide better service and more choice to business travelers.
Knackstedt spoke to Skift from Australia about increasing traveler choice, the importance of corporate travel policy to a company’s culture, and what he learned managing mining giant Rio Tinto’s travel policy for years.
Skift: When you look ahead, what are the major trends you see when it comes to technology affecting corporate travel?
Knackstedt: It’s going to be interesting. I’d like to see business common sense to drive the travel program in any company within the industry at large, as opposed to a policy driven approach. There’s an understanding that corporates have specific responsibilities to their travelers, employees, shareholders, to their bottom line, duty of care, and legal as well, which is always talked about. Those things you can’t escape. It’s part of the corporate world. When it comes to the fact that travel in and of itself is a uniquely personal experience, it’s an individual leaving home, going out and doing stuff on the road, it’s that constant balance between the hard and soft components. It has to be always figured out.
With technology where it’s at, with data, ubiquity, and accessibility only getting more and more broad and capable, and with technologies and services enabling travelers to be able to make smart decisions based on informed choices, then there should be a world where the traveler is ultimately able to ask, “What does my company want me to achieve? What is the general budget that I should be looking to spend? What is my experience going to be booking that trip, on that trip, and then coming home and finishing that trip?”
All those pieces are there, in terms of researching all the content easily, understanding my safety, my getting around, my comfort level, what’s going to be the right choices I make. How am I going to do that cost effectively? Is my company going to be happy with what I’ve spent and how I’ve conducted myself on that trip? Will my company have visibility into everything all the way along?
Skift: Your company Troovo uses automation to smooth over a lot of the behind-the-scenes pain points for travel managers. Trying to break into the corporate travel market, how do you think about the resistance of corporate travel to change and new solutions?
Knackstedt: We launched Troovo just about a year ago, officially, and it’s been a challenging process because most travel agencies, especially in the corporate space, they’ve built a lot of their infrastructure on the people that support the process, which are mainly your travel consults are the people who support the corporates day in and day out. That’s difficult to change because it’s been so entrenched.
It’s coming of age right now. The timing is actually good, the article that came out last week that mentioned this. That’s why it triggered it, because we’re finally starting to get that traction, because, several major reasons but the most important reasons is, one, just increasing profitability. TMCs are getting squeezed like never before, and they have to find ways to increase their margins, because there’s very little blood left in the stone. At the same time, the corporates are putting ever more pressure on the transaction prices. They just keep going down and costs keep going up. They have to find ways to rip out inefficiency, and automation is obviously one of the best ways to do it.
Skift: It seems like the technology is corporate travel is just catching up to technology used in the leisure space, especially when it comes to the traveler’s experience.
Knackstedt: It’s been since really e-commerce travel started to significantly evolve in the late 90s with the onset of the Internet. Corporate has always been lagging in terms of technical, functional capabilities compared to leisure. It’s just a simple matter of the fact that it’s traditionally a more controlled environment.
I’ll caveat what I said to some degree. It’s not so much lagging. It’s that the world corporate operates in is more constrained, based on corporate policies. It’s not for want of desire, it’s just for practical reasons.
That being said, the last three to four years, especially at ACTE, we’ve been heavily focused on bringing the dialogue into the industry about what do we do about it, because the lines aren’t blurred but they’re smashed, in the sense that travelers now have more power than ever because they are technically savvy, they are content aware, they know what’s out there, they want it, they can get it quite easily, and they’re saying to their corporate programs, corporate travel managers, “Enough is enough. There’s a different world out there and we want to be a part of it.”
We absolutely see this not as a trend, it’s the reality. Corporate managers now are rapidly adjusting to this in order to say, “My role is not just about driving down cost. It’s about servicing the traveler, making their experience better, and making them more efficient and also happier while they’re on the road.” This is a great thing, I think. We’ve been embracing it as part of the industry, but then of course it gets down to the nitty gritty. What do we do about it and how do we go about doing it?
Clearly there’s going to be continued focus on either adapting leisure and/or consumer style services and applications for corporate, integrating systems better. Everybody keeps talking about the sharing economy, and Uber, and Airbnb. That’s old news now, in the sense that technically and process and policy wise, these types of services now are part of the corporate landscape.
Skift: Could it be because so much of the technology that creates change is really specific and hidden behind-the-scenes, instead of being in front of consumers like mobile booking tools or something?
Knackstedt: It’s funny you say that, because when I go in and tell people what I’m doing, especially people I’ve known for a long time, they’re like, “Automation?” They give me this funny look. I’m like, “I know. It is the most unsexy part of travel,” but it’s because of that unsexiness that it’s important, because you have to be able to do it well to be able to do the stuff that you want to do. Everybody wants to do cool stuff. Nobody wants to do the unsexy stuff, but without the unsexy stuff working properly you can’t do the other stuff.
Skift: You managed Rio Tinto’s enormous corporate travel operation for years. What lessons did you learn from that experience?
Knackstedt: That’s a great question. The first thing that springs to mind, again, is it’s a very challenging world, because everybody is an expert in travel, yet the company wants you to tell them how to travel, and that is a really difficult, probably the most difficult part of the job. You know as well, you mentioned when you tell people you work in travel and write for travel, and everyone’s like, “I’ve done this, I’ve done that, you should go here, you should write about this, you should write about that.” Everybody is an expert. They’ll probably tell you what story to write next, because they’ve done this and you should write about it. It’s the same principle.
Translating that into what they have to deal with in response, it is about I think now given travel is such a mobile, tactile in-your-handbag-type situation, literally, because people can think about and plan travel anywhere, anytime, that it’s really starting to finally change the conversation that travel managers have with their corporations about their role and what they can do. We’re starting to see travel managers go away from the major focus being on procurement and cost savings, to going back to travel being almost a business service.
Seeing companies, and Rio is one of them, that in essence procurement was part of the business services area, which covers all things relating to the employee, other companies would call it different terminology, but in essence that travel now is part of a … not necessarily HR, it’s not necessarily employee performance or so forth, but it’s about optimizing that employee’s contribution to the business. If travel is a part of their role, a part of how they contribute, how do we make that contribution the most meaningful and the most impactful from the bottom line perspective? It’s not just all about, did you only spend X or less for that trip?
That shift of thinking is rapidly accelerating, and it’s taken a long time, but I see the next five or ten years as being the most exciting development in corporate spaces, getting that mentality to drive travel, and not just the dollars and the bottom line. A big company like Rio Tinto, or any big company, how their culture responds to that type of thinking, their infrastructure, their bureaucracy, their policies, their processes, that can be still years for any company to evolve, but at least the thinking is now there. Whereas, maybe even as recent as five years ago, “Travel is a part of procurement, you negotiate contracts, and you as travelers use those contracts.” That’s pretty much the extent of the conversation. At least the conversation is changing.