Travelers are increasingly demanding control for their leisure trips, so why not for their business trips too? It will not be long before this becomes the norm.
In its State of Business Travel 2016 report, Concur reported that, amongst its business travelers, home sharing is quickly gaining popularity, with 56% growth between Q1 2015 and Q1 2016.
And Airbnb reported in July that its sales to business travelers increased threefold over the past year.
Putting things into perspective, however, are survey results released by the Travel Leaders Group in September 2016, showing that demand for short-term rentals is still relatively low amongst business travelers. Over 55% of its respondents (354 travel agent owners, managers and frontline agents) said their clients are not using alternative accommodation suppliers. Nevertheless, there are growing indications that business travelers are warming to the sharing economy, although change might not be coming at a revolutionary pace just yet.
Traditionally, it has always been easiest for business travelers to book a hotel due to close ties between hotels and travel management companies. However, the travel landscape has changed significantly with the rise of online travel agencies (OTAs) and changing traveler demands, impacted by external factors like the economic crisis and the rise of internet access. Short-term rentals are in an ideal position to impact on where the business traveler of today and tomorrow will stay.
The Importance of Business Travel
Business travel truly is a multi-billion dollar business. The Global Business Travel Association (GBTA) has recently predicted that business travel spending will grow by 5.8% between 2015 and 2020 to reach $1.6 trillion. Although leisure travelers are higher in numbers, Euromonitor International data shows that the average business trip sees spending of $1,399, while for the average leisure trip this is $1,123. The average room rate for business travel tends to be higher, as is spending on ancillary services. And business travelers tend to fill up hotel rooms during the week, while leisure travelers are more frequent during the weekend, thereby substituting each other well.
Top 15 Countries by Business Spending in 2015
Source: Euromonitor International
Short-Term Rentals Take Steps
The poster child of the sharing economy in the lodging domain, Airbnb, took its first steps to adapt to business travelers and their employers in July 2014, but bookings really took off in 2015 when, in July, it launched a revamped Airbnb for Business, which includes a centralised billing system and better tools for HR representatives to track spending. This came off the back of Airbnb’s integration with Concur’s TripLink in autumn 2014, which allows travelers to book directly with Airbnb, but have the charges automatically added to their expense reports for reimbursement.
The connection with TripLink ensures that travelers are booking according to their corporate travel policies and lets employers know where their travelers are, a key step in addressing duty of care and security concerns. It is also an example of the steps needed to pull employers away from the tried and trusted travel policy, so often still stating something along the lines of “our employees are allowed to stay in a 3- or 4-star hotel”.
Business Travel Is a Changing Industry
To appeal to the individual business traveler, Airbnb for Business only lists properties appealing to business travelers, with features such as Wi-Fi, instant booking, an iron, and no shared spaces. What Airbnb and other short-term rental platforms seem to have realised is that the definition of business travel is changing, and, with it, expectations are shifting.
Today’s business travelers, not unlike leisure travelers, increasingly want to make their own decisions about where to stay during their trip. With boundaries between leisure and business blurring, business travelers are not necessarily looking for hotels with conference rooms and proximity to the financial district, instead factoring in their personal preferences in their decision making.
There will always be a place for hotel business centres and conference halls, but changing working environments are also impacting demand. Data from Euromonitor International shows that employees still make up the vast majority of the workforce, but this is slowly changing. Fuelled by technological innovation and globalisation, the gig economy (a work environment characterised by short-term contracts, freelance working and entrepreneurship) has been on the rise.
This has not only resulted in a boom in short-term rental supply, but also means less need for physical offices, a bigger drive for shared and flexible workspaces, and more employee movement across the globe. More start-ups and entrepreneurs will be looking to satisfy their travel needs, unwilling to dive into the world of lengthy travel management contracts. It needs to be simple, flexible and at their fingertips.
Select Countries’ Working Populations by Employment Status in 2015
Note: A family worker is usually a person who works without pay in an economic enterprise operated by a related person living in the same household
The Modern Business Traveler’s Booking Habits
It is a well-known fact in the industry that hotels are not the best at attracting bookings through their websites. Euromonitor International’s lodging booking data show that short-term rental bookings are more made online than hotels and other lodgings.
Lodging Bookings Made Through Online and Offline Channels in 2015
Source: Euromonitor International
Short-term rental platforms like Airbnb, which are able to offer a more streamlined and frictionless online booking experience than most hotels, are in a good position to capitalise on the changing demands and expectations of business travelers. The online and mobile channels allow travelers to make a better-informed choice and to manage the vast amount of options available to them. They allow travelers to be in control of their booking before, during and after their trip.
Euromonitor International is a leading provider of global strategic intelligence on consumer markets, with offices in London, Chicago, Singapore, Shanghai, Vilnius, Santiago, Dubai, Cape Town, Sao Paulo, Tokyo, Sydney and Bangalore and a network of 800 in-country analysts worldwide.
Euromonitor International’s analysis of the global travel industry covers a wide range of categories, including tourist flows and expenditure, lodging, transportation, car rental, cruise, tourist activities, travel intermediaries, online and mobile travel.
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Photo Credit: Airbnb's push for business travelers includes appeals to location, price, and convenience. Airbnb
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