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The Skift Corporate Travel Innovation Report is our weekly newsletter focused on the future of corporate travel, the big fault lines of disruption for travel managers and buyers, the innovations emerging from the sector, and the changing business traveler habits that are upending how corporate travel is packaged, bought, and sold.
The Future of Corporate + Business Travel
The past week has brought plenty of news about mergers, acquisitions — and the impact of such deals —
in the world of corporate travel.
Marriott, which now owns Starwood’s portfolio for a total of 30 brands, has launched a new luxury group for nearly a quarter of those brands. The Virgin America acquisition by Alaska Airlines is moving forward (with conditions). And there’s a leadership shakeup at KDS, which was acquired this fall by American Express Global Business Travel.
Post-merger developments can mean changes in business relationships, bargaining power, and possibly pricing, all of which can be unsettling for corporate travel programs. While it’s still too soon to tell how recent deals will play out, it’s clear travel managers are concerned.
In a recent interview, Jeff Hillenmayer, head of corporate hotel sourcing for the Americas at HRS, told Skift that he’s having regular conversations about the impact of transactions like the Marriott-Starwood deal.
He said one big concern is that with consolidation, brands that were once competitively priced options for corporate buyers will now raise prices. Already, Hillenmayer said this year many hotels have declined to bid on requests for proposals during the negotiation season.
“A lot of that is that they don’t want to mess with the lower-producing customers, want to get them paying higher rates,” he said. “You think about any company being acquired, I would want to start showing my value, showing my worth.”
At this point, Hillenmayer said his company’s strategy has been to point out hotel options outside of the biggest chains.
“All companies are looking at driving savings, and the only way to do that in a market that’s experiencing inflation is looking at other options and seeing what’s out there,” he said.
So in other words: Time to shop around.
— Hannah Sampson, Skift
Social Quote of the Day
I can’t imagine what business travel was like before @breather @Uber & @Airbnb — or even @googlemaps
I wouldn’t have survived the 90s. @SarahPrevette
Business of Buying
Travel-Focused Consumers Win in Amex and Chase’s Battle for Credit Card Supremacy: It takes a remarkable amount of effort to extract value from credit card offers, but for sophisticated travelers who study their options, the rewards tend to be worth it. Read more at Skift
U.S. Travel Growth Is Slowing Due to International and Business Weakness: It looks like the trend of slow growth for travel in the United States — or no growth, in some sectors — will continue into early 2017. Read more at Skift
Airline Lounges Up the Ante on Spa Perks for Ultra-Rich Male Passengers: Crazy-rich male travelers: They’re just like the rest of us (except with better perks). Read more at Skift
Delta Is Testing Free Meals in Domestic Coach Class: Even if this test goes nowhere and Delta stays with the status quo, you should give the airline some credit for trying something new (even if it’s old). This is why most insiders believe Delta is the most innovative major U.S. carrier. Read more at Skift
Mergers and Acquisitions
Marriott Officially Debuts New Luxury Group for Eight of Its 30 Brands: With so many brands that fall under the luxury space, this makes sense. But we wonder: What will happen to the other 20-plus brands? How will Marriott contend with differentiating them too? Read more at Skift
DOJ Clears Alaska’s Acquisition of Virgin America: The Department of Justice has an odd relationship with airlines. It seems to enjoy grabbing headlines about how it’s doing its job to protect industry competition. But when it comes time ot actually get airlines to make real concessions, it falls short. Read more at Skift
Months After Being Acquired, KDS Has a New Boss: Dean Forbes is out as CEO at corporate travel tech firm KDS, just a couple months after the company was acquired by American Express Global Business Travel. His replacement is chief financial officer and executive vice president of business operations Roxana Bressy. Read more at Business Travel News
Disruption + Innovation
Airbnb Quietly Builds Its Business in China: Airbnb can’t adopt the same approach it did around the world if it wants to grow its business in China. But even if it does work more with local regulators to comply with local laws, will that be enough to give it a marketplace advantage over other homegrown competitors like Tujia? Read more at Skift
DOT Approval of More Norwegian Air Flights Opens Door for Cheaper Transatlantic Travel: Politics is a funny games. There was little doubt the government would approve Norwegian’s application — it had no legitimate basis to deny it — but the DOT still waited years before finally getting around to it. That was probably not fair to Norwegian, but the airline will survive. Read more at Skift
Norwegian Air Considers Next Steps After U.S. Clears Trans-Atlantic Expansion: Some of the recent stories on Norwegian Air are a little misleading. The company, through its Norway-based airline, already had the right to fly any route it wanted between the United States and the EU. But this new approval should give Norwegian more flexibility in how it runs its business, and should lead ot more flights and lower fares. Read more at Skift
Disrupting Brexit Is the UK Tech Industry’s Biggest Challenge: While an attempt by tech leaders in the UK to try to maintain the country’s position as a hub is laudable, the direction the current government is heading in means that many of its key suggestions are likely to be ignored. Read more at Skift