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Corporate travel has not done a good job at solving the problems faced by actual business travelers. Smaller corporate travel companies, along with travel providers and technology startups, are working hard to find solutions to the most enduring problems across the sector.
In this interview series, we will break down the silos between travel sectors to find out from leading travel executives how they are working to make the business travel experience more enjoyable for travelers and simpler for the companies sending employees on the road.
The hotel experience for business travelers has long been a headache.
Conichi, which was one of the first companies to experiment with beacon technology at hotel properties, has in recent years focused on the more knotty issues that add complexity to corporate travel. While the company now has more than 400 partner hotels using its system to enable keyless hotel room entry and express check-in and check-out services.
Now, according to Conichi CEO Max Waldmann, the company is working to push deeper into corporate travel by fixing some of the backend technological inefficiencies that stymie travel managers and their travelers alike.
“The entire technological set up within corporate travel is still in the early stages,” said Waldmann. “It’s a bit like back in the AOL days. Everything is still disconnected. It takes a lot of time, it’s complex, and only some people use it. It’s not where it should be and it’s definitely not at a B2C stage yet. But it will absolutely grow.”
Skift spoke to Waldmann about ways that fixing the hotel check-in process will help make life easier for global business travelers.
This interview has been edited for clarity and length.
Skift: When Conichi started out, you focused on deploying beacon technology and other things. Now, you’re pushing deeper into expenses and other back-of-the-house stuff. Why the shift?
Max Waldmann: To give you the bigger picture, when we started off the core focus was always to come up with a solution to streamline the entire corporate stays process. And we always had more or less two balls in the game, one in the leisure side and one in the corporate side, with the intention of, again, streamlining the entire stay process. In the course of the last year, especially since 2017, we put a core emphasis on corporate travel. Reason being, leisure travel is really, really complex to manage. You don’t know where travelers are going. You don’t know how often they’ll travel. They’re really, really expensive to access.
Obviously, [leisure hotels’] willingness to innovate is high, but at the same time, the necessity to innovate and to disrupt is pretty low because their frequency of traveling is low compared to corporate travelers who travel a couple of times a week. The necessity to innovate for them is super high. So, we’ve been always been looking at how to optimize the entire hotel stay process.
Simultaneously sort of diving down deeper into corporate travel, we understood that the complexities of corporate travel on the one side are the operational challenges at the hotels. Due to the fact that check-in and check-outs are super manual.
And especially for corporate travelers who check in during peak times and check out during peak times. Interestingly enough, corporate travelers are the crown jewels for hotels, because they fill the rooms Mondays to Thursdays. At the same time, those are the ones causing the main pain, because those are the ones which will, again, check-in and check-out during peak times, or the ones which will want to have invoice changes. They all need to have a compliant invoice because they need to expense it, et cetera. So, it’s this, again, this is the opportunity for hotels to optimize their occupation, at the same time, again, causing operational friction. And while looking at how to optimize the process on the hotel end, and of course for guests, for travelers, we sort of understood the lack of transparency within corporate travel.
Skift: The promise of better visibility into costs is extremely valuable for travel managers.
Waldmann: After employee costs, travel costs are the biggest cost block, and within travel, hotels are the second biggest after aviation. And at the same time, we’re talking about, on average, sort of plus $100 million programs, there’s no transparency on what is really happening at the hotel.
So, hotels are a complete black box. And they are a black box because the traveler books a rate, let’s just say 100 Euros, so a traveler from a corporation, let’s just say Siemens, a traveler from Siemens books a hotel for 100 Euros, or 100 dollars, it doesn’t matter. Once that traveler actually arrives at the front desk he might be paying 105, 102 or 110, whatever it is. In fact, sort of HRS just conducted a study and found a 22 percent mismatch in rates paid. And again, it makes sense, because who actually checks and who compares the rate there has to pay against the rate which is actually booked. There’s sort of rule of thumb in regards to, “Does this rate make sense? And is it below the internal company travel policy?”
But on top of that really, there is no real check, there is no real compliance. That’s the one big issue we saw while optimizing that process. At the same time, we also understood that if those corporates actually go out and they negotiate with hotels, I was just referring to $100 million volume, this $100 million volume is measured according to the booking volume that respective corporate conducts. That corporate books for $100 million dollars and then, that’s the volume they know how to negotiate with.
But the truth is, anyone who stayed at a hotel is sort of fully aware of this, you don’t only consume the room rate. You consume wifi, you consume minibar, F&B, parking, whatever it is. Which is sort of roughly 20 percent. So, 20 percent on top of the actual rate is completely invisible. And that means in $100 million program, we’re talking about $20 million which are just not visible. And $20 million is essentially lost in the overall negotiation. Plus, there’s no idea, in regards to, what is actually being consumed at the hotel. Are 60 percent of their travelers consuming parking, or Wi-Fi, or whatever it is in order to then sort of optimize that going forward?
Skift: So beyond the traveler experience, you think solving corporate pain points will compel more hotels to get on board?
Waldmann: Essentially what we’ve been working on is a solution to streamline the entire in stay process, so to automate and digitize the entire check-in and payment process. And at the same time shed light on this black box hotel to give corporates an exact understanding of what is it travelers are consuming at the hotel and what the overall volume is. And that really allows them to make data-driven decisions and drastically increase the compliance. And whilst doing this, we’ve seen generally a net promoter score increase of 60 percent; at the same time, a savings of roughly 40 dollars per stay. And this is crazy if you think about it. So, we’re talking about 40 dollars in savings on the corporate side, which is savings that we’d generally try and get out of the [average daily rate].
Even if the corporate, due to the fact that they have got such streamlined processes and are so super agile and employee costs are super low … even if our saving makes up five Euros or 10 Euros or 10 dollars or whatever it is, it’s in a lot more, and they can sort of save through sourcing and optimizing the [average daily rate].
Skift: You’ve been at it at Conichi since 2014, and adoption has been slow among hotel. Has your strategy for getting more hotels on this platform changed over time?
Waldmann: Yeah, that’s neem ultra difficult. And again, we’ve been doing this for the last plus four years and it has been really challenging and tough to get hotels to a point where they understand the technology. What we’re doing now and, again, every new process, especially in hospitality, takes a lot of time and until it’s been adopted. But what we see now is that due to the fact that they are the crown jewels of the travelers, while the do cause that major pain in regards to check in/check out, they understanding that, for their corporate travelers, this is exactly the process that eases the entire operational set up.
And that’s what they’ve understood and they’ve now gotten the value behind being a smart hotel. That’s the terminology for those properties. They benefit from being flagged as smart hotel and all those leading [online booking tools], they have a prominent flag, they are a smart hotel. Travelers can immediately distinguish them from the rest. And that essentially lead to a point where we’ve won global chains, where we’re constantly rolling out, we’re scaling and growing.
But it was a long path, essentially building a piece of technology which, operationally, functions in a seamless and easy way and integrates into the existing archaic hotel processes.
The complexity we had was to convince them to integrate the solution into an application and come up with the setup, which functions, essentially, seamlessly within the existing mobile set up.
We work with global corporations, with Fortune 500 companies, because they’ve understood the necessity of shedding light on this black box hotel. At the same time, their core assets are their travelers. You’re saving them 20 minutes for check in/check and, essentially saving them time during the expensing process is the core thing of what they’re looking out for. Absolutely, that’s a huge part … one of the drivers of our business. Because, at the end of the day they reach out to their preferred properties and make sure their preferred properties become smart hotels.
So it’s not actually us acquiring hotels but it’s actually a corporate partner acquiring hotels because they’ll reach out to their preferred properties and inform them that they want them to use Conichi.
Skift: How does this all tie in with improvements to the experience for business travelers?
Waldmann: I think traveler centricity and the intention and the idea of putting the traveler into the center of the entire journey and optimizing the mobile process through digitization is inherent in every major travel strategy. And that’s the core focus. At the same time, the entire technological set up within corporate travel is still within the early stages. It’s a bit like back in the AOL days. Everything is still disconnected and it takes a lot of time, and it’s complex, and only some people use it. It’s not where it should be and it’s definitely not at a B to C stage yet. But it will absolutely grow. And it will grow because, at the end of the day, there will be a lot of automation of the process, and at the end of the day … compliance is always driven by convenience.
At the same time, the market fragmentation within the hospitality is a major issue, so you really need to build this bridge, this single technology bridge to corporates and hotels to streamline the processes. It’s really difficult to integrate on a one-to-one basis with hotels, if not impossible. You need to have a solution which is generic enough, which is agile enough on the one side to integrate with all the different partners and rigid enough to act as a stable technology bridge to really streamline the processes. Those are the challenges that we’re fighting right now but we have major corporates behind us which have adopted the technology, major hotels which are implementing what we’re doing, and our seamless successes of a streamlined process and we’ll definitely see this process in regards to check-in and check-out.
And we haven’t even touched the entire post-experience side which is everything in regards to expensing and itemizing your bill on the corporate side. We’ll see all of that vanish in the next couple of years. It will become a standard the way you check into flights today … it will just be something people won’t even be talking about. It will just be taken for granted that you don’t have to run through any paperwork and you don’t have to run through a check-in and check-out. It will just work and function as a completely digital process.