Small and medium enterprises (SMEs) are becoming increasingly important for hotels and airlines. Travel brands can no longer ignore the collective economic clout and spending power of these organizations. American Airlines and InterContinental Hotels Group (IHG) are tapping into the business opportunity presented by small- and medium-sized businesses through their individual corporate travel programs and by partnering with each other.
IHG’s Business Edge program offers an online booking portal with access to accelerated loyalty status, visibility into travel spend for corporate travel managers, volume-based discounts, and many other benefits to its small and medium enterprise clients. The program was voted 2019’s best small- to mid-sized business program by the readers of Global Traveler. American Airlines has a suite of products for small- and medium-sized businesses as well. For example, Business Extra, the loyalty program which recently won the 2019 Travel Weekly Magellan award, allows companies and employees to earn redeemable reward points. The airline also offers a VIP prepaid travel program called AirPass, and in 2018, it introduced a discount product that targets the mid-sized market.
Through the partnership, both brands want to offer more value to their corporate clients than they can offer individually. One initial step taken is to offer bonus rewards to small businesses that become members of both Business Extra and IHG Business Edge. But that is just the beginning, according to executives from both companies.
SkiftX spoke with Clarissa Sebastian, director for small- and medium-sized businesses at American Airlines, and Doug Abbott, director for SMEs at IHG, to understand what brought these two companies together and what the future of partnerships in this sector might hold.
SkiftX: Why are travel brands now, more than ever before, focusing on the corporate travel needs of small- and medium-sized businesses?
Clarissa Sebastian: We’ve focused on the small- and medium-sized business market for a while, but over the past few years, we’ve renewed our focus on growing our portfolio of such accounts. Small- and medium-sized businesses have been one of the fastest-growing sectors in the U.S. This sector is outpacing all other sectors when it comes to increases in revenue and jobs. The U.S. Small Business Administration (SBA) Office of Advocacy found that small businesses create two-thirds of net new jobs and account for nearly 48% percent of the U.S. private sector workforce. Stats like these indicate that in order to grow our portfolio, we must focus on small- and medium-sized businesses. There are a lot of opportunities there.
Doug Abbott: IHG also has always had some offerings for small businesses, but it hasn’t been a coordinated global program until now. We feel like small business is actually big business for IHG. We are a franchise organization and are made up of small business owners who invest in our brands. With our corporate product, IHG Business Edge, we are putting something in place that helps small businesses and gives them a turnkey solution that can help control their travel spend.
SkiftX: What should small- and medium-sized businesses expect from this renewed focus?
Sebastian: They should expect larger companies to compete a lot more actively for their business. They should also expect programs to be more tailored to their needs — and not be forced into programs that were primarily designed for larger companies. For example, in 2018, American Airlines launched a suite of discount programs for small- and medium-sized businesses. The programs give customers access to many of the benefits that large accounts enjoy but they didn’t have in the past, such as upfront discounts, corporate traveler benefits, fee waivers, and a dedicated American Airlines account manager.
Abbott: Today, travel brands can use advanced technologies to offer self-service features to mid-sized corporate customers without them feeling that the service offered to them is inferior to the service offered to a larger managed account in any way. We found through research that small-and medium-sized businesses find travel programs offered by hotels today too narrow and are too often only focused on discounts. These businesses want to be able to tap into a community of similar organizations and interact with the provider on their own terms. That’s what we provide with IHG Business Edge.
SkiftX: What brought American Airlines and IHG together?
Sebastian: When we started discussions, we realized that we shared the goal of understanding the unique needs of small-and medium-sized businesses and fulfilling those needs with specific offerings. We both had the desire to provide our customers with more benefits together than we could with our individual programs separately.
Abbott: As two trusted global brands focused on enabling commerce and providing outstanding service to our business-to-business customers, we shared both a vision and sense of responsibility to the small- and medium-sized enterprise community. Our focus is on identifying and fulfilling their unique needs. It’s much more than a marketing relationship. As we continue to learn together, we will be able to tailor our individual and joint products even more for these clients.
SkiftX: How will this partnership create incremental value for your corporate travel customers?
Abbott: First, with cost savings, which is of course important to all our corporate customers. By leveraging the two programs, we aim to drive value for them in a way that they wouldn’t be able to get on their own. These savings could be in the form of special bonuses for enrolling and activating accounts in both programs. It could also be an added bonus for flying a certain number of times or staying a certain number of nights. We are in the early days of our relationship, but we are thinking about how we can give them more from being in both programs so that there’s real value there.
Sebastian: It also helps us expand their networking opportunities by bringing more small businesses into the fold. We now have this chance to pool all of our research and insights about these businesses together to create new offerings and improve old offerings.
SkiftX: Should we expect to see more of these partnerships in the industry? And how do you see your partnership evolving in the future?
Sebastian: As technology evolves, so does our ability to do more things together. Also, small businesses are going to want to leverage their growth and purchasing power to find better ways to combine their spend and get more out of their partnerships.
As the travel industry is constantly evolving, we want to make sure that we stay innovative and keep our offers relevant and fresh. With IHG, we are working to figure out all the things we can do to that end. We’re just starting out and as our partnerships and customer bases grow, we’ll be looking at different ways in which we can create more value for this segment of the corporate travelers.
Abbott: Based on our research from a couple of years ago, small businesses say that partnerships between two travel brands makes sense. So we will likely see more of those in the industry. But they also said that partnerships should be between services that are closely aligned. A partnership between a hotel and a car rental company or an airline works.
As for the partnership with American Airlines, I think it is about us coming together, learning about our customers, and then putting that to work to develop something that is unique for them. We are early in our partnership, but there is so much opportunity here. Small-and medium-sized businesses are often overlooked by big corporations, so it’s a winning combination that will help meet their needs.