New acquisition Deem is well placed in the current climate, helping corporate travel agencies develop booking tools to navigate complex Covid-era trips. But can it keep up with demand?
The idea for Enterprise was to keep San Francisco-based Deem at arm’s length — it builds agnostic platforms for corporate agencies that book all forms of travel, not just car rentals. But as Enterprise finally un-pauses, will Deem still be relevant in the new travel landscape where demand for new ways to took trips is skyrocketing?
Deem’s president, who has been working in corporate travel since 1994 and joined from Enterprise, said he has a strategy in place to make good on the promise of the acquisition.
“The pause was good for us,” said David Grace. “Trying to triple your staff in a short period of time can be a challenge. It could strain culture.”
It’s all part of the long game for Enterprise, as it’s a relationship that goes back to 2011, when it offered Deem’s platform to its corporate customers that didn’t have a managed travel program. As well as hiring its own cars, what about booking flights and hotels? Grace believes that ultimately this drives a lot of value to Enterprise. It then became a minority investor in 2016, and in January 2019 decided to buy it outright.
It proved to be a savvy move. Today, Deem works with 150 corporate travel agencies, including big-hitters like FCM Travel, developing mobile platforms and online booking tools. In some cases they use or white-label its new Etta (short for Easier To Travel Anywhere) platform.
Now it needs to sustain that growth.
As part of that effort, there are currently 23 jobs advertized at Deem, across Oakland, California (home to its new headquarters); Dublin, Ireland; and Bangalore, India.
However, as hospitality grapples a labor shortage, there’s a software talent war looming.
One travel technology startup founder, based in London, told Skift costs can reach $1 million for a top engineer after the salary, equity and other incentives are factored in. He cited fintech star Stripe as one company that’s particularly difficult to compete with when recruiting.
“The technology side may never really slow down,” Grace said. “The competitive nature to get people with the right skillset is as high as it was before, and ramping up right now.”
But Deem’s geographical spread could work in its favor, as it covers different time zones. Its three core development centers in India are growing, while Dublin, where Deem focuses on engineering, can attract talent thanks to its more relaxed labor laws.
“Being decentralized gives you that ability to attract great talent, but for that collaboration and innovation, you need to centralize that to some degree,” Grace said. “That’s somewhat of a pre-Covid type of statement, but we know having a place where they can gather when they need to is vital to creating innovation and efficiency.”
Dublin also will also be a useful stepping stone for planned future expansion in Europe.
Rise of the Corporate Booking Tool
Part of Deem’s growth also comes off the back of a need for more sophisticated travel booking tools. These are set up by company travel managers, and plug into the travel agency, but are used by employees.
“As business travel returns, organisations and travel managers will be prioritising duty-of-care and business traveler safety more than ever before,” said Paul Dear, senior director of supplier management at SAP Concur, whose Travel and Expense tool is one of the more ubiquitous in the market. “This elevates the importance of online booking tools, as they have the data and information to ensure business trips are as safe as possible.”
For example, its TripItPro function allows users to search Covid-19 information, such as infection rates; quarantine or testing requirements; mask requirements; restrictions on dining and shopping; documentation requirements; and entry and exit rules.
These were hardly essential requirements before the pandemic.
“Benefits like this are exactly why online booking tools will be so important to the safe restart of business travel,” Dear added.
Meanwhile, Grace said Deem was partnering with more traditional travel agencies because they have to compete with growing numbers of startup agencies, which often win customers on the basis of their own easy-to-use mobile platforms.
In 2018, Deem’s then-president and CEO John F Rizzo noted there were few dedicated travel booking tools in managed travel, calling out SAP Concur, American Express Global Business Travel’s KDS and Sabre’s GetThere as the competition.
“There are a few emerging platforms like TripActions and Upside, but really only one or two pure-play companies focused on managed travel, a market that’s enormous,” he said at the time.
That’s certainly no longer the case.
“Travel agencies need to reinvent their business model, because they’re being disrupted by startups,” Grace continued. “They bring value into the travel management equation, but technology is becoming more important. A lot of them don’t have the capital to invest in their own platform. We are selling to these organziations, we want to be their ‘dev shop’”.
At the same time, ongoing agency consolidation is having an impact.
“The traditional online booking tool providers have pretty much removed themselves from the market due to being purchased, changes in sales strategy or not taking on new agencies,” said Gavin Smith, director at Element Technology.
With recent acquisitions, will the new mega-agencies at the top really want duplicate booking tools? Amex GBT’s CEO dismissed the idea that Egencia’s travel booking tool would clash with its own Neo tool, which it also offers as a white label platform to other agencies.
“Neo is for clients who don’t want a fully integrated technology stack, they want to procure different elements of the travel management process,” Paul Abbott told Skift.
Then there’s travel booking tool Lola, which is now part way through a five-year exclusive deal with Amex GBT.
“We are excited for their plan to bring Egencia into the product lineup, which will provide more options for all the different customer segments they serve,” said Lola CEO Mike Volpe.
However, the hunt for efficiencies could prove otherwise in the long term.
“I was at a conference recently, and two other panelists from travel management companies made a comment that they’re going to have to make tough decisions, they’re not going to be able to fund everybody,” Grace said.
Keeping An Eye On Hertz
As corporate travel restarts, Deem’s parent company Enterprise will be watching rival Hertz closely. Enterprise also owns National and Alamo.
It is now backed by investor Certares, after it won a court-approved auction to lead Hertz out of Chapter 11 bankruptcy, alongside Knighthead Capital Management and Apollo Capital Management.
Certares is quietly building a portfolio of brands that touch on nearly every aspect of travel, from adventure holidays to nature-themed cabin retreats, on top of its investments in Amex GBT and Internova.
“Are we watching Certares? Yes, they work across travel. There’s a lot there. It’s intriguing to us,” Grace said. “That closed ecosystem, where potentially they want to control all the customers, give them the content when they want to give it to them. I’m not going to speak for Enterprise, but Enterprise obviously watches everything that goes on with competitors.”
In the meantime, Deem will need to watch — and support — its growing number of agency relationships as corporate travel resumes.
Tags: american express global business travel, car rental companies, certares, concur, corporate travel, corporate travel management, deem, egencia, enterprise, fcm, hertz, kds, lola, sap, tripactions
Photo credit: Enterprise Holdings, which is the world's largest car rental firm, bought travel technology company Deem in 2019. Brock Wegner / Unsplash