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Mining the data

Consumerisation of business travel could open up new opportunities for buyers

When the airline deals are done, where does the cost-conscious travel manager go next? The air category has traditionally been the largest chunk of most companies’ travel programmes and, inevitably, buyers typically spend the largest proportion of their time on this area because it has had the potential to deliver the biggest returns.

Yet the changes in the travel industry that saw airline commissions reduced to zero in most cases and the legacy airlines stripped of large parts of their short-haul businesses by low-cost carriers means that potential savings are dwindling.

This has forced many buyers to look at secondary spend on things such as hotels and food and beverage to continue to keep the finance director happy.

Quality data
But the ability to take control of spend in these areas is being hampered by two things – data and consumerisation. Data, or more specifically quality data, is often hard to come by.

Mark Avery, global business services and travel leader at Price Waterhouse Coopers (PWC), says: “All sources of data can be valuable. The key is the quality of data available, whether inputted through the expense process, received via card feeds, TMC or supplier. We all have reams of data but if unstructured, it can be next to useless.”

Coupled with this issue is the rise of consumerisation, which has seen business travellers increasingly tempted away from preferred channels to the apps and websites they use in their personal lives and which are often seen as being more user-friendly and – dare we say – exciting.

This has led to increased fragmentation in spend categories which were already badly fragmented. Take hotels, which can be a particularly gnarly problem for many companies to get a grip on.

Alice Linley-Munro, global travel analyst of Oil Spill Response, says: “In some of our smaller locations (our South African base, for example) we have 100 per cent leakage, although they have an almost non-existent travel spend to begin with. It is our four small offices where the leakage happens, something we’re trying to combat by pulling together all our rates properly into the GDS and mandating their use in the future.”

For Linley-Munro, the answer is working more closely with the company’s travel bookers and not trying to capture all the data through an expense management system. “I think our saving grace when it comes to hotel leakage within our programme is that it’s coming from a handful of our own travel bookers, as opposed to hordes of our travellers, and therefore should be easier to crack down on,” she says.

Expense management provider SAP Concur’s answer to combatting this trend is Trip Link, its solution aimed at tracking “rogue” spend. This allows employees to link their accounts with partner airlines, hotels and taxi companies so these bookings are automatically passed into the expense management system. Partners currently include Airbnb, Hotel Tonight, Intercontinental Hotels Group and Trainline Europe.

Chris Baker, managing director for the UK, Ireland, Nordics, Middle East and Africa at SAP Concur, admits many Trip Link partners are US-focused, but says the company is “now seeing movement from suppliers within Europe”, particularly with the company now under European ownership. SAP Concur says connections to British Airways, HRS and Lufthansa will be coming soon.

Trip Link also allows users to forward confirmation emails from non-partner suppliers and the information is collected from the email and is used to populate the expense claim.

Booking.com is a particularly popular Trip Link partner for corporates. Baker adds: “People love Booking.com; it’s simple and is a really good consumer-style site. Why not make that available to your corporate traveller with the safety net of Trip Link?”

Expense reporting does potentially have some advantages for gathering data from non-traditional areas of spend.

One example is where an airline stops providing meals as part of its service. If business travellers do not want to pay for meals in-flight they start to expense their pre-flight purchases at, say, Pret a Manger or Gordon Ramsay Plane Food at Heathrow, adding significantly to the total cost of short trips.

Baker says travel buyers are telling his team: “My traveller is spending more, the airline is costing me more money because of the changes they made to improve their margins. The most savvy buyers will use that in their next round of negotiations with the airline.”

Hidden opportunities
Expense reporting could also offer hidden opportunities in other areas for travel buyers. SAP Concur research finds that – in the US at least – Starbucks is the most expensed “restaurant” and most frequently used location for out-of-office meetings. The company reveals that the average expense claim for one of these Starbucks meetings is US$16. So are there opportunities for corporates to negotiate deals with Starbucks?

“I think that’s a brilliant disruptive idea, but it would also be a lot of hard work to organise and implement, especially as I don’t know of anyone leading the way and doing it already,” says Linley-Munro.

PWC’s Avery says the firm’s expense policy doesn’t allow for coffee to be expensed. “We have, however, used [expense reports] to negotiate some discounts with certain restaurants and chains,” he says.

SAP Concur’s Baker says that despite the “absolutely huge” spend with Starbucks, he has not heard of any company successfully negotiating a discount with the coffee chain. It may take a huge global company with enormous spend to make the first approach.

However, in the meantime, there are collective programmes, such as Perks at Work, which offer discounts at thousands of places including coffee shops and more for which corporates can sign up for their own dedicated programme, free of charge.

Perks at Work’s business model is to negotiate directly with companies and use the promise of shifting market share from competitors to secure the discounts. This model effectively outsources the negotiation for categories where the expenditure would not be significant enough for a travel buyer to spend their own time negotiating it.

Unmanaged spend
One of the issues in using expense management reporting to identify unmanaged spend is the quality of the data. If the expense is incorrectly categorised or the data entry is flawed then the data becomes fragmented and next to useless. Some companies use methods other than expense management to track spend outside preferred channels.

PWC, for example, asks the tiny minority of travellers who book through non-preferred channels (the firm claims compliance rates of 98 per cent for flights and 90 per cent for hotel channels) to tell the TMC about these bookings to allow the traveller to be tracked in case of an emergency.

Airbnb and Uber are two disrupters tapping into the consumerisation trend and offering business-focused solutions for companies. Both are working with SAP Concur to provide corporates with access to quality data.

Baker says that information gained from Uber is also useful, despite scant evidence of companies managing to negotiate a corporate discount with the ride-hailing tech firm. Instead, this data has been used in the short term to negotiate with Uber’s competitors, such as Lyft and Mytaxi.

“Those pressures will ultimately enable buyers to go to Uber and say, you are giving my firm 5,999 trips a year, I want some kind of rebate to continue using the service,” adds Baker.

Many companies have looked at Airbnb and Uber for Business only to decide that there were duty-of-care issues or the economics don’t add up. One buyer at a large multinational told BBT: “We have a very strict policy on Airbnb. No traveller should try and book with them. However, we have looked carefully at Uber for Business but the commercials did not make sense. The additional booking fee did not give us the savings we thought it would. I believe the booking fee is due to the data that Uber can provide, but we evaluated that we could get this data ourselves.”

Perhaps the time has come for suppliers to step forward to supply the data they have to buyers?

Oil Spill Response’s Linley-Munro says that we live in a world where most programmes have deals with the usual air, hotel, rail and ground transport. “It may be time to flip things on their head and think about where else deals could be made. It would involve having the right data in the right format at the right time in order to get it working,” she says.

“I like the idea of suppliers approaching buyers with data as – while it might catch the buyer on the hop – it smacks of a deeper understanding and relationship opportunity,” she adds. “The suppliers want to drive travellers directly to them, so why shouldn’t they negotiate with the buyers to make it happen?”

PWC’s Avery says he frequently receives approaches from companies that have identified clusters of spend by its employees with a view to getting on to the company’s travel programme.

“In most cases what they consider to be high spend doesn’t meet the thresholds that makes it worth the time and effort in negotiating and contracting. It is usually either small hotel companies or it is in very fragmented markets such as ground transport,” he explains.

SAP Concur’s Baker says it’s time for buyers to rethink their strategies. He adds: “If I was a buyer, I would be looking at what’s happening with direct connects and new distribution methodologies. Suppliers want to directly interface with my travellers to sell them upgrades and market to them in some way. They’re making a bit more margin so you should have a piece of that. I don’t know who is doing that yet but it ought to be happening.”

“Did you know you are spending €5 million with us?”
For many business travellers in companies with travel policies, consumer-facing travel websites such as online booking agencies (OTAs) can often be like cocaine – easy to access and seemingly inexpensive. Yet at the same time they have many similar disadvantages to hard drugs – they are potentially addictive and can take up hours of time without the user realising it, and something seemingly inexpensive often has hidden extras. You can only push the drug analogy so far – the people running them are not mafia overlords – but you can see the parallels.

Interestingly, some of the companies that are at the vanguard of consumerisation are among those trying to wean the users off maverick behaviour. Booking.com, for example, has been approaching corporate buyers with details – aggregated and anonymised, they point out – of employees booking hotels using the OTA and entering corporate email addresses.

One travel buyer from a large multinational company, speaking to BBT anonymously, says they were approached by Booking.com at last year’s Business Travel Show and told that there was an unmanaged Ð5 million of hotel spend going through its corporate email account.

“We do indeed share this type of data with our partners, and find that many of the travel managers and corporate business travel partners we speak to are keen to learn more about the insights that Booking.com can offer,” says the OTA.

Booking.com’s approach may seem counterintuitive – Ð5 million worth of hotels booked individually is likely to earn the OTA more than that if spend was consolidated. However, Booking.com has the long game in mind – the prize is being admitted to the corporate travel programme as a preferred channel, with the potential for winning more of the overall hotel spend.

Our buyer was certainly of this opinion. “I actually viewed it as an opportunity. Travellers were clearly looking at other booking channels, so I wanted to explore how Booking.com could be brought on to the programme,” she says.

The rise of consumerisation is a huge threat to the traditional way that travel buyers work, she adds. “With more booking channels going direct to travellers, travel managers must find ways to consumerise travel programmes better. If travellers have choice I tend to find they will do the right thing. If they are forced to do something, it will send them in the other direction. It is human nature,” she says.

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