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Analysis: Sharing economy and business travel

The emergence of peer-to-peer platforms in managed travel is getting a mixed reception from the corporate market as Rob Gill reports

If the old maxim that “there’s no such thing as bad publicity” really is true, then nothing should hold back the global advance of the giants of the “sharing economy”, such as accommodation network Airbnb and taxi app Uber.

Both Airbnb and Uber have been generating plenty of headlines in recent months, and not always for positive reasons. London’s black-cab drivers brought traffic in the UK capital to a standstill for a day in June, to protest about Uber drivers’ use of an app that traditional cabbies claim is illegal because of the way it utilises GPS (global positioning system) technology to set fares – a dispute that’s already on its way to court.

Uber has also been involved in a row with taxi app rival Lyft in the US over alleged false bookings made on each other’s platforms which have then been cancelled.

Authorities in some major business travel destinations, such as New York, Paris, Berlin and Barcelona, have also attempted to crack down on what they say is the illegal renting of apartments and other properties through Airbnb and other similar services.

Paris mayor Anne Hidalgo has even created a 20-strong team of inspectors who make unannounced visits to properties suspected of unlawfully renting through Airbnb.

But talk to travel buyers and TMCs about peer-to-peer networks, and the worries are about more practical issues such as safety assurances, the quality of background checks on providers, insurance coverage and traveller tracking.

These issues are only going to become more important within travel management following Airbnb and Uber’s launches of their first business travel services, which were unveiled at July’s GBTA Convention in Los Angeles.

The two firms are also working with Concur to include corporate bookings within its expense management system.

Airbnb says it has been working with companies such as Facebook and Salesforce to develop its business travel product, and already has around 30 corporates on board.

Meanwhile, Uber has already signed up an impressive list of corporate clients, including Deutsche Bank. Uber has also created a loyalty product with corporate card provider American Express.

The attraction of business travel for Airbnb, Uber and others operating in the sharing economy is the same as for all travel firms – business travellers generally spend more than leisure customers – and these new platforms claim that corporate travellers have already been booking their services.

SERVICE, SAFETY AND SECURITY
But what does this mean for travel buyers and how do these services fit into the travel programme and policy? Can the titans of the shared economy convince companies that they can offer a similar level of service, safety and security as traditional providers? Wouldn’t it be easier to use apps that offer professional service providers, such as black cab platforms like Get Taxi or Hail?

The dilemma was neatly exposed by the travel department at the University of California this summer when director of travel services, Belinda Borden, announced that peer-to-peer services should not be used by those travelling on university business because they were “not fully regulated and do not protect users to the same extent as a commercially-regulated business”.

But such was the outcry from employees that just two days later a new communiqué was released by the university reversing this decision and allowing travellers to continue using the likes of Airbnb, Uber and Lift. However, the university added it was seeking ways to “overcome potential liability and safety concerns” and wanted to work with providers to reach “a point of complete comfort with the risks involved”.

The new business travel programmes from Uber and Airbnb can be seen as the first step along this path, and have been driven by demand from corporate travellers themselves.

Chip Conley, Airbnb’s head of global hospitality, claims that “nearly 10 per cent” of customers are already travelling for business and looking for something different from a traditional hotel stay.

“We know Airbnb isn’t for every road warrior, but for larger groups, longer stays, and relocations, Airbnb offers inspired spaces in memorable places to make the most of any type of travel,” says Conley. “Working with Concur, we’ve now made it easier for people to make the most of their business travel.”

Unsurprisingly, Concur agrees with this assessment of the potential of peer-to-peer bookings within corporate travel. Concur executive vice-president Tim MacDonald says the data shows that Airbnb expense claims on the Concur platform have gone from zero in 2012 to US$1 million during the second quarter of this year.

“Employees clearly want Airbnb in their managed travel programme and we think that trajectory will continue,” adds MacDonald. “Our goal is to support customers who want to empower their employees while ensuring that fiscal visibility and duty-of-care responsibilities are met.

“Airbnb’s pitch is aimed at those on business trips who tire of lodging at large hotel chains – often employees who have ventured outside their internal travel systems to book trips.”

Interestingly, Google’s global travel manager, Michael Tangney, who is famed for developing an open booking policy for employees, said that Google staff had spent a total of US$2 million with Airbnb in the past year, during a Phocuswright conference in May; while TMC Carlson Wagonlit Travel (CWT) says that “at least one corporate customer” has added Airbnb to its preferred accommodation.

The worries are about issues such as safety assurances, the quality of background checks and traveller tracking programme. CWT’s UK and Ireland senior director, Nigel Turner, adds: “We need to make sure we give our clients as much information as possible, including what these providers do and don’t offer, and where there might be risks, so they can decide if this type of provider is right for their programme.”

HYPED UP?
But not everybody is convinced that the shared economy will change the landscape of business travel. Graeme Milne, UK general manager for Corporate Traveller, thinks it will have “little impact” on the sector. “There has been a lot of hype recently, but I still don’t believe that these travel services are viable for business travellers,” he says.

“Duty-of-care and CSR [corporate social responsibility] are top priorities for corporates when arranging travel for their employees, and services like Airbnb can’t provide that level of assurance and safety. Corporates want to stay in a reputable hotel with proper facilities, not a bed-and-breakfast exchange.”

Some in the industry draw a distinction between different types of peer-to-peer services.

Hillgate Travel sales director Warren Dix says the “flexibility” and “easiness” of services such as Uber is already making them popular with business travellers. “The ability to book a car from your mobile device at short notice, track the car’s progress and save money will be highly appealing,” he says.

But Dix adds that using Airbnb is “trickier” due to regulations on renting private homes being “much weaker and, in some cases, non-existent” in many key cities.

“Uber has the upper hand on this front, as in most markets there is regulation in place whereby licensing is required to operate,” adds Dix. “Any new product or service that challenges the status quo will always cause waves among the competition – especially if they operate within a mature and safe market.”

Given these concerns, it may be tempting to steer well clear of peer-to-peer platforms when putting together your travel programme. But as the example of the University of California shows, trying to ban them is unlikely to go down well with travellers who become used to using these services, and unhappy employees can only mean trouble for buyers and managers.

As one UK-based travel buyer put it: “You can’t just ignore them, as they seem to be here to stay. If your travellers want to use them, then it’s going to be difficult to stop them. You have to find ways in which you can capture the booking and data within your systems. Duty-of-care is a huge issue but it’s something we’re going to have to work on with suppliers.”

BUYER WORRIES
The moves by Uber and Airbnb to integrate their bookings with companies’ expenses systems are only likely to make them more attractive to travellers. This will no doubt furrow the brows of many buyers worried about employees staying in sub-standard accommodation with potential health and safety pitfalls, but it may be a problem they just have to cope with.

On the other hand, leveraging the likes of Uber and Airbnb against traditional taxi services and hotels could help to drive better negotiated deals with these existing suppliers. For example, a study by Boston University’s School of Management claims that budget hotels have the most to lose by the rise of Airbnb, with the US economy hotel sector on course to lose as much as 10 per cent of its revenue by 2016 if Airbnb continues to grow at the current rate.

WHO ARE AIRBNB & UBER?

Airbnb
The accommodation platform Airbnb was set up in 2008 in San Francisco, and offers a marketplace for people to rent their apartments or spare rooms to visitors. The company says it has more than 800,000 listings available across 34,000 cities in 190 countries.

Accommodation can be booked online or on mobile devices, and there is also a 24-hour hotline for urgent enquiries. Properties are covered by a £600,000 Host Guarantee for any damage caused. London, Paris, Barcelona and Amsterdam are the most popular cities for British travellers using Airbnb.

airbnb.co.uk

Uber
Another San Francisco-based start-up, which operates its taxi service through an app connecting customers with nearby drivers through GPS. Uber, which was founded in 2009, currently operates in 162 cities across 42 countries, including London, Manchester and Dublin.

The company says its drivers are independent contractors and there is a “rigorous screening process to verify that every driver is insured and legally qualified to drive”. In the UK, this means that anybody with a private hire vehicle licence can become an Uber driver.

uber.com

 

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