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July/August 2017
For Business, Corporate Travel & Meeting Buyers & Arrangers

Travel tech start ups

YOU MIGHT NOT EXPECT the words start-ups and corporate travel to be mentioned in the same sentence. And yet in the past year, there have been many new players looking to disrupt corporate travel, and established businesses are beginning to change how they think about these newbies.

Take Travelport. A year ago it launched its Travelport Labs accelerator programme – a scheme whereby a company provides mentorship and support to a start-up – and has just unveiled its third tranche of par­ticipants. Initiatives around accelerators are one way to help raise the profile of start-ups and encourage new entrants. B2B confer­ences which run start-up competitions are also helping.

Business Travel Show event director David Chapple says innovation is the “lifeblood” of any industry and without it “evolution is impossible”.

“For a sector like business travel, which has been – and continues to be – impacted so heavily by technology, innovation is particularly important and must be embraced by buyers,” he says. “Without innovation there would be no online booking, no apps, no sharing economy, no paperless check-in and no digital traveller tracking.”

Last year the Business Travel Show unveiled its Launchpad initiative, which brings start-ups and buyers together at the two-day event. Chapple says that Launchpad provides the new entrants with exposure to the corporate buying community which, in turn, gets to discover new products and services. In addition, buyers can also help shape the direction of start-ups with valu­able feedback on how their concepts might have most impact.

More recently, British Airways-parent company IAG announced its start-up ac­celerator Hangar 51 while Marriott Hotels unveiled its own Testbed initiative. Easyjet, meanwhile, partnered with Founders Factory on a five-year deal to incubate and accelerate start-ups in the travel space.

DISRUPTIVE THINKING

Carolyn McCall, chief executive of Easyjet, said the initiative was about “putting disruptive thinking at the centre of our digital experience”.

Coupled with this desire to seemingly embrace disruption is the arrival on the scene of a number of start-ups – Trippeo, Flyr, Upside, Travo, Hyper, Conichi and Trav­elbank to name a few – all seeking to address different elements of corporate travel.

Patrice Simon, who has responsibility for new product development at Carlson Wagonlit Travel (CWT), believes one reason for all the start-up activity is some high valu­ations which makes investment attractive.

“The time it takes to go from US$20 million to US$1 billion is a lot less. If you are an investor you might be thinking you could put US$100,000 into a company in January and get a return by June, so that triggers a lot more activity. It’s a money thing.” He adds that it’s no longer about investors seeking technology start-ups that might make mere ‘unicorn’ status (companies valued at US$1 billion), rather companies that may achieve ‘decacorn’ status (valued at US$10 billion).

Dan Ruch, CEO and co-founder of Rock­etrip, which helps businesses incentivise travellers that adhere to policy, agrees there is plenty of money being put into the space, as well as a lot of “inquisitive behaviour”. He points to deals such as Concur’s recent acquisition of Hipmunk as an example.

Ruch adds that the size of the corporate travel space also makes it a target for start-ups and investment. “It’s crazy to look at the size of the business space and not get excited about disrupting it. It is by far the biggest, addressable market. There’s a massive oppor­tunity so it’s surprising there aren’t more.”

UNTAPPED POTENTIAL

Click Travel executive chairman Simon McLean says entrepreneurs will be looking at the travel space in general and see corpo­rate travel as relatively untapped. There is an appetite to see innovation and change in this area, and travel management companies (TMCs) and buyers recognise the benefits of working with start-ups.

CWT’s Simon says big companies have difficulty in bringing new products and services to market quickly and describes start-ups as another world in terms of agility and speed to market.

But while there are benefits, there are also challenges and risks involved. Craig Cherry, procurement director at media and digital marketing firm Dentsu Aegis, says companies don’t often have the time and resources required to nurture a start-up or integrate it within the business.

“We live in an age of mitigation and the whole concept of risk management has been lifted to a different level. Then, there’s issues around the use of data and personal data.” He adds, however, that if he can demonstrate a business-use case for a new product or service in terms of money savings and efficiency gains somewhere in the process, then his company will definitely look at it.

DO YOUR HOMEWORK

Rocketrip’s Ruch says there’s a trade-off in working with new entrants when it comes to their ability to deliver what they say in terms of particular features, or more widely. “Does it really work the way it was pitched and is the company going to be around long enough to produce what it said?” His advice is to seek as many references, testimonials and even case studies as possible about a start-up and its product before committing to working with it.

CWT’s approach to start-ups is a little different. It works with both Plug and Play in the US and Welcome City in France to help it identify companies that might solve particular pain points for corporate buyers and travellers.

As part of that approach, it incubates and tests products with a number of corporates and their travellers to understand their value and how they will fit into the overall process. The TMC is particularly looking at whether the product works, how much it costs to implement, whether it solves a particular issue and whether it can scale.

CWT’s Simon says that start-ups are not always successful in demonstrating value and ability to scale, and this process means it can minimise risk and hopefully help more start-ups prove their concepts. “It’s not easy – they need help. They think sales cycles are really short when, in fact, they are really long. A lot of start-ups don’t know how a corporate works, and they need knowledge of how procurement works.”

PROBLEMS AND SOLUTIONS

Inside knowledge of the industry also helps start-ups to focus on what areas re­ally need addressing to avoid developing a solution that is looking for a problem rather than the other way around. Cherry says it’s worth checking the background of the start-up’s team to see whether it un­derstands the traveller and buyer points of view.

Ruch adds that start-ups are unlikely to survive in business if they are not addressing a problem. “At the end of the day the market dictates demand. You can get away with getting it funded but not with selling it to 20 customers.”

All these risks around start-ups make it difficult for them to get the attention of the corporate travel space, whether that’s TMCs or corporate buyers.

Cherry, who worked within an alterna­tive investment fund previously, reckons something of interest comes across his radar about once a week but acknowledges how difficult it is for start-ups. He says everything happens so fast these days that people don’t have time to stop and put some thought to innovation and what’s out there that’s different to what is currently used.

In an ideal world, TMCs would bring innovative start-ups and ideas to corporate buyers as well as the other way round. Simon says clients tell CWT their pain points, enabling it to get a “holistic view” so that it can then find start-ups that might be able to address the issues.

Dentsu Aegis works with American Express GBT, and Cherry says that, as with any partnership, he would expect the TMC to investigate relevant products and services.

Click Travel’s McLean agrees that it should be a two-way street but points out it can often depend on economic factors. “When the economy is stronger people are open to new ideas and, as companies empower employees, they will inevitably drive these changes.”

He adds that the corporate travel technol­ogy and TMC worlds have been a bit lazy and have a tendency to rest on their laurels. “There’s still this theory that the organisa­tion makes a decision and dictates the tools to staff, and that makes tech designers lazy.”

RIPE FOR CHANGE

Rocketrip’s Ruch supports this view and believes there will be changes in the user experience. “The business travel ecosystem has left itself wide open for innovation on user experience. It has treated employees like cattle for a long time. The buyer of the product is not the user of the product whereas, in leisure, if it is not a seamless experience then you don’t get the booking.”

While some in the corporate travel com­munity acknowledge the need for things to change, others are still a bit slow. Simon says TMCs that get new ideas into the ecosystem and change the fastest will have a big head-start on rivals.

He adds that it’s critical to work with start-ups and that there has been a sea change in thinking within the organisation. “We need to be open and understand what is out there,” he says. “We don’t want to get disrupted. A year ago it would not have been easy to work with them; today, we look at it in a very different way.

Who’s on the corporate start-up radar?

Flyr A fare prediction start-up with early financial backing from the investment arm of insurance firm AXA and seed funding of US$3.7 million.

Travelbank An expense management website and app that helps corporates predict travel costs and provides travellers with a budget. It has US$10 million in funding.

Conichi An app that uses beacons within hotels to improve the traveller experience, with financial backing from hotel portal HRS.

Trippeo A travel booking and expense management app with undisclosed start-up funding.

Hyper A travel booking assistance application which uses chat to help travellers. It has received just over US$1 million in seed funding

Freebird A service which reboots disrupted airline passengers. It has received US$3.5 million in funding and signed a deal with Corporate Traveller.

Upside A service aimed at smaller companies that rewards travellers with gift cards for well-known brands if they are prepared to be flexible and save money on their travel.

Travo A start-up for business travellers who don’t use a TMC to help find the best airfares and accommodation, which it then packages up into an itinerary. It has funding of US$2.4 million.

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