The travel industry has been grappling with the question of how to deal with unmanaged business travel for years now. Some travel managers see a rich seam of potential revenue just waiting to be mined, while others view it more as an existential threat than a blessing. We fall firmly in the first camp, and with
Unmanaged Travel or "Open Booking"
The UK’s 5.7 million SMEs (as of December 2017) represent over 99% of all private sector businesses. Of these SMEs, the vast majority who engage in overseas business travel do so on an ad-hoc basis without a structured corporate travel programme. Indeed, according to research conducted by PhoCusWright and Business Travel News, just 12% of companies with less than 50 employees surveyed had managed travel programmes with official rules on vendor usage and preferred booking channels.
What’s more, the unmanaged travel sector isn’t just confined to smaller businesses who aren’t yet ready for a corporate travel programme. Even those larger companies with robust travel programs are seeing an epidemic of “open booking “among their travellers— that is booking hotels or flights on the open market—whether those employees are permitted to or not. In fact, Concur estimate this figure to be as high as 40% on average.
The rationale behind going “off policy” for travellers is simple: for most, it’s down to personal preference, brand loyalty to an airline or preferred app, or a belief that they can get a better deal than a TMC.
So, how should TMCs react to this? A quick scan of blogs on the subject will tell you that industry figures tend to react one of three ways: fire and brimstone condemnation, weary resignation, or excitement about the opportunities it presents.
Taking a Nuanced Approach
We believe in a nuanced approach, although unmanaged travel undoubtedly presents some problems. For example, how do you fulfil
But in truth, it’s also unlikely to go anywhere, no matter how much TMCs might like it to. After all, personal preference and brand loyalty have long been accepted as normal aspects of consumer behaviour.
Some, such as Concur Hipmunk and Upside, advocate meeting unmanaged travellers halfway—by combining the consumer booking experience with the perks of a more robust corporate travel program. In practice, this means offering perks search as loyalty programs, access to priority customer service and some discounted fair rates without the pressure of using a concrete travel management program.
Another option is to offer travellers a persuasive travel program. For SMEs, this means offering them solutions to the aspects of business travel that are particularly difficult or arduous to deal with independently. For example, visa checking, creating itineraries, and seat
Put simply, it’s about providing a service to SMEs that demonstrates exactly what you can do for them and, hopefully, persuading them of the benefits of managed business travel. You could even offer a trial period for some of your services.
For travellers in larger corporations who choose to go “off policy” the solution is flexibility. It’s well established there are usually three major factors in play during a traveller’s decision to go off policy, age— as many as 64% of millennials understand their company’s policies, but still book travel outside of those policies—convenience, and the perceived choice it offers.
The first is difficult to address head-on. Changing business model to meet generational characteristics is something the industry may have to do sooner or later, but it’s difficult to address as a single TMC— after all millennials are not your sole customers. However, by focusing on the other major factors, convenience and choice, it’s likely you’ll end up catering to millennials anyway.
But how to go about it?
In addressing convenience, it could mean embracing travellers' use of ride-hailing services such as Uber and Lyft—often more convenient at the end of a long trip than using a traditional taxi service. Or, it could mean allowing travellers to book accommodation through sharing economy sites such as Airbnb. You could even let travellers “open book” their preferred hotel, although this presents an obvious problem for supplier relationships with hotels.
Giving travellers greater choice is simpler. Most business travellers who go off-policy are going to use a travel fare aggregator such as Expedia, so why not give them access to it through you?
Doing so, through platforms like Expedia’s Affiliate Network (EAN) means being able to offer your travellers a similar range of choice to what they’d be able to find independently, but without the hassle of doing it themselves. What’s more, you’ll likely be able to save them money with Expedia’s preferential deals for users.
Unmanaged travel is a balancing act for TMCs, on the one hand, it represents an incredibly lucrative untapped market—even if no individual account is a big money-maker. On the other, catering to SMEs and “off-policy” travellers could risk TMC’s supplier relationships. As yet, no business can really be said to have “won” the battle for unmanaged travel but, for the eventual victor, the spoils will be significant.
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