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The Sharing Economy is Changing How Travel Managers Do Their Jobs


Posted by Kevin Iwamoto on 05/08/2015

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The “number one” conversation and discussion at industry these days seems to be The Sharing Economy — and its potential to disrupt the current travel and meetings ecosystem. U.S. companies and their corporate travel programs are projected to be more than $310 billion in 2015, and the global meetings and events marketplace is estimated to be over $500 billion.

Today’s Sharing Economy startups are challenging traditional travel vendors, travel policies and overall travel and meetings management models — and in the process, they’re forcing many businesses to reevaluate their existing travel policies and processes. At the same time, they’re forcing travel and meeting suppliers to revisit both how they transact business and handle agreements with travel and meeting buyers.

Those in our industry (both buyers and suppliers) who have tried to stop The Sharing Economy from taking root are simply too late.  Travel managers are especially vulnerable, as their long-standing positioning on lowest cost policy is working against them —often, Uber and Airbnb are the lowest costs.  

That leaves only the safety-security-Duty of Care arguments against the Sharing Economy suppliers — and those are also being evaluated by corporate legal departments today. So what about the evidence of hard savings? According to various studies, Airbnb saves 41 percent — or an average of $102 per night — compared to traditional corporate hotel programs. Depending on which study you read about Uber, the savings vs. car rentals and “black car services” are double digits.

Want more compelling evidence? Concur, a top travel expense management company, reported in July 2014 that Airbnb transactions in their expense reports had increased by 27 times (year-over-year) while Uber transactions had climbed 5 times. Clearly, travel managers have a growing issue at hand.
So let’s review the high-level pros and cons:

Market share or revenue impact for supporting the Sharing Economy Suppliers:

Pros:  Whatever volume you lose from your traditional program can be offset by the cost savings you need to track to justify the policy change to include these new Sharing Economy suppliers.

Cons:  In many cases, this shift completely conflicts with the traditional travel manager’s strategy and policies. The biggest conflict is volume: the more employees book in the Sharing Economy, the less they book with traditional travel vendors. If the company fails to spend at or above the minimum spend threshold negotiated by the travel manager, the deals and perks may be negatively impacted or cancelled.


Safety – Security – Duty of Care:

Pros:  The trend of increased Sharing Economy safety and security concerns means you can convince your corporate legal department and senior leaders to review existing policies, insurance coverages and supplier agreements. In addition, you can use any program leakage data and information to support your request for better support and controls over existing travel programs and policies.  

Cons:  Today, many corporate insurance policies do not cover The Sharing Economy. Most employees are completely unaware of how complicated, stressful and restrictive the safety and security issues can be for a travel manager and senior executives. Most troubling is that many of them don’t care — opting for convenience and prices.


Supplier Negotiations:

Pros:  Like Jerry Maguire, tell your suppliers to “…help ME, help YOU…”  Ask them to be creative in addressing market or revenue share leakage, and hopefully they’ll come up with pricing and perks that you can defend in support of your existing or modified programs.

Cons:  The new Sharing Economy challenges the old guard not just in terms of savings and perks negotiations with suppliers, but could have a negative impact on the value of long-standing supplier relationships. The ability to not just quantify, but communicate and explain the “value” of the corporate-supplier relationship model, has never been more under attack than it is today.  


Crystal Ball

I have no doubt that the Sharing Economy services will meet travel and meeting managers at least halfway on safety and insurance issues. Uber and Airbnb have publicly stated as much. Second, Sharing Economy companies will continue to compete head-to-head with the old guard suppliers on perks and rates.  

There will be more conversations between travel management companies and the Sharing Economy startups. The key will be how they handle any potential revenue sharing. What partnership model will be economically viable? Already, there’s some traction with United Airlines and Starwood partnering with Uber and providing loyalty points and/or traveler convenience.

The corporate and meetings travel ecosystem is constantly targeted for disruption. And guess what? For a change, it’s great to see that the winner that will ultimately emerge from this will be you —travelers and corporate travel managers. Travelers will get the convenience and pricing they’ve become accustomed to, and corporate travel programs will get the cost reductions and traveler satisfaction scores they want.

 
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