I spent my last few blogs describing Why Uber and Airbnb Are About to Hit the Jackpot … Again! and that B2B Is the Place to Be! Only a small share of travel startups deliberately focus on the B-to-B segment, and although I understand some of their rationale for not targeting this audience, I still believe that there is great opportunity in this area waiting to be captured—and a distinct need for innovation.
Make My Life Easier and I’ll Pay for It
If you asked frequent travelers around the country to name the three things that matter the most to them when they travel for business, “convenience” likely will feature in the majority of their responses. In the most recent Global Business Travel Association (GBTA) survey, for example, corporate travelers enrolled in the TSA PreCheck program “are significantly more satisfied with air travel” than those who aren’t enrolled. (I can personally vouch for that.) You have an idea that will help us salvage a few extra minutes of sleep when we have to take the dreaded 6 a.m. flight? You have effective (and practical) solutions for us to leverage to enable a relatively healthy lifestyle while on the road? You have a solution for reducing our luggage so that we may not even need our carry-on bag? Sign us up.
Well, how about a service targeted at road warriors that allows us to pre-purchase our coffee and banana from our favorite coffee shop at the airport so that we can avoid the line altogether? How about a fitness-focused app that shows us creative ways to maintain a healthy lifestyle while on the road? A combination of all of the above, all in a simple, easy-to-use app, maybe?
Similar to what Uber and Airbnb have done, other businesses also have the opportunity to extend their current B-to-C offerings in the B-to-B space. One that comes to mind immediately is on-demand laundry service. What if Washio or Rinse set up corporate contracts with corporate discounts that enabled travelling professionals to leave their dirty clothes at their hotel on Thursday evening and pick them up from the hotel reception when they return the next week? Sales reps and consultants would love this. Or perhaps Instacart can set up contracts with corporations to provide the option of fresh, healthy food choices delivered to their employees’ hotels. The list goes on and on.
Don’t Just Present Historical Prices; Predict Future Airfares
Any travel management companies out there looking to strengthen your value proposition to lure corporate accounts? Consider this: How many agencies, traditional or online, can predict future airline ticket prices with a reasonable degree of accuracy and be able to say, for example, “We recommend that you purchase your ticket in two days, as there is an 80% chance that your ticket price will fall by $XX between now and then”? Now, wouldn’t that predictive capability pique the interest of large corporate travel buyers?
Before all of you revenue management buffs cast doubt on my claim, please allow me to share one caveat: We can’t, of course, predict future booking patterns and yield management strategies with 100% accuracy, nor can we predict unforeseen future events or “actual” price increases (as opposed to the opening and closing of fare classes). But we should, with a reasonable amount of certainty, be able to predict how pricing should trend by leveraging historical pricing data along with current seat availability using, say, global distribution system and airline seat maps, or other booking build data. And the kicker here is that the risk associated with this is limited. The predictive algorithm can easily be tested and fine-tuned before launching the product.
This is not a new concept. For example, Farecast, later purchased by Microsoft, tried to do exactly this but wasn’t successful. Almost all online travel agencies are also trying to integrate this into their value propositions, but most will tell you how airline prices have trended over time and not how they expect to trend in the future. The idea isn’t novel, but the solution and execution are critical. If this solution is predictive, and the impact scales to a point where it can influence airline revenue management behavior, this “cat and mouse” game could be especially interesting, and could give this information provider a competitive advantage that would be hard to replicate, or to beat.
Corporate Travel Spending Analytics 2.0
Yes, travel management companies are supposed to provide corporations with travel spending analytics, and they do, but the reporting is most often extremely basic, such as a chart showing the company’s travel spending over the past five years. Statistics like this barely satisfy anyone’s appetite; on the contrary, they only raise more questions.
Many travel management companies also find it challenging to support the more complex questions that corporations are becoming increasingly interested in. For example, a corporate travel manager I recently spoke with wanted to analyze the cost impact by changing the company’s business class policy from flights over five hours in duration to those over three hours. Travel management companies would have a hard time conducting this analysis, let alone having the bandwidth to do it. What if there was a service that could help with performing more insightful analyses like this that travel management companies and corporations could both leverage?
The potential value in this area is widely recognized in the travel industry already. In mid-2014, when American Express spun off its business travel division into a joint venture led by Certares International Bank, one of the key reasons cited was to have better access to capital to invest in technology, including reporting. In addition, some of the other larger travel management companies, and even in-house travel departments at corporations with large travel budgets, may already do higher-quality and more detailed reporting today. However, there’s still significant opportunity to develop a solution for small and medium-sized corporations, those with travel spends too small to warrant the budget required for sophisticated systems and tools, but large enough to warrant attention within their own corporations.
Whether or not you agree that these particular ideas represent significant opportunities for travel management companies, most of you probably agree that there’s no shortage of opportunities in the B-to-B travel space. And the B-to-B travel segment’s (relatively inelastic) size of approximately $1.2 trillion worldwide and $275 billion in the U.S. in 2014 is nothing to sneeze at, either. However, getting aspiring entrepreneurs to recognize this, and to focus on it, is a real challenge.