Managed Travel 2.0 is quickly becoming a topic in board rooms and corporate travel departments these days as companies such as Uber and Airbnb dig in to the landscape of mainstream travel.
For corporate travel managers, who control roughly half of the $292.3 billion travel industry in the United States today, the concept can be a double-edged sword. Most of these managers work to enforce travel policies that require employees to book the cheapest available option through set distribution channels, such as corporate travel agencies.
However, the 2014 Managed Travel Survey by global sales and marketing consulting firm ZS found that Managed Travel 2.0 – an emerging policy of managing and booking corporate travel – could be a valuable alternative for many of these companies.
A philosophy often described as the “future” of corporate travel, Managed Travel 2.0 allows employees to book travel through any channel, similar to how they shop for personal travel – as long as it meets specific parameters (such as preferred vendors or budget) and allows the company to collect all transaction and travel data in real-time. With this freedom, some companies have found, comes higher travel program satisfaction, less resistance to abiding by travel policies and overall improved employee engagement.
ZS sized today’s Managed Travel 2.0 market by surveying 202 U.S.-based corporate travel managers. This included 18 of the top 100 corporate travel companies. ZS analyzed what types of companies invest in managed travel today and how likely they are to adopt Managed Travel 2.0. It then determined that one in five companies is likely and willing to grant greater traveler freedom.
“Corporate travel managers must balance how they fulfill financial objectives with how they account for soft costs borne by the employee,” said Glenn Hollister, principal and leader of the travel and transportation practice at ZS. “As different types of booking technologies advance and consumers adapt swiftly, many have realized that a superior user experience may encourage better compliance and generate greater business value from their travel programs.”
Companies motivated to improve employee productivity and comfort, willing to offer extra travel amenities and who already implement attractive policies for suppliers are usually also ready to make the move to Managed Travel 2.0. And, according to the study, nearly 20 percent of companies today satisfy these criteria and define the immediate 2.0 market.
“These travel managers already make travel-buying as seamless and simple as possible for their road warriors,” said Jayesh Patel, manager at ZS. “Our survey uncovered that 78 percent of the Managed Travel 2.0 market allow travelers to spend corporate dollars on comfort and productivity amenities, such as priority boarding, extra legroom and in-flight WiFi. Another 69 percent allow exceptions, such as granting an extra night in a hotel if employees are on extended business trips or long flights.”
These companies also align the focus on employees with how they measure the effectiveness of their travel program and managers. In addition to calculating company savings, the Managed Travel 2.0 market is around 2.5 times as likely to measure metrics such as employee productivity and health and wellness costs when evaluating corporate travel program performance.
New Corporate Travel Ecosystem
As the appetite for Managed Travel 2.0 grows, companies must ensure management buy-in and successful implementation. This includes having a travel manager or key executive who actively supports and champions this new booking travel policy.
A company’s program must also offer a near-term, immediate reward, such as quick-to-implement booking options that provide a positive experience for employees and add value for the company, such as less time spent on the booking process.
However, widespread adoption cannot occur until a complete network of suppliers exists to support Managed Travel 2.0. This must include major supplier categories (e.g., airline, hotel and car), travel management companies and distribution channels.
“You need a complete ecosystem of suppliers, distribution channels and technologies that work fluidly together,” said Patel. “Some suppliers have already made significant investments in this direction.”
Take for example United Airlines, which recently announced its work with Concur to develop direct booking capability for corporate travelers in 2015. It will allow corporate travel managers to acquire all booking data, track where their employees travel and monitor for compliance.
“Forward-thinking suppliers and companies are preparing for Managed Travel 2.0. When corporate travel managers enable multiple booking paths that align with their program objectives, they should see a win-win situation that satisfies both the company and traveler,” said Hollister.