Business travel is being transformed by the sharing economy. (Photo: Thinkstock)
Sharing-economy companies such as Uber and Airbnb are starting to make serious inroads into the $300-billion business travel market, completely changing the way business travelers, well, do business.
Last week, the house-sharing giant Airbnb announced a massive overhaul to its Business Travel program that was launched in July 2014, in the hope of increasing the visibility of an employee’s travel plans and spending. And today, Concur Technologies — which provides travel and expense management services to businesses across the country — is announcing new partnerships with Lyft and HotelTonight, expanding its already extensive offerings, which include Uber and Airbnb.
It’s a reflection of a larger shift within the industry toward the use of sharing-economy services instead of more traditional competitors. “We are seeing a really big uptake in adoption of those products by business travelers as they they add a ton of value and enhance productivity,” Concur executive vice president Tim MacDonald told Yahoo Travel.
So what has driven this clear shift in business travel toward services provided by the sharing-economy?
While it appears that the millennial generation has certainly been key in the adoption of these services within corporations, they are not the ones driving the growth. “What we have found is that these changes to the industry may be millennial led, but it is not a millennial trend,” says MacDonald. “I think that what you are seeing is early adoption of these new tools by that generation and then it is working its way up the generational ladder within corporate America.”
Millennial business travelers aren’t the only group using sharing-economy services. (Photo: Thinkstock)
According to the Global Business Travel Association, the business travel industry is worth over $300 billion in the U.S. alone. It is estimated that $175 million was spent globally by business travelers in 2013 on travel services procured through travel management companies such as Concur, which has over 30 million users in the U.S.
Business travelers are expected to abide by specific policies put in place by their employers, limiting their options and choices surrounding their business travel. These rules make partnerships between travel management companies like Concur and the sharing-economy brands an essential part of the industry’s growth. And the only way in which brands like Uber, Lyft, or HotelTonight, can get a foot in the door that gives access to these travelers.
“Companies are [also] able to live up to their duty-of-care responsibility, which…means they need to understand where their employees are in the case of some kind of incident, whether that be an earthquake or a terrorist attack,” MacDonald explained. “We can reach you and find out if you are ok and if not, provide assistance. So these offerings are not [just] nice to have, they are things that companies really have to do.”
“Corporate travel is a big part of the travel pie; it’s worth a lot of money,” Airbnb co-founder and chief technology officer Nathan Blecharczyk explained last week to Bloomberg.
Airbnb is playing catch up, with just 10 percent of its overall business accounting to the business travel sector.
In the past, AirBnB had to manually invoice companies with spreadsheets displaying employee room rental expenditures. But with more than 250 companies enrolled in the program in the past year, the dated manual system quickly became a problem.
The new system will be fully automated and offers companies a centralized dashboard where they will be able to track employee travel plans and expenditure.
Established business travel providers need to adapt. (Photo: Thinkstock)
Uber, on the other hand, has had little problem stealing market share from taxi companies on both the business and leisure travel sides of the sector.
In the second quarter of this year, Uber took over from conventional cabs as the most expensed form of ground transportation according to expense management system provider, Certify. Uber accounted for 55 percent of ground transport receipts processed by the company compared to just 43 percent for taxis.
“Established travel providers will need to adapt quickly or face further market share erosion to the sharing economy,” Certify CEO Robert Neveu said in a statement.
Concur found from its own data that Uber registered a five-times year-on-year growth between July 2014 and July 2015 among its business travel clients. Lyft, meanwhile, has seen seven-times growth, based on Concur’s data analysis.
But while business travelers might be quickly moving toward services like Uber and Lyft, many employers still have reservations about the safety and liability of these ride-share options.
Depending on the city, the drivers aren’t necessarily regulated by government taxi licensing authorities. And while both Uber and Lyft insure drivers during paid rides and also require drivers to carry personal auto insurance that covers them the rest of the time, the policies regarding insurance protecting the passenger aren’t always clear and they can vary from state to state, city to city.
The growth of these services is also expected to expand into other types of offerings to the business traveler, beyond just accommodation and transport.
“One of our biggest partners is not one that you would necessarily think of when you think travel and that is Starbucks,” shared MacDonald. "Today I can go into the Starbucks app and I have two cards that I can choose between. If I choose my Concur card, for something at Starbucks, it automatically shows up on my expense report. We did that with Starbucks because we found that it was a very large category on the expense report.”
With the “sharing” or “peer-to-peer” economy already referring to services as varied as co-working spaces and even short-term bike rentals, these discoveries will continue and companies like Concur will continuously update their offerings to reflect the new demands.
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