ALTERNATIVE AMBITIONS
Small and midsize companies see widening options to add travel controls while stopping short of a classic travel programme
In the battle for the still vastly untapped market of small and midsized company travel spend, the field of players has widened, with a host of options outside the traditional travel management company providers targeting the segment.
Many of these alternative travel management providers said they are seizing an opportunity not only to capture previously unmanaged travel programmes but also to draw in dissatisfied companies in those traditional models.
A solid majority of respondents in BTN's survey said they have not changed TMCs or online booking tools in the past 18 months – 75 per cent and 82 per cent, respectively – but suppliers said they see a market ready for change.
Oded Zehavi, CEO and co-founder of Mesh Payments – which added a travel management platform to its offerings last year – said it's a particularly ripe time to win business, as many legacy TMCs and travel technology platforms had to pause investment during the Covid-19 travel stoppage, and that stalled development has put them behind with their customers' needs.
"There is a huge wave of [requests for proposal] coming all across the industry," said Zehavi. "Almost every company you speak with is in an RFP, plans to have an RFP soon, or is shopping around to see what is new in the space."
India-based business travel management platform Itilite, which targets companies that spend between $1 million and $10 million each year on travel, has been making "good progress" in its expansion with US customer growth, having grown from around 25 customers in 2022 to some 500 today, said founder and chief business officer Anish Khadiya. That has come not just from previously unmanaged programmes but also from companies that are changing a travel management provider they've had for five or more years.
"We've discovered the SME segment is not very well served. The change management on that journey is not well fleshed-out"
Anish Khadiya, founder, Itilite
"We've discovered that's a segment that is not very well served," said Khadiya. "The change management on that journey is not well fleshed-out, and we've been able to build a strong niche there."
Industrial corporation Sodecia, one of Itilite's new clients, fell into that former category, having moved from a "pen-to-paper" system of travel management prior to signing with the company, said head of treasury Zach Surma. Approvals required chasing down people to sign off, and by the time that happened, costs sometimes had moved out of budget.
Additionally, "customer service above all is the biggest selling point," said Surma. "There's a million things that can go wrong, so it's great to have a team to call up and rely on."
As such customers look to find the programmes that meet their needs, here is a look at some that have arisen over the past few years.
Fintech branching out
Fintech players have been particularly aggressive in recent years in their expansion into the travel industry. Besides Mesh, to name a few, announcements over the past few years have included: financial services and technology company Brex, which launched a travel booking service on its Empower platform in partnership with Spotnana last year; corporate spend management provider Ramp, which in 2022 launched its Ramp for Travel offering that enables companies to set policy controls for travellers booking across a wide variety of platforms; and expense management app Expensify, which this year added a new travel platform also built on Spotnana technology.
In recent weeks, another player entered the travel fray: software and business tool provider Zoho, which provides a wide range of tools for business functions. It is adding a spend management solution that has travel functions, including a booking tool.
These combined offerings give SMEs an "all-in-one" platform that Zehavi said also has been of increased demand among the segment. "The theme that everybody is speaking about is they are looking for a unified experience that covers both travel and expense," he said.
Expense management providers also have a bigger penetration into the SME market independent of TMCs, according to BTN's research. Four out of five respondents said they use expense management technology, and 73 per cent of all respondents said they get that technology direct from the supplier, compared with 7 per cent who get it from their TMC. By comparison, while more than 90 per cent of respondents said they use online booking tools, more than half of that subset got that technology from their TMC.
"The theme that everybody is speaking about is that they are looking for a unified experience that covers both travel and expense"
Oded Zehavi, CEO, Mesh
Of course, integrated travel and expense is hardly a new concept, and market leader SAP Concur views expense as a way of capturing the SME market. Expense can be a starting point for SMEs with no grasp on their travel programmes, especially if they are not yet able to go to suppliers directly or want to get locked into a TMC deal, said Concur Travel president Charlie Sultan.
"They want to get some savings and want to get reporting," Sultan said. "The beautiful part about working with us is that even SMEs have to submit expense reports; if they're using an OTA, they can get in on the ground floor with Concur Expense, do something with TripLink and graduate."
The expense and payment product itself, however, can often be the differentiator for specific needs across the SME spectrum. SME-focused expense management supplier Center – which also has an integrated travel and expense platform built from Spotnana, which is in its same investment family – was designed to "refresh and update" the typical batch reporting experience, Center's travel ecosystem SVP Amy Padgett said. Its revenue model, which is based on consumption from the Center card, lets companies start building that same travel data without having to pay fees per report or software fees, she said.
"Our customers are not paying for an expense solution, so it's a great entrée into managed expense reporting and ultimately managed travel," said Padgett. "Companies engage with Center, they create unique controls around card usage, but also they can apply cost centre and company codes that make reporting at the end of the month really easy." The travel element is based on a per-trip flat fee.
Steve Singh, whose Madrona Venture Group portfolio holds a collection of innovative business travel and meetings technologies including Center, recently announced investment and incubation in an AI-powered travel agent called Otto. It is targeted to companies with unmanaged travel, and he said Otto would begin to wrap in elements of Center as the new product continues development. Singh isn't the only one eyeing the very big SME market as the ripest segment of the bunch.
Expensify is also focusing on the lower end of the SME spectrum – companies with 50 or fewer employees – via its "New Expensify" app, which is pulling together payment, document-sharing and chat capabilities into a single app. With the addition of travel, it brings a cost-effective way for those small companies to combine travel and expense that they didn't have before, according to CEO and founder David Barrett.
TMCs still in play
Of course, use of these platforms is not exclusive of working with a TMC. In fact, Mesh's Zehavi said his platform was developed with the capability of working across multiple regional TMCs in mind, which has been a growing need among the increasingly multinational SME market – especially in "long-tail" countries with only a handful of employees.
"Before Covid, most of them were looking for one global TMC to give them unified service," he said. "There was the realisation, especially with a struggle to provide service in all territories, that more and more companies acknowledge they need to work with multiple TMCs. That also makes an impact on their infrastructure and policies, and this is pushing the industry in a different direction."
Suppliers up their game
Center's Padgett said in many cases, SMEs coming to Center are coming from an environment where travel was booked either through consumer online travel agencies or directly with suppliers. The card and expense capabilities add the ability to "work with travel suppliers to create policy-compliant bookings that work directly with the suppliers," she said.
At the same time, SME still have the option to work directly with suppliers in their own SME-focused programmes, which most major airlines and hotel companies, at least, have to some extent. While not the best option for companies that want travellers to be able to compare prices and options when booking, they do offer benefits to companies that work extensively with a single supplier.
Marriott International last month launched an enhanced offering, Business Access by Marriott Bonvoy, that broadens the travel management approach for SMEs. Built on the Spotnana technology stack, the programme offers broadened flight and ground transportation booking options as well as controls and duty-of-care tools such as travel policy parameters, traveller location maps, disruption monitoring and an expense management module. Similarly, Qantas last year launched a new platform for its Qantas Business Rewards – once again built on Spotnana technology – enabling broader booking and policy controls.
Supplier-direct programmes are now providing another benefit to SMEs. Melissa Allocco, head of travel for global business event company IQPC, said she takes an "old-school" approach to travel management, managing travel herself with bookings done largely through Sabre and a host agency to obtain commissions and discounts. As content has become fragmented, particularly with a growing amount of content moving exclusively to New Distribution Capability channels, the supplier-direct programmes ensure that she is still able to get access to the best rates when they are not available in Sabre, she said.
OTAs themselves have also been building programmes for SMEs, including Booking.com for Business and Kayak for Business, and both have been making moves to grow that share. Serko, which provides its Zeno travel management software as a partner in Booking.com for Business, this summer brought in former Airbnb corporate travel leader David Holyoke to build its presence in unmanaged travel. It last year brought on agency support via a partnership with CWT, which enables it to grow with clients as they move beyond the "unmanaged" label.
"As they grow past that, we bring them across to the travel management community, and those customers are still on Zeno with Booking.com," Serko CEO Darrin Grafton said. "The sweet spot is really that small business at high scale through that platform, and they get to have the servicing and also get the mix of loyalty content, with CWT rates in there and CWT servicing."
Kayak for Business, meanwhile, this summer launched a "premium" offering for SMEs, providing services such as group bookings, around-the-clock agency support and corporate rate access for a flat fee of $20 per trip. The idea is to be able to adapt across a wider range of SME needs, said Kayak for Business SVP Eva Fouquet.
"You can sign up, onboard and put your travel policy in and start booking straight away, but we also have a team that can onboard and help with change management," she said.
"I loved the concept of the online travel agency options but it would take away the ability to actually generate money back"
Melissa Allocco, global head of travel, ICPQ
The outsourcing option
One other alternative for SMEs, of course, is outsourcing travel management. Midmarket-focused TMC Adelman Travel sees opportunity here, as it this summer launched a "Travel Management as a Service" programme that provides clients with a dedicated travel manager who is up to speed with their specific requirements, preferences and policies. That travel manager can handle a portion or all of the travel management tasks needed at the company.
With 10 clients currently using the service, needs covered have "run the gamut," said Adelman VP of corporate sales and client success, Melinda Kirkham. One client wanted the service to achieve a 20 per cent travel spend reduction, she said. Others want to offload day-to-day tasks such as dealing with the travel index, and one client is looking for full policy development.
Lingering effects of the Covid-19 pandemic is one driver to outsourcing, as some SMEs are still looking to right-size their travel programme. "Post-pandemic, a lot of clients who used to have a much larger programme have fundamentally changed, and they don't anticipate having that big of a programme again," said Kirkham, "at least not in any kind of timeframe for them to have a change in travel management investment."
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