Both travel management suppliers and corporate clients have a lot of good things to look forward to in 2024. Three distinct but necessary ingredients have been marinating over the past several years which will significantly expand the capabilities and value of managed travel to a broader audience and pay dividends across the entire travel supply chain.
First, and I know, I sound like the old guy yelling at the kids to get off his lawn, but I’m excited about all of this… most of the global workforce are now Millennials, soon to be followed by even more tech savvy Gen Z. Second, industry suppliers are forcing the industry to shake up the way that we’ve operated for the last 30 years and are pulling the plug on traditional distribution strategies. And third, small to mid-market business (SMB) travel demand is not only growing rapidly but forcing the industry to think differently about managed travel.
My blog, published here 27 months ago predicted the travel industry would ultimately come to thank the historically underserved SMB client for helping to “expand the tent” we call managed travel. Indeed, investment in new travel technologies over the past several years has caused a dramatic uptick in interest amongst SMB clients to seek managed travel solutions. But they don’t want traditional, drawn out or clunky implementations. The leaders in this segment of business are busy – they wear a lot of hats, and they don’t want to think very hard about their travel program. They want it to work and to be adopted without much effort. Most new marketplace technology promotes content rich ease of use at a time when industry suppliers are successfully and unabashedly pivoting to unpopular content disintermediation strategies such as Modern Retailing and Continuous Pricing. Many of the newer technologies that are attractive to SMB clients are also having a direct impact on the way traditional large market clients approach travel management with the net effect of pushing innovation and industry change.
Finally, Millennials whose behavioral traits include brand loyalty, tech intuitiveness, and efficiency are now in decision making roles within companies today. This generation cares about their experience and the environment, and they are challenging us all to be better. How can we think differently? How can we use technology to enable the success of managed travel programs of all sizes?
All these factors fold purposely into new supplier strategies and sets up forward thinking industry players including TMC’s, GDS’s, FinTech, and expense solutions for a re-invention which will provide better and broader access to a $1 trillion industry that remains largely untapped and is made up primarily of SMB’s.
Reinventing the Corporate Travel Ecosystem
As Millennials continue to step into senior leadership roles, an understanding of how behavioral traits from one generation to the next influences how products and services are marketed plays a key role as to why industry suppliers are finding success in their new distribution strategies.
Consider the speed and impact that American Airlines had on the industry’s distribution channels as it pulled content out of the GDS in April 2023. Industry veterans from the early 2000’s recall having “seen this play before” when full content access was shrouded behind opaque content agreements which highlighted web-only fare carve-outs, while suppliers engaged in double-speak, trying to cut out its distribution partners while pledging fealty at the same time. This time things are different, and many suppliers are not hedging. To thrive, corporate clients as well as industry intermediaries face the stark choice of re-invention or obsolescence. Evidence that a travel renaissance is underway is mounting.
In February 2023, The Company Dime published an article reporting that American Airlines content strategy resulted from “a soul-searching exercise that has AA de-emphasizing perks and benefits for managed corporate travel programs and their corporate travel agency partners in a favor of a direct relationship with travelers.” In November 2023, another article announcing Hilton Worldwide’s intention to focus its SMB distribution strategy directly to travelers. Both “soul searching” exercises have implications that extend well beyond content. These consumer driven strategies impact managing corporate travel programs from booking practices, remuneration strategy, management burden, duty of care, sustainability reporting, expense automation, payment solutions, and more.
In June 2023, Amex GBT, the largest corporate travel intermediary in the world published its 162 use cases that “airlines, global distribution systems, and online booking tools need to fulfill before bringing NDC content into the Amex GBT marketplace.” In addition to the suspiciously odd fact that none of these systems were prepared prior to enabling a sea change in distribution, American Airlines took their strategy one step further with their announcement that their new SMB program would have nothing to do with NDC, but rather focus solely on website direct bookings.
Whether or not NDC is a red herring (as I firmly believe) intended to provide some hope of a return to normalcy once everyone catches up may be irrelevant but should be thought provoking. Still, the fact is that American Airlines has found success in its strategy, rewarding brand loyalty for a user base who likes to be brand loyal. Makes sense when you think about it. NDC, continuous pricing, exclusive small business programs, and modern retailing are all euphemisms for this singular and sublime strategy.
Travel Management’s Reinvention for 2024
Managing corporate travel is complex and the idea of changing the way we approach and define program optimization is not new. Today’s management challenges are unique, and I think travel programs are best suited to consider how to solve for the broader challenges described here as opposed to discrete and potentially superfluous issues such as NDC.
Successful travel management will seek to find a way to best manage an increasingly complex spend category. Travel managers and industry suppliers have an opportunity to increase the value they bring to their programs through data aggregation resulting from content fragmentation, a workforce demographic who may successfully lobby for personal choice over travel policy, rapidly changing technology across the entire corporate travel landscape, and deeper analytics that measures the cost/benefit against all these factors. While many of these challenges may change the way suppliers position and service their clients, as more SMB clients seek managed travel solutions, the opportunity for both legacy and new industry suppliers will yield growth and prosperity.
It is important to keep in mind that even with so much industry change, corporate travel expenditures still represent one of the largest discretionary spend categories for companies. The value managed travel and category owners bring to the table should not be underestimated and the opportunity to manage travel expenditures will only grow in 2024.