Opinion Piece by Juan Moreira, Corporate Sourcing Manager at John Wiley and Sons
The Sharing Economy is a relatively new concept in business that allows consumers to use or borrow things like movies, cars, and even homes on a subscription basis without actually owning them. Companies like Netflix, Uber, and Airbnb have generated enormous profits by giving customers access to a network of goods or services using assets that these companies actually don’t own. For example, as of June 2015, Airbnb has a market valuation of over $25 billion without owning a single piece of rentable property. This is by all means an amazing achievement, but how do sharing economy companies, given their success in the consumer world, affect your business travel program? How much attention should you pay to this new business model?
It’s important to note that the travel industry is taking them seriously. Founded in 2008, Airbnb is a relatively new entrant in the world of hospitality and even newer to the world of business hospitality. However, an increasing number of professionals are using Airbnb. In 2015, Concur, the world’s market leader in travel and expense management, significantly furthered Airbnb’s growing relevance in business travel when they signed an agreement with the company.
Business travel is not leisure travel. Understand that the rules are different.
I have found that Travel Managers and the Senior Leadership of more traditional companies are hesitant to recommend or condone the use of sharing economy companies in their organization. However, if asked, many professionals are perfectly comfortable using Uber, ZipCar, and Airbnb for leisure travel. So what’s the difference? I asked one colleague why an Airbnb property is acceptable for leisure travel and not professional travel and heard concerns about unclear expectations and the availability of basic services such as internet connectivity, general safety, and customer service. Despite the fact that Share Economy suppliers have a lot to offer, their standards are still being established and their service is rated by subjective opinions, not objective rules. Travel arrangers who book with known and reputable properties, such as Hilton or Marriott, are confident that their travelers have everything they need for a safe and productive work trip, and specific, actionable, pro-active recourse if they don’t. Simultaneously, Travel Managers are less willing to sacrifice consistency for unique lodging experiences, not least because of safety concerns—virtually anybody can become a “Host” and rent their property through Airbnb.
As might be expected, growing businesses routinely to adapt to demand. To address concerns around reliability and the expectations of our average business traveler, Airbnb developed a business-ready class of available properties. These properties are held to more stringent service levels and response times, and are better regulated to prevent unexpected changes. As one example of a more business-ready rule: a host may not cancel an Airbnb reservation within 7 days of a business arrival.
Don’t ignore the disruptors. Deal with them.
At Wiley, we find that Airbnb and Uber are more popular with younger travelers and travelers who joined our organization as a result of a recent acquisition. These travelers see value in a travel program that is flexible and allows them to book travel how they see fit. Admittedly, reporting on this travel after the trip is simple with the Concur integration. But using some of these non-traditional companies can fragment your travel program, making it more complicated to manage. Airbnb properties cannot be booked through any GDS, so travel records are split, which complicates traveler tracking, re-booking, or re-accommodation. Leakage can also impact your negotiation power with major suppliers. Travel Managers prefer having all travel booked through a centralized source so that they can easily and reliably consolidate the information and readily report on travel.
Some Travel Managers try to avoid or ignore discussing new entrants like Airbnb and Uber by simply dismissing them as unsuitable for business travel. The reality is that companies that make up the sharing economy are on the cutting edge of business innovation and won’t be ignored. So don’t ignore them! As companies like Airbnb and Uber begin to develop and refine programs that specifically address business travel, the pertinent question is not how appropriate sharing economy companies are for business travel, but how appropriate are these companies for your organization. As Travel Managers, we need to talk with our travelers and leaders about the benefits and risks associated with engaging with Share Economy companies. They are not going away, and as disruptors, they are a force to be reckoned with. It may seem far-fetched today, but traditional hotels and cab companies might run the risk of going the way of Block Buster and Tower Records under the shadow of the ever growing sharing economy.
