This article was first published on businesstravelnews.com in North America as part of a Business Travel Innovation 2023 special report
Once defined by paper tickets and time-consuming phone calls to reservations teams, the business travel industry today is underpinned by an intricate web of technology, tools and processes designed to enhance the booking and management of travel and to improve the on-trip experience.
Yet pain points persist wherever you look, and the industry is simmering with startups whose raison d’etre is to deliver convenience, personalisation or automation. That the sector is so ripe for innovation, say some commentators, could be due to its complexity. “There’s a lot of room for improvement in travel,” says Hansini Sharma, practice lead for corporate travel at Acquis Consulting, and one of four judges at the BTN Group’s 10th annual Innovate event, held in October.
“As an industry we’ve made tremendous strides in the last three to four years. We have the ability to innovate, there’s an interest and an appetite for it, and there’s funding for new ideas. We saw a lot of entrepreneurs emerge [during Covid], and we have a lot of interesting new solutions,” says Sharma.
But innovation is not just the preserve of startups, she notes. “There’s also an opportunity for legacy players to innovate and to push the boundaries of their technology because travel really is a playground for innovation.”
The Innovate competitors in New York last month illustrate not only the current breadth of innovation but also the focus on the application of artificial intelligence.
Hubli showcased its new tech for booking companies’ internal meeting spaces, while Bizly is tackling small meetings, and BTP Automation is addressing a “35-year-old hotel sourcing issue” in requests for proposals and hotel compliance.
Tripkicks is providing travellers with insights and guidance at the point of booking “so they can make the best decisions” for themselves and their company. Snowfall is bringing content together to offer multimodal trips, and Mobility IQ and HQ are both addressing the under-served ground transportation market. The latter was named Innovator of the Year.
On the AI front, travel management company ATG showcased Baldwin, its “intelligent” IBM-powered assistant, Cerebri AI presented its data analytics capabilities, and Navan received an honorable mention for its AI-driven Ava technology.
Two legacy players also showcased new lines of business with accommodation specialist HRS moving into flight disruption management and travel management company AmTrav showing off its Gather tool for managing unprofiled travelers.
The People’s Choice award, voted by Innovate buyer attendees, went to two former winners whose companies have both been acquired by expense management specialist Emburse and were showing off the first fruits of their combined labours.
Jeroen van Velzen, founder of Roadmap and now SVP of solutions strategy at Emburse following its acquisition of the app in March 2021, says many startups exist to “get rid of the complexities” embedded in long-established processes or, in Roadmap’s case, to “get compliance through your programme by making the user experience convenient to the end user.”
TMCs, he says, can deploy new technology and automation to ease the burden on staff but must also push the envelope to ensure their survival as well-funded, tech-first competitors penetrate the market. Matt Zito, managing partner of incubator TSI, agreed, adding that too many TMCs fall into the trap of believing “if it ain’t broke, don’t fix it. They just keep doing the same thing over and over, but eventually you’re going to get run over by new, innovative TMCs.”
While much hype has surrounded generative AI in 2023 – think ChatGPT, Bard and Bing – Zito says that artificial intelligence for many years has been harnessed to power chatbots in travel. More recently, corporates such as EY have experimented with blockchain-based booking systems, while payments, profiles and personalisation are three areas in which technology and processes are accelerating.
“Some of the core components of our experience as corporate travellers are the most ripe for innovation,” says Sharma, about those areas. “Right now, I’m seeing a lot more fringe pieces: the data, the reporting, the sustainability, the duty of care… all really important components. But those are the ornaments on a Christmas tree.”
If the tree itself isn’t of sufficient quality, she says, then the decorations are going to fall down. “You want to be able to have a full tree and be able to leverage everything, but you have to have a strong core to do that.”
Johnny Thorsen, VP of partnerships at Spotnana, says innovation on those underpinning technologies is in a positive state. “There’s a lot of startups doing great stuff in the booking process, but we are also seeing the first signs of next-gen independent profile systems appearing, we are seeing suppliers creating new ways of delivering deals to buyers, and TMCs are adopting the new tech. We are seeing a lot of momentum.”
Start-ups getting started
There are two types of startup founders, says Tripkicks CEO Jeff Berk: those who come from the business travel industry and have “lived a problem first-hand” but don’t have experience founding and growing a company and raising money. Then there are those who don’t know the travel industry but have been successful elsewhere and have the business acumen and might even come with some capital sources. “They both come with their own set of challenges and learnings,” he says.
Van Velzen says startups need to “nail their niche” and to find a small group of vocal buyers who “see what you see” in terms of the potential of the tool or tech and “can be your amplifiers.”
The size of the industry and entrenchment of incumbents, however, pose serious challenges even for those who are laser-focused on their vision, he adds, not to mention the fact that travel buyers typically don’t have the budget to invest in innovation. “You need to get the non-travel people around the table to understand the value of your product,” he says.
Sometimes the market’s just not big enough for what you’re trying to sell, but if you have a really good idea and it’s a big market then funding is going to happen
It’s far from uncommon for a startup to pivot from the B-to-C to B-to-B market. Former Innovate winners Grapevine, Troop, Roadmap and Tripbam all started life as consumer-facing technology before refocusing on the corporate travel community.
“The B-to-C side is very hard. If you want to get relevant you have to pay so much to get to the top of the screen – it’s the ‘Google tax’,” says Steve Reynolds, founder and CEO of Tripbam, which was acquired by Emburse in July this year. “We dabbled in the consumer market, but as soon as the corporate market woke up, we pivoted.”
For Grapevine, it was the high-frequency nature of corporate travel, the often-repetitive trips and the “very rich data” which offered a better environment for innovation on the corporate side, says Jack Dow, the company’s founder and CEO.
The biggest hurdles
Raising capital is one of the biggest hurdles a startup will face, and their future is potentially doomed if they can’t find an investor who shares their vision and sees its potential.
“Sometimes the market’s just not big enough for what you’re trying to sell, but if you have a really good idea and it’s a big market then funding is going to happen,” says Zito. Even so, he notes that many startups fail. “Even when you raise money, the odds are still against you. That’s the reality.”
Moreover, while funding in past years “was relatively forthcoming, that could be changing in the current economic environment of high interest rates,” warns Cara Whitehill, founder of Unlock Advisors.
Thorsen, who co-founded ConTgo, which was later acquired by Concur, and who worked at Mezi when it was acquired by American Express, says: “It really is tough if you want to play in the corporate travel vertical. It is expensive and it takes time.
“You can focus on the [small and midsize business] segment, but that’s hard to grow quickly because each customer is small and delivers very little revenue. Either you have to have enough in the bank to keep growing that segment over a long time, or you have to have enough to sustain winning the big customers and eventually get revenue flowing. Both options are hard, so having enough funding is critical.”
At Roadmap, van Velzen was in the fortunate position of having the funds to sustain a new venture after selling a prior business. Instead, his biggest challenge was convincing the market it needed a traveller-centric app experience.
“At the time, everything was focused on the process, the buyer, the distribution, the supplier. The traveller was at the end [of the list]. User experience didn’t even matter. That was the hard part for us, trying to explain without the economic proof that if you actually take care of your employees, that’s of more value to the business than maintaining a process that only benefits the existing value chain.”
Whitehill agrees that getting that first customer is often the biggest challenge of all, especially for those selling into enterprise clients, where finding the right sponsor can be crucial. “Procurement teams and big companies are much slower to move and they have a lot more hurdles to navigate,” says Whitehill. “Startups that are selling into the midmarket tend to have a better pathway to get those early customers, to collaborate with them, and then cycle the feedback from trials into the product roadmap more quickly.”
The buyer hesitancy barrier
Some travel managers that BTN spoke with were forthcoming about the challenges they face when considering working with startups. Cost and time constraints were chief among their concerns, while fear of the untried and untested and of false promises featured prominently. Others cited the reputational risk of things going wrong, a lack of demonstrable ROI, security concerns and convoluted integration processes.
“Corporates are also often afraid of the company’s financial stability, but it works both ways,” says Sharma. “Startups need customers not to have to worry about that. But then corporates don’t always realise how agile startups are. It’s pretty incredible. These are really smart people doing really smart things and, given the opportunity to work with someone who’s a little open-minded and willing to take a little bit of a chance, you can make a lot of magic happen.”
Organisations that don’t open their eyes to evolving technologies risk being left behind, says Thorsen. “Buyers need to ask themselves whether, with the programme they have in place right now, they are in the best possible space,” he says. “A lot of buyers are realising that it’s hard to defend the continuous use of the ‘Concur plus TMC’ model, at least without looking around.”
One key benefit for early adopters, says Thorsen, is having the close attention of founders. “Those very early customers actually have an oversized influence” to have customisations that work for them, he says. For the startup company itself, however, that could be a risk. “[They] are actually at risk of going down a rabbit hole and building something that ends up being only for that one customer,” he adds.
It will be hard to be a corporate travel manager if you don’t embrace innovation. Travellers are going to be asking, ‘Why are we using this old, outdated way of doing things?’
Stuart Bartholomew, T&E sourcing manager at manufacturing conglomerate ITW, is no stranger to working with startups, which he appreciates for being “free of the bureaucracy of larger, more established organisations” and for their agility. “Once a startup has a few customers, that’s reassuring for us as buyers,” he says.
After identifying a potential technology provider, Bartholomew first engages his company’s IT department to ensure they’re comfortable with the solution. At the same time, finance will be looking for the ROI in order to sign off the budget, and then a select band of end users will be involved from the early stages.
“Too much of the time in any industry people aren’t willing to stand up and take a risk, but with those stakeholders involved it’s not just one person’s decision, and the risk is shared if things go wrong,” says Bartholomew.
The prospect of acquisition can also put some travel buyers off working with startups, for founders typically have one of two motivations, says Whitehill. The first is to be their own boss, run their own company and to watch it grow. “They may just build their own business and kind of bootstrap and run it and be very successful at that,” she says. “Then you have the founders that are looking at it as a path to grow the business to a point where they could have a lucrative exit by either going public or selling it to another company.”
Thorsen says Spotnana has been asked by potential clients whether its goal is to sell quickly but, he says, “given the funding we have raised it’s very clear that there is no plan of selling quickly”. Nevertheless, he understands the concern.
“A lot of buyers have been burned over the years by gambling on a startup, investing the time, energy and money, only to see it being acquired by somebody they don’t want to work with,” he says.
The pandemic saw a wave of startups being acquired. Credit card provider Capital One bought the flight disruption management technology of Freebird in 2020 and then Lola’s travel and payments software and team in 2021, while Emburse bought Roadmap and DVI, Pana was acquired by expense specialist Coupa, and Snowfall came to the rescue of booking tool Psngr1.
TMCs were at it too, with Flight Centre buying booking platform WhereTo and American Express Global Business Travel acquiring conversational booking interface 30SecondsToFly.
Few of them exist by the same name today or even in the same form, giving rise to the fear among buyers of a disruptive ‘capture and kill’ future for would-be startup partners.
What changes for those early customers when a startup is sold? “They have to adjust to the fact they might not get the founders’ attention anymore, although that happens when you start scaling anyway,” says van Velzen, who added that all Roadmap’s pre-acquisition customers still work with the company under its new ownership and guise as Emburse Go.
Regardless of the concerns and opportunities surrounding the adoption of startups and emerging tools and processes, buyers will face an “avalanche of innovation in the next few years year” says Thorsen.
“Tech has evolved to a point where we can build new solutions very elegantly and very smartly. It will be hard to be a corporate travel manager if you don’t embrace innovation. You’re going to be under immense pressure from travellers asking, ‘Why are we using this old, outdated way of doing things?’”