Are the 'Online-First' providers the disruptors of corporate travel agencies?

In recent years, several new names have emerged in the field of corporate travel agencies, attracting attention with deep marketing pockets and considering themselves disruptors.

The purchasing departments, especially those of small and medium-sized enterprises (#SMEs), have some question marks about this.

And rightly so, as I will demonstrate.

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In no particular order: Lanes & Planes; Travelperk; Navan with its other brands Comtravo and Reed & Mackay, see themselves as business travel platforms rather than traditional travel agencies. Also referred to as 'online-first' providers.

All these companies, except Reed & Mackay, claim that with digitization, the use of AI (a magical word), and 'everything online,' they make processes and content related to business travel easier, safer, and cheaper. However, it sometimes seems to me like a reversal of a well-known saying, which would be: 'Old wine in new bottles.'

Ultimately, all these companies offer nothing that well-managed, mid-sized travel agencies don't already have in their offerings. In fact, in most cases, their service offerings don't even cover what well-managed, mid-sized travel agencies provide.

Let me give you a few examples:

Let's assume your company has decided to use the personally collected #bonus miles of all business travellers (e.g., Miles&More) for business trips. If you're lucky, one of the ‘online first’ platforms offers flight bookings based on bonus miles. However, they certainly don't offer the complex optimization of both collecting and using bonus miles.

As a result, your company runs the risk of overspending up to 10% on air travel.

Particularly, the prices of flights and hotel accommodations are subject to significant fluctuations. Robotic systems monitor these fluctuations 24/7. Once a lower price is found based on the booked travel, the travel agency is prompted to rebook at the lower price. Most, if not all, of the mentioned platforms, do not offer this service. Your company runs the risk of overspending an additional 3-6% on air travel and hotel accommodations.

After the COVID-19 pandemic, all major airlines deliberately ramp up their capacities slowly to be able to enforce higher prices. Consequently, there is an increasing number of flights delayed by >3 hours or cancelled by the airlines. This issue was already significant until 2019 but is now even more common. According to EU Regulation 261/04, such cases are eligible for compensation. If your company wants to receive these compensation payments directly - legally not a problem - it is important to find the right partner to assert these claims. To my knowledge, none of the mentioned platforms offer this service optimally. This represents another 3-4% of your company's air travel costs.

These three examples alone demonstrate the importance of consistently comparing all service offerings. In these three examples alone - conservatively calculated - we are talking about a 16% cost reduction (or missed cost reduction) solely in air travel costs!

Moreover, the ‘online first’ platforms bring together various third-party elements of processes, depriving you, the corporate customer, of the opportunity to choose the best combination for your company by comparing different solutions and providers.

Furthermore, if you ever want or need to switch travel agencies in the future, you are deeply embedded in the specific configuration of 'online-first' providers, which would result in significant adjustments, especially for the users (cost of change). On the other hand, well-managed, mid-sized travel agencies often use licenses from third-party providers that can easily be found again when switching to a new travel agency.

Here are a few more examples:

At least one of the mentioned platforms does not allow the use of corporate cards for hotel bookings. The process is based on "cost coverage when using their own (the platform's) card solution." What if this doesn't fit into your processes, considering many companies use corporate cards or purchasing cards for business travel? This is a new trend where such providers issue their "own" card, usually backed by a separate bank and often branded as "VISA."

One of these companies has entered into a binding agreement with a reputable provider for the refund of value-added tax paid during business trips abroad. There are hundreds of such providers worldwide - there's no need to compare them all - but there are always three or four relevant providers with slightly different solutions for companies also dependent of the country your company operates in. As a corporate customer, you should have the opportunity to choose based on all the details and not be forced to align your processes with the platform's offering.

In summary:

If your company is considering switching its corporate travel agency, it is still advisable to go through a tender process (#RFP).

As always, it starts with a well-thought-through and detailed compilation of the specifications, which takes into account the specific requirements and needs of your company. There is no "one size fits all" solution.

How does it look in your company?

One of my recent clients said to me after completing the tender process, "You drew our attention to many aspects that we wouldn't even have thought of during the tender process."

Of course, the 'online-first' platforms outlined here can be invited to participate in the RFP because they are also evolving. However, I wouldn't yet label them as disruptors.

And to the well-managed, mid-sized travel agencies, I would say: Stay at the forefront, as there is currently no reason for you to hide.

However, the right disruptor could emerge tomorrow.