March 30, 2015

Sharing economy on the brink of disrupting business travel


The foundations of the business-travel ecosystem are under more strain than ever before. U.S. companies are projected to spend $310 billion on business travel in 2015 (up 6.2 percent from last year), but how they spend that money has become a source of tension and uncertainty.

Sharing-economy startups like Airbnb and Uber are challenging traditional travel vendors – and in the process, they’re forcing many businesses to reevaluate travel policies and conventions that are pillars of the current system.

The corporate travel ecosystem is traditionally powered by relationships between travel managers and travel providers, the latter of which includes travel-management companies, airlines, hotel chains and rental car companies. Travel managers and providers negotiate rates and perks based on the volume of travel that a company will book.

For example, a multinational company that commits to one airline can often secure a flat discount, free upgrades, free baggage check and last-minute rates that are as much as 75 percent lower than what a leisure traveler would pay. A hotel chain might offer discounted rates, free breakfast, free last-minute cancellations and more.

Although these relationships can save companies tons of money and improve quality of life for business travelers, many employees see corporate travel policies as a hindrance. They’re discovering that sharing-economy services that they use in their personal lives are often more convenient and less expensive than what is available inside their corporate travel platform.

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