The 'Sharing Economy' and Corporate Travel Programs

Business Man Technology
White Papers 23 Oct 2017

Are they mutually exclusive or is there a happy medium?

Without a doubt, technology and the ways in which people are connected by the Internet has changed the way we buy and sell any number of commodities. Accessibility of goods is easier now and finding new and different things due to the competitive selling behavior of suppliers has driven unique changes in the distribution of goods.

The following paper provides a background on the sharing economy, its roots and major players in the corporate travel arena today. An overview of the positives and negatives of these services against traditional business travel services will be explored, with recommendations provided for organizations who may be considering using these services to supplement their business travel programs.

 

What is the sharing economy?

The sharing economy (also commonly known as peer to peer or p2p) refers to individuals renting things they need from others using technology-based networks that facilitate transactions. These new forms of rental are springing up in all kinds of areas, from bedrooms, cars, garages and storage spaces to accommodation for pets and more.

This is no longer considered a fad but recognized as a robust trend that is transforming society and business models, similar to what Facebook and Twitter once did for social networking. It is also driven by the desire to be more sustainable in the longer term.

 

Key players in corporate travel

Without a doubt Uber and Airbnb have caused some disruption in the business travel industry, which has traditionally relied primarily on Global Distribution Systems (GDS) for content. This content over the years has increasingly been complemented by non-GDS content from various suppliers and online travel agents (such as Expedia) offering options not available via traditional channels. To this, the added complexity of sharing economy suppliers now often also needs to be considered.

 

Duty of Care

Increasingly there are legislative requirements upon employers to ensure safety and security of employees whenever travelling abroad on business. This is a major detractor for travel managers considering ridesharing and accommodation options to supplement their travel program as bookings via traditional channels are considered safer and more reliable.

Concern

Travel Management Company

Uber / Airbnb

Insurance / Liability

Suppliers required to meet various insurance / liability requirements

Limited or no regulation around insurance / liability

Regulatory compliance / Legislation

Suppliers must meet requirements relating to driver background checks, random breath testing, etc

No requirement for Uber drivers to complete background checks, submit to random breath testing

Security of traveller

Travellers generally protected by "big name" brands with standardised safety and security policies and procedures both the product and the staff providing the service

Unreliable nature of Airbnb properties gives no guarantee of traveller security and potential increase in risk of harm to person

Assistance in Emergency

TMC offering 24 x 7 support to change, cancel or seek alternates in an emergency Little to no support

 

Data

In order to effectively manage travel programs to ensure maximum returns, comprehensive data is required to offer full transparency of employee’s T&E expenditure. Both Uber and Airbnb have launched business programs offering travel data, and both are now exploring options to provide feeds to TMC’s to meet requirements and integrate with expense management tools.

Concern

Travel Management Company

Uber / Airbnb

Accommodation Data

Full transparency on all data for accommodation booked through TMC available once booked

Little/no data available or unreliable due to nature of Airbnb properties

Ground Transport Data

Data available if pre-booked through TMC, however, for taxi expense data, only available post trip

Uber data often better than taxi and black car due to geotracking for both expense and duty of care

Security of Data

Confidence that personally identifiable information (PII) will be handled according to local legislation applicable to data security

Little/no confidence that PII will be protected according to local legislation for data security

Policy Limits

Bookings made through TMC consultant and/or OBT will need to meet travel policy in order to be booked Uber business program allows travel managers to set policy limits and access ride/expense information at will

Accommodation Data

Administration time by organisation travel manager streamlined when bookings made through preferred suppliers

Bookings made outside of policy can cause additional work for travel managers who are required to piece together expense claims post-trip

 

Supplier / Travel Experience

In addition to data and duty of care concerns, there are a number of supplier and traveller concerns to be weighed up when considering whether to include sharing services in your overall travel program.

Concern

Travel Management Company

Uber / Airbnb

Negotiated Rates

Favourabble negotiated rates at established properties in high volume cities

No negotiated rates

Quality of Accommodation

Higher levels of confidence when staying at established global accommodation brands

Little to no guarantee of quality of accommodation until arrival

Ease of use for regular city bookings

Easy to rebook same hotel, even same room when staying in same city frequently

Little to no guarantee of being able to rebook same property

Booking decisions for ground transport

Ground transfers need to be booked in advance or potential taxi queues at unfamiliar airports which often take cash only Ability to make quick booking decisions via Uber app, no cash required. Know where your car is prior to arrival.

"Bleisure" travel experience

Standard hotels offer little in the way of local culture and experience

Airbnb properties allow person to truly immerse in local culture, experience city as a local "home away from home" experience

Accommodation check-in process

Simple, easy quick check-in with many properties now offering mobile check-in Can be cumbersome to arrange to meet with owner to collect keys, etc

Cost of stay

Negotiated rates can be favourable, however, as the length of the trip extends, so does cost of stay Airbnb properties become more appealing when length of stay goes beyond 3-4 days, potentially cheaper than hotel cost for same period

 

In Summary

For organisations considering amending their travel policy to include sharing services such as Uber and Airbnb, it is quite clear that in terms of Duty of Care and Data that bookings made through the TMC using established suppliers are the most logical choice. However, both Uber and Airbnb offer some compelling value-adds; particularly due to the nimble nature of the technology platforms thus enabling travellers to make quick and informed decisions about travel.

It should be noted that the disruption caused by sharing services has introduced an element of competition that, at the end of the day, acts as a benefit to the end user. For example many large hotels are introducing more urban style accommodation choices, offering more flexibility around checkin/ check-out times and even lowering average daily rates to appeal to a wider customer base. Similarly, traditional ground providers are changing the way they work with TMCs and introducing new technology platforms such as Get Picked Up allowing travellers to prebook door-to-door transfers using a mobile application.

In the regulatory space, Uber will need to address compliance with legislation that affects safety of travellers while Airbnb may be an appropriate solution when occupancy in a city is high or an extended stay is required.

Any organisation looking at sharing economy services in their travel policy should carefully weigh up the pros and cons with an expert from their travel management company to determine when and how these services might be appropriate and to create a solution for data capture to ensure the organisation meets Duty of Care obligations for employees that are on business and that expenses are properly accounted for.

 

What are the next steps?

FCM recognises that there may be times when using a sharing service may be the only viable option, or in some cases, offer a better experience than traditional services. Some examples where we have worked with clients to assist them with using these services include:

  • FCM have partnered with professional services firms and Airbnb as part of their “long stay” programs and had a number of properties in specific locations assessed and approved for corporate booking – similar to auditing of inventory prior to being approved as a policy compliant selection for accommodation.

  • We are able to assist organisations interested in using Uber to facilitate tripartite discussions with an insurance provider to specifically include Uber and similar services into travel and public liability insurance policies.

  • FCM can work with organisations and Uber to restrict particular services in various cities. For example it could be arrange to restrict services only to UberTaxi and UberBlack in a city where UberX may be deemed unsafe.

As your business travel partner of choice, FCM will work with you every step of the way to determine whether or not sharing services may be suitable for your organisation.

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