Coupa Blog

Coupa is a company of talkers, passionate about sharing tips, tricks and advice for improving finance and procurement and saving companies of all sizes time and money. But we’re not the only people with opinions and ideas. We’d love to hear from you so join the conversation!

Making frenemies with open booking, the new megatrend in corporate travel

  • May 23, 2016
  • |
  • Ethan Laub

  •  |
  • Expenses

open bookingOpen booking, the practice of business travelers booking all or parts of their trips outside of their company’s approved channels, has always plagued corporate travel programs. Over the past decade and a half, open bookings have exploded, leaving travel managers struggling to maintain policy compliance and data integrity for their programs.

 

This has led technology companies to develop solutions that allow companies to embrace, or at least become “frenemies”, with open bookings. These innovations give travel managers the information they need while letting travelers have more freedom to book and travel as they wish.

 

Leakage

Even in the days when booking a business trip meant phoning up the company travel agent, there was still what the industry calls “leakage” from people who called the hotel or airline directly. With the Internet, this leakage became a flood as new consumer travel booking sites put flight and hotel options at everyone’s finger tips.

 

As a result, since the early 2000s, open booking has become a huge issue with which the industry has to contend. According to 2012 research by Carlson Wagonlit, 54 percent of travelers book outside of their company’s recommended hotel booking channels. A 2012 PhoCusWright study found that only 60 percent of respondents in managed travel programs always complied with booking channel policies.

 

The problem is that the only way managed travel programs work is if everyone uses them. The primary goals of these programs are to use data to keep travelers safe, manage compliance, and source discounts with preferred providers. Open bookings create huge data blind spots that keep programs from achieving those goals. Travel managers are playing an endless game of whack-a-mole to try to maintain control.

 

Growing, not going

Open bookings are not going away any time soon. In fact, they may continue to grow due to multiple factors:

Hoteliers pay commissions to travel agencies for booking hotel reservations. Airlines pay a fee for tickets booked through travel agency GDS systems such as Sabre or Amadeus. There’s a big incentive for airlines and hoteliers to sell directly, and they’re enticing travelers to buy on their websites with loyalty rewards and extra perks such as free wi-fi and other amenities.

The sharing economy is introducing attractive new travel alternatives such as Airbnb and Uber, which typically fall outside of most managed travel programs.
Consumer booking sites are spending millions continuing to improve their user experience by offering a wealth of content, personalized recommendations, reviews and dead simple booking. Corporate booking sites that must contend with legacy technology infrastructure are hard pressed to match the pace of innovation.
Consumer expectations of technology are changing. Digital natives in particular have low tolerance for the transactional friction associated with many corporate travel programs. According to a 2011 report by Business Travel News, just 47 percent of travel transactions initiated by employees under 35 were compliant with company travel policy.

 

Pushing innovation

It all adds up to a megatrend that will continue to push technology innovation and change to existing business processes. Expense management software providers are leading the way with solutions that help companies address many of the challenges posed by open bookings. Advanced email parsing, cloud computing, open APIs, and geolocation technology can solve many of the visibility, sourcing, policy and risk management problems that years of corporate mandates have not.

 

This means the choice to prohibit or permit open bookings is no longer black and white. Companies may not fully embrace open booking, but it doesn’t need to be the enemy it once was. Each company needs to evaluate a number of things and decide on a strategy, and a combination of technology and policy to execute on it.

 

Prohibition

At one extreme is totally prohibiting open bookings. This option only works in very strict, top-down company cultures. To really make it stick you have to refuse to reimburse employees—even executives and sales stars-- for anything booked outside the program. 

 
If you want to go that route, you’ll increase your chances of mass adoption by reducing incentives for employees to go outside the system. Think about improving the traveler experience by adopting a better booking tool, or even several booking tools. Each regional market has a few top booking tools; they’re not the same ones in every market, so get the best one for each.  

 

Consider letting people call a travel counselor when they have a complex trip. Sometimes, companies are so cost-sensitive they force people to use the booking tool even if they’re doing a road show and visiting five different cities internationally. It’s smarter to let travelers call an agent. That makes their life easier and keeps them inside the program.


Finally, see if you can find ways to loosen up policies. For example, some companies go overboard with multiple layers of preapproval. It slows down the process, and oftentimes results in the needed or expected content not displaying. Those kinds of things drive people to go out of bounds.

Open booking is a huge temptation, so if you want to go the prohibition route, do all you can to make sure that staying within the program is the easiest thing they can do.

 

Embracing open bookings

Embracing and even encouraging open booking is at the other extreme. One reason companies might want to do this is because like hoteliers and airlines, they also spend a lot on agency fees--typically three to six percent of their travel spend.

 

This isn’t going to be a mainstream option any time soon, but we’re already seeing some companies, most notably Google, moving in this direction maybe not so much to save money in their case as to delight their tech-savvy employees.

 

In this scenario, there is a corporate travel program but employees are welcome to go outside of it if they find a better price, or simply if they find something more to their liking. A variety of new technologies help the company capture open booking information and bring it back into the program so managers still have the needed visibility and cost control.

 

The travel game

Tools such as RocketTrip and TravelPerk are gamifying travel booking. Using these apps, employees can book however they want to, but they get rewards or share in the savings when they keep expenses below policy limits.

 

That's a nice way to let people take advantage of lower prices they may find on Airbnb, or maybe opt to fly premium economy instead of business class if that’s allowed. There's something in it for the employee, and so there's alignment of the employee and the employer's incentives around saving money.

 

Capture the data

It used to be that all of your travel data came from your travel agency and booking tool. Many expense management technology solutions can now bring credit card data into the mix, so if hotels or airline tickets are purchased with a company card, cost and itinerary data is available.

 

Get the travelers to give you the info

There are also trip aggregation apps that let employees forward open booking confirmation emails to the expense management system, where the data is captured and populated into the employee’s expense report.

 

The key to getting travelers to help is simplification. In that regard, expense management providers are in a unique position in that there’s a natural incentive for employees to share their open booking information because it makes it faster and easier to submit their expense report and get paid.

 

Global check-in

Technology is also helping large and global organizations that have people traveling a lot internationally solve for risk management, sometimes called duty of care.

 

In the old days, companies used travel agent reporting to locate employees in case of emergency. Now, in addition to corporate card data, mobile check-ins using the GPS on travelers’ phones is emerging as an alternative.


The way it works is, a little box pops up when they land. It says, "Are you okay?" and maybe asks them a question or two. It does that on daily basis just to check in and make sure they're secure

 

Of course, the traveler has to opt in and get the app, but according to a recent survey of business travelers 70 percent or more said they would find GPS tracking acceptable when they're traveling overseas to a high-risk destination.

 

The same benefits, cheaper

These are all examples of current technology that can help companies achieve the same goals as a managed travel program. They can cover reporting, duty of care, and policy compliance. They can capture some discounts while also shaving off the agency’s commission.

 

As technology improves, I can imagine a day when corporate travel programs as we now know them go away, particularly, for small and mid-size organizations. When you think about the current benefits of a travel program—reporting and policy enforcement—that’s already largely feasible for open bookings. As those things shift to technology companies, TMCs will need to provide more value added concierge services, and many are moving in that direction.

           

We’re not there yet, so the most practical approach for the majority of companies is probably combining a corporate travel program and a well-thought out approach to open bookings.

 

Preferred suppliers

Preferred supplier agreements are still one of the big reasons to use a managed travel program.

 

For big companies that negotiate direct agreements with airlines, hoteliers, and rental car companies, today the most efficient way for employees to take advantage of those discounts is to use the corporate booking tool or a travel agency, where you can load those discounts at point of sale. 

If employees go directly to the preferred provider, the only way to take advantage of those agreements is if they know the discount code and make the effort to punch that in.

 

Finding a way to systematically apply corporate discounts when booking directly on a supplier’s website is the final nut that has to be cracked before open booking can become a mainstream option for mid- to large-sized organizations. The technology is not there yet, and the partnerships with the travel providers are not there yet either.

 

Making frenemies

Until they are, I think it makes sense for most companies to steer people into a managed travel program while becoming “frenemies” with open bookings.

 

The key to success is setting clear guidelines for when open booking is acceptable, and putting technology in place to capture open booking data and eliminate blind spots.


For example, maybe someone is going to a conference, and there's a bargain conference rate that’s not accessible through the travel agency. That could be an instance where it’s okay to go outside the program.

 

Set clear guidelines on circumstances where it’s acceptable to book outside the program. Lay out the process to follow when that happens-- charging it to a corporate card, forwarding the confirmation email, or whatever it may be so that you capture the appropriate data.


Beyond policing
It used to be that open booking was synonymous with unmanaged travel, but with today’s technology, that no longer need be the case. Open booking will only continue to grow, so companies need to start thinking beyond policing it to how they might begin to strategically embrace it.

 

There is no simple one-size-fits-all solution, but for companies that aren’t big enough to get a lot of corporate discounts and don't do a lot of complex international travel, these technologies can offer many of the benefits of a managed travel program without the agency fees.

 

Over time, as more and more of these solutions are built and mainstreamed, we’ll probably see more mid- to large organizations gradually start to allow and eventually incorporate open booking in a way that doesn’t harm their program. 

 

Open booking no longer the enemy. Travelers realized that a long time ago. Now companies need to catch-up.

 

Ethan Laub is director of product management for Coupa Expenses. He is the founder of TripScanner, an open booking data capture tool that was acquired by Coupa in 2015.  Prior to that, he was a director of account management for American Express Global Business Travel where he oversaw relationships with small and mid-sized corporate customers.