Sharing economy companies and business travel programmes – to be, or not to be?
13th August 2015
Business travel management is increasingly influenced by sharing economy and enjoys its growth in popularity amongst business travellers. However, so far there are substantial issues, risks and challenges that need to be addressed and should not be underestimated, such as unregulated pricing, traveller safety and security, compliance with industry-specific regulations, laws related to payments or tax issues. Nevertheless, there are opportunities that could be offered to managed business travel programmes by sharing economy companies or the so-called “disruptors” such as Airbnb, Uber or Lyft. Here we share important issues, potential risks and benefits of using sharing economy providers, helping travel managers to assess when and if integrating sharing economy into the managed travel programme is the right route to take for their company.
BENEFITS OF INTEGRATING SHARING ECONOMY SUPPLIERS
Lowering business travel costs
Booking accommodation via sharing economy companies can often turn out to be cheaper than conventional hotel options. For example, the average daily hotel rate for a hotel in London is an estimated £145 based on the PWC 2015 Hotels Forecast. Airbnb turned up a modern two-bedroom apartment with a garden in the Westminster neighbourhood for £113 per night, and a luxury designer apartment located in Hammersmith within a traditional London old Victorian terrace for £120. When it comes to ground transportation, we have seen providers like Uber and Lyft aggressively undercutting prices of conventional taxis leading to falling prices across the network.
Good alternatives to sold out options (hotels, taxi)
Have you ever tried to arrange accommodation for employees for the time, when a major trade fair is taking place, such as Farnborough Airshow, ITB or Bauma? Certainly, it’s no secret that during major events hotel prices usually skyrocket and if you need to arrange a hotel at the very last minute then you may find that all hotels are fully booked making it almost impossible to book a reasonable priced accommodation nearby the conference and exhibition centre. In such cases, it may save you a lot of headaches, time and money to book accommodation via a sharing economy company such as Airbnb.
More convenient and personalised trip experience for business travellers
When booking a room with conventional hotel chains offering standardised services, you know what to expect no matter where you are in the world. An accommodation booked via sharing economy companies such as Airbnb or Wimdu offer a personal home-from-home experience with a wide choice of unique products and services with more local authenticity. This is, in particular, often craved by frequent business travellers looking for a more relaxed and refreshing trip experience tailored to their personal needs. Also, Uber’s location-based app enables clients to book an immediate pick-up via a simple mobile app, while travellers can rate and share the travel experience with others. The use of on-demand ride sharing services like UberX for example, can save travellers time spent waiting for a taxi to arrive or hailing a taxi during periods of peak demands. In comparison, apps launched by traditional taxi services have not always been as well received, especially when it comes down to user-friendliness.
RISKS OF INTEGRATING SHARING ECONOMY SUPPLIERS
Traveller security and duty of care concerns
One of the key tasks in travel management is to ensure business travellers are safe while travelling for work purposes. Alongside having a robust traveller tracking system in place, this also includes the use of suppliers that provide the company’s employees the best possible protection against any harm while they are out on the road. Although there is a wide range of services provided by sharing economy companies available to travellers, currently the regulation for these peer-to-peer (P2P) services is still evolving. For example, sharing economy suppliers do usually not check if properties are compliant with fire or other regulations and, therefore, cannot provide hotel safety data typically requested by travel managers. Besides, many insurance companies are currently not fully covering the risks related to the use of services provided by sharing economy companies. Most sharing economy companies are already addressing duty of care and traveller safety concerns. Uber, for example, carries out rigorous background checks whereas others such as Lyft or Sidecar have a strict zero-tolerance policy towards drugs and alcohol consumption in place.
Business travel spend and expense management issues
Peer-to-peer services offered by companies such as Airbnb or Uber enjoy increased popularity amongst many travellers and are seen as a cost-effective alternative to traditional suppliers, to include hotels and car rental services. However, alongside health and safety issues, there is a financial downside for travel managers. With more business travellers using these on-demand services, less bookings may be made via preferred conventional suppliers. Thus, if not managed well, companies may run the risk of not achieving spending above the minimum threshold their travel managers have negotiated with other suppliers, thus losing the deals and additional perks such as free upgrades or additional amenities agreed. Also companies might miss out on benefits related to corporate loyalty schemes, such as free upgrades, hotel stays and other perks, as those are currently not offered by sharing economy companies. Also, the use of unofficial accommodations and transportation raises additional financial issues, as business travel spend on those unofficial services is usually channelled through expenses, which may incur accounting and tax complications. Although expense management systems like Concur have partnered with service providers such as Uber and Airbnb, sharing economy companies do not have ties, like conventional suppliers, to GDS’s as yet, making it more difficult for travel managers to keep track of business travel spend on sharing economy companies.
Issues with rules and regulations
As mentioned before, regulation for sharing economy products is still in its infancy and authorities across the world have yet to find appropriate ways of dealing with them. Sharing economy companies face legal challenges and investigations in a number of countries. For example, in Berlin banned short-term rentals in the most demanded parts of the city without prior permission from government authorities. Since February 2014, city inspectors in Paris are allowed to check rental properties whose owners are under suspicion of illegally renting their private homes to visitors. France and a number of US cities authorities are evaluating whether those offering peer-to-peer products are required to comply with the same licensing, safety and tax rules as conventional suppliers. However, there are countries and regulators that are undertaking attempts to support the sharing economy companies, with Amsterdam being the first city to pass a “Airbnb friendly” legislation in February 2014. The British government has introduced a law to make the UK the global sharing economy hub and London ditched regulations that were limiting short-term stays under the Greater London Council Act 1973.
HOW TO DECIDE WHEN AND IF SHARED SERVICES SHOULD BE PART OF YOUR TRAVEL MANAGEMENT PROGRAMME?
Whatever the pros and cons, this trend is here to stay and it is considered to be a growing market over the coming years, as it marks the beginning of a fundamental shift in business travel management. It is clear that even though there are challenges that need to be addressed and not underestimated by business travel managers, these are not insurmountable. However, companies will have to find ways to adapt, as younger consumers already eagerly embrace the trend, with the elder generation slowly also joining. According to a PWC study, the sharing economy in the UK alone could be worth around £9bn by 2025 with an increase of 37% in peer-to-peer accommodation and 23% increase in car sharing.
Thus, the question is whether it is already time for travel managers to rethink business travel management strategies and adjust their company’s travel policy to meet the rising demand for peer-to-peer bookings from business travellers. Companies considering integrating sharing economy companies into the travel management programme, you should know how to get the most out of it. As a starting point, travel managers should ask the following questions:
- Do sharing economy companies add value to our travel programme if we allow our business travellers to use them?
- How would we manage and integrate these suppliers into our business travel management programme?
We advise you consider this option carefully, as it may not be suited for every business traveller or every company (yet). Find out about your business travellers’ attitudes towards sharing economy companies, and know your business travel programme well. Work closely with other departments such as human resources, legal, security and compliance, ensure it is clear who is made liable if a traveller is injured or killed? Ask yourself if a supplier is judged to be in breach with the law, should you really work with this supplier? Partner with your travel management company, they should be able to provide you with the valuable support and advice you need to ensure you make the right choices for business travellers and your company’s needs.
Should you decide to go for it, make sure to constantly review your options and offers, as things in the sharing economy are changing daily, e.g. regulatory issues or product and company developments. You will have to know which suppliers are already offering an option to integrate data and which available tools allow you to integrate booking and spend data accordingly into your business travel management.
Flightline Travel Management: Delivering superior support and business travel consultancy
As one of the UK’s leading independent business travel agents, Flightline Travel Management delivers superior support, great travel booking services and custom-made corporate travel management solutions. Additionally, your company is provided with all relevant information for making the right choices regarding sharing economy companies for your business travel programme. Find out more either by contacting us on 01844 299 750 or enquiring online about solutions for your corporate travel needs.