A new travel management program from Expedia aimed at small businesses poses little competitive threat to travel management companies or business travel agencies.
Launched last week, Expedia Business Rewards gives participant companies $100 for every 10 hotel nights charged to certain Chase credit cards. The program is aimed at what Expedia calls "power users," buyers using individual accounts to book 50 to 100 trips per year.
Expedia’s announcement of the program appeared to position the world’s largest online travel agency to move into travel management for small companies. The reality, business travel insiders told Travel Market Report, is that the new program is not a threat to travel management companies or business travel agencies.
“There is a lot of travel done by these small companies, but I don’t see Expedia as a threat to TMCs. TMCs are fine with seeing the really small companies being served by an automated model,” said consultant Scott Gillespie.
“I like the idea of trying to consolidate travel for these small companies on a single corporate card,” Gillespie added. “Moving travel to a corporate card is a very basic technique of travel management.”
How it works
Expedia’s program is simple and automatic. The online giant gives companies $100 for every 10 hotel nights booked using the Ink for Chase credit card. The corporate reward comes on top of any personal rewards that travelers earn from airline or hotel programs as well as points earned through the existing Expedia Rewards Program.
Companies sign up for the Ink card if they don’t already use one, register with the rewards program, then invite employees to participate. Program registration by the company and program participation by employees are both free.
Once the company reaches reward thresholds with the first 10 hotel nights, Business Rewards can be converted into Flexible Reward Coupons. The coupons can be used to save costs on future travel or given to employees for their own use.
Tracks & consolidates data
At the company level, Expedia provides a dashboard view of travel expenses booked and paid using cards enrolled in the program. The program collects and tracks both bookings and actual travel expenditures at the individual employee level. Expedia also consolidates the data for a company-level view.
(Earlier this year, Orbitz launched its own automated program for small business, Orbitz for Business Express. The program has a dedicated online booking portal that promises special rates and expense reports for companies.)
It’s not managed travel
The Expedia program might sound attractive, said Steven Glenn, CEO of Executive Travel, but it doesn’t do anything to manage travel or influence traveler behavior. Executive Travel, located in Lincoln, Neb., company manages about $60 million in travel, much of it for small companies.
“A well-managed travel program is significantly more than a simple card program,” Glenn said.
“Managing travel is not just getting the data out of bookings and spend, it is doing something useful with the data. This program doesn’t tell you anything about managing your travel spend, and it doesn’t touch the main issue – managing traveler behavior and helping them spend the company’s money more wisely.”
Hotel data only
Glenn sees two other problems with the Expedia program.
Expedia is primarily a hotel seller, he said, and Business Rewards only rewards companies based on their hotel spend. It does nothing for air, car or other business travel expenditures.
And all it really tracks is spending on one specific credit card. It does not integrate booking or spending data from any other source. Nor does it offer any strategies or recommendations to help companies manage their travel spend.
Not Expedia’s bread & butter
“In the typical travel program, about 3% of your costs are fulfillment and 97% are manageable costs,” Glenn said. “Expedia is really good at dealing with that 3%. Travel management is just not where they make their bread and butter.”
Small companies with unmanaged travel might consider the program, he continued, but Expedia is no threat to TMCs that actually manage travel for their clients.
A company with a $1 million air spend, for example, can likely save a quarter of their total spend simply by managing unused tickets and better timing of ticket purchases.
“That kind of management just can’t be done by the Expedias and the Orbitzs of the world,” he said.
Small business needs
The need for travel management in small companies is real. According to the federal Small Business Administration, small firms with fewer than 500 employees account for more than half of all companies in the country.
And according to market research firm PhoCusWright, fewer than one-third of all business travelers use any kind of corporate system to book their travel.
“There is a lot of travel, a lot of unmanaged travel, in this segment,” Gillespie said.