With a total of forty million users, Uber, plus many other apps have proved the value of the sharing economy – an economy that is already piercing the regulated bubble of corporate travel. Our year to date analysis of around $2.2 billion dollars in travel-related spend revealed that Uber accounts for 17.3% of total spend in the entire taxi/black car/limousine category.
This may seem like a small figure now, but it is rising rapidly. From 2017 to 2018, Uber spend has risen by 40% while Airbnb spend has grown by a whopping 58% and – with the growth of other sharing economy apps like Lyft, Taxify, Meals24 and VRBO – these numbers are only set to climb higher.
How does the sharing economy impact corporate travel?
Currently valued at $5 billion, the peer-to-peer based market raises new challenges in a travel programme. Travel Managers are scrambling to answer questions on Duty Of Care, Risk Management, Supplier Negotiations and Expense Reporting. Amidst this disruption, Travel Managers now have a key choice in front of them: should I pretend it is not happening or should I use these apps to improve my programme?
More than half of corporate travel buyers are choosing the latter, says a report carried out by the Business Travel Show in January this year. According to the report, most managers view sharing economy providers as a benefit to their travel programme, as they provide convenience and flexibility for travellers, ultimately improving the traveller experience.
Instead of dealing with the hassle of hailing a taxi on a rainy afternoon, travellers can simply order it on their phone. Airbnb’s flexible check in and check out times sometimes make Airbnb preferable to approved hotel suppliers. It is no surprise that the number of buyers allowing travellers to book with sharing economy suppliers independently has risen from 7% in 2017 to 22% in 2018.
“Attitudes are changing and Travel Managers are finding the idea of using sharing economy providers less threatening. They are also more appreciative that travellers enjoy the flexibility and convenience they provide. Some Travel Managers are still concerned about potential duty of care issues, and it’s sensible of them to put travellers first. But, in a few years’ time, I’m sure we won’t even be having this conversation and Airbnb will be considered as just another accommodation option, much like serviced apartments are today,” said Business Travel Show Event Director David Chapple.
How do we get the most out of the sharing economy?
Most Travel Managers are concerned about the impact the sharing economy will have on their supply chain. They are correct. The ease and convenience of these apps are changing the way travellers are booking and having a lasting impact on the programme. Here are are four perceived challenges the sharing economy faces and how to overcome them:
Poor visibility into data
The existing data received from Uber, Lyft and Airbnb is, in actual fact, high in quality – delivered by relatively extensive API’s. Both Airbnb and Uber have additionally introduced their own corporate travel-friendly solutions. Uber for Business incorporates Uber into the Expense Management System, while Airbnb for Work has one-click expensing, along with extra features like a list of work-friendly accommodation (accommodation with wifi, workspaces, 24 hour check-in and flexible cancellation policies).
While Uber and Airbnb provide rich data, Managers still struggle to compare it to other suppliers like Hotels, Black Car Hire and Yellow Cab expenses. PredictX for Travel allows complete Airbnb and Uber integration – providing one source to be able to compare the spend across all categories.
Perhaps the biggest limitation of the sharing economy is the lack of risk management carried out by these suppliers. Depending on jurisdiction, Uber drivers, while certified, may still receive no background checks or company controls such as random breath testing that may be applied to other company drivers. The nature of Airbnb’s business gives fewer guarantees of traveller security and a potential increase in risk of harm to person.
This may soon change. After the birth of disruptive technology it sometimes takes the law some time to catch up. At the end of 2017, Europe’s top court confirmed that Uber should be regulated as a transport company across the continent classifying it as a Transport service and not an Information Society service. This will standardise Uber across the EU into a model much more similar to a traditional pre-booked taxi service.
No preferred rates
Airbnb and Uber still do not negotiate preferred rates with Travel programmes. The increased spending across these apps are more likely to cause erosion in traveller use with existing preferred suppliers. The price of these services, however, is often significantly cheaper. Uber is far cheaper than Black Car and Taxi services while Airbnb is often cheaper than traditional hotels for trips lasting more than one or two nights.
Predict(X)ing the future of the sharing economy
While Uber, Lyft and Airbnb are growing to take a resident spot in your travel programme – the list of sharing economy apps is growing longer. Meals spend is becoming increasingly less about dinners in preferred supplier hotel restaurants and more about food delivery app services like GrubHub, Eat24 and Postmates. A Business Travel News survey showed that sharing economy meal delivery services marginally outperformed the use of ride sharing services like Uber and Lyft – with more than half of active business travellers using them.
These apps are here to stay. Their flexibility and ease-of-use is irresistible to leisure travellers, yet can be just as tempting to a corporate travel programme as well. After all, are we not all about improving the quality of the traveller experience? Let us take the first step in making our travel programmes just as flexible and attractive as the sharing economy itself.