The Real Reason Corporate Travel Has Changed

The Real Reason Corporate Travel Has Changed (and What To Do About It)

Industry suppliers and buyers have agreed on one thing post pandemic – the industry is changing.  But consider that while the industry continues to evolve, change has already occurred and most of us are just catching up.

Any successful corporate travel program is dependent on striking the right balance between cost savings and service.  This calculus includes governance around airline class of service, hotel type, car class, meal per diems, and other support or duty of care initiatives. 

To some extent the factors that help travel category owners navigate this tenuous balance comes as a result of available technology, new industry trends, and resource availability.  While these traits change over time perhaps the most significant shift the industry has seen over the past decade is corporate culture change in organizations which can largely be attributed to a changing workforce demographic.

Workforce Demographics Have Changed the Travel Landscape

Characteristically, generational change lines up closely to corporate strategies around travel programs.  Now mostly retired, Baby Boomers can be described as highly loyal to their employer, willing to make personal sacrifices for career benefits, and have a strong work ethic following company rules.  Mandated business travel policy and adherence to corporate negotiated discounts and preferred supplier partners falls directly in line with what you might imagine defined a successful travel program 25 years ago when Baby Boomers were in their prime. 

Gen Z’s who now make up most senior and executive leadership roles within organizations were the first generation to understand the power of technology and the efficiencies gained in the corporate travel space such as online booking tools and procure-to-pay automation.  Gen Z are widely understood to be more technology savvy, efficient, and more independent than their predecessors.  If your corporate travel program runs into employees that question the efficiency of corporate travel related technologies, policies that run counter to competing organizations, and stifles brand loyalty and related perks, the traits associated with this generation may help explain some of these hurdles.

Even more compelling, Millennials, most of which are in their late 30’s and early 40’s are typically characterized as highly technology savvy, brand loyal, and more focused on work/life balance than their predecessors.  In 2016, Millennials became the largest demographic in the workforce.  Today, they make up close to 50% of middle and senior management.  When we think about industry change, the generational traits associated with Millennials line up perfectly with the demands being made on our corporate travel programs and with the strategies we are seeing deployed by mainline airlines, major hotel brands, and travel related technologies in general.

Can we then argue that the changes we’ve seen in corporate travel over the past two decades are purely a result of innovation, technical debt, and a dying legacy infrastructure?  Or does it make more sense, that as our changing workforce demographic has changed over time so too does our industry’s strategy in terms of how it services its customers and the products it makes in support of our travel programs

Growing Investment in New Technology

Throughout the past two years, the travel industry has witnessed unprecedented investment in new technology, most aimed at re-imagining how consumers access travel related content through a streamlined and ubiquitous process.  Much of this strategy is intended to provide ease of use to a consumer audience demanding a simpler and better way of doing business.  But as we’ve seen supplier strategy shift to technology like NDC (New Distribution Capability) and a wholesale rejection of the traditional distribution model, an industry observer must draw one of two conclusions – either industry suppliers are tone deaf and the strategies they are employing will unfairly disenfranchise legacy distribution channels or suppliers have a better grasp on the behavior characteristics of end users than many industry experts realize. 

Given the changes we’ve seen in the industry even over the past few months, all evidence points to the fact that suppliers understand the consumer much better than many industry experts admit.  Under the assumption that earnings reports remain robust (American Airlines is forecasting a strong Q2 2023), there is no reason to believe that its “modern retailing” strategy which puts a focus on the traveler as opposed to the supplier’s industry indirect channel partners, not only sticks but expands with other suppliers following suit.  

Brand loyalty, customer engagement, and user experience are all hallmarks of the emerging generation of corporate leaders, and all are precisely being executed in support of supplier strategies which not only match consumer behavior characteristics but represent a more profitable distribution model to suppliers by disintermediating indirect channel partners including Travel Management Companies (TMC’s) and Global Distribution Systems (GDS)

What’s Next for Corporate Travel?

Even though the consumer demographics have changed over the past few years, striking the right balance between cost savings and traveler satisfaction remains the primary goal for most travel programs.  

Brand loyalty and a quest for greater efficiency have driven more travelers directly to supplier websites for the best user experience and right support.  Persistent staffing shortages have also helped promote self-sufficiency while at the same time also provide a pressure relief valve for travel counselors and traditionally managed programs who need to ensure a proper amount of attention is paid to those reservations which require live agent support.  As modern retailing options including NDC take hold, we expect to see more options for travelers to find content and a more focused need among corporate clients to aggregate disparate booking source data in support of its negotiated discount programs, duty of care and sustainability initiatives, automated expense, and management reporting.  

CapTrav can provide a lot of help in these areas but beyond this KesselRun recommends that organizations take a hard look at their customer, evaluate needs and determine how best to manage its program in a fast-changing environment that, in many ways, has already changed.

Looking for a consulting company to help manage your corporate travel program? Contact us online to find out why more organizations choose to work with Kesselrun consulting.