Not Ready to Formalize
a Travel Program?

In the battle for the still vastly untapped market of small and midsized company travel buyers, the field of players has widened, with a host of options outside the traditional travel management company providers targeting the segment.

Many of these alternative travel management providers said they are seizing an opportunity not only to capture previously unmanaged travel programs but also to draw in dissatisfied companies in those traditional models. A solid majority of respondents in BTN's survey said they have not changed TMCs or online booking tools in the past 18 months—75 percent and 82 percent, respectively—but suppliers said they see a market ready for change. Oded Zehavi, CEO and co-founder of Mesh Payments—which added a travel management platform to its offerings last year—said it's a particularly ripe time to win business, as many legacy TMCs and travel technology platforms had to pause investment during the Covid-19 travel stoppage, and that stalled development has put them behind with their customers' needs.

"There is a huge wave of [requests for proposal] coming all across the industry," Zehavi said. "Almost every company you speak with is in an RFP, plans to have an RFP soon or is shopping around to see what is new in the space."

India-based business travel management platform Itilite, which targets companies that spend between $1 million and $10 million each year on travel, has been making "good progress" in its expansion with U.S. customer growth, having grown from about 25 customers in 2022 to about 500 today, founder and chief business officer Anish Khadiya said. That has come not just from previously unmanaged programs but also from companies that are changing a travel management provider they've had for five or more years.

"We've discovered that's a segment that is not very well served," Khadiya said. "The change management on that journey is not well fleshed-out, and we've been able to build a strong niche there."

Industrial corporation Sodecia, one of Itlite's new clients, fell into that former category, having moved from a "pen-to-paper" system of travel management prior to signing with the company, head of treasury Zach Surma said. Approvals required chasing down people to sign off, and by the time that happened, costs sometimes had moved out of budget.

Additionally, "customer service above all is the biggest selling point," Surma said. "There's a million things that can go wrong, so it's great to have a team to call up and rely on."

As such customers look to find the programs that meet their needs, here is a sampling of some that have arisen over the past few years.

In recent weeks, another player entered the travel fray: software and business tool provider Zoho, which provides a wide range of tools for business functions, is adding a spend management solution that has travel functions including a booking tool. These combined offerings give SMEs an "all-in-one" platform that Zehavi said also has been of increased demand among the segment.

"The theme that everybody is speaking about is they are looking for a unified experience that covers both travel and expense," he said.

Expense management providers also have a bigger penetration into the SME market independent of TMCs, according to BTN's research. Four of five respondents said they use expense management technology, and 73 percent of total respondents said they get that technology direct from the supplier, compared with 7 percent who get it from their TMC. By comparison, while more than 90 percent of total respondents said they use online booking tools, more than half of that subset got that technology from their TMC.

Of course, integrated travel and expense is hardly a new concept, and market leader SAP Concur views expense as a way of capturing the SME market. Expense can be a starting point for SMEs with no grasp on their travel programs, especially if they are not yet able to go to suppliers directly or want to get locked into a TMC deal, Concur Travel president Charlie Sultan said.

"They want to get some savings and want to get reporting," Sultan said. "The beautiful part about working with us is that even SMEs have to submit expense reports; if they're using an OTA, they can get in on the ground floor with Concur Expense, do something with TripLink and graduate."

The expense and payment product itself, however, can often be the differentiator for specific needs across the SME spectrum. SME-focused expense management supplier Center—which also has an integrated travel and expense platform built from Spotnana, which is in its same investment family— was designed to "refresh and update" the typical batch reporting experience, Center's travel ecosystem SVP Amy Padgett said. Its revenue model, which is based on consumption from the Center card, lets companies start building that same travel data without having to pay fees per report or software fees, she said.

"Our customers are not paying for an expense solution, so it's a great entrée into managed expense reporting and ultimately managed travel," Padgett said. "Companies engage with Center, they create unique controls around card usage but also they can apply cost center and company codes that make reporting at the end of the month really easy."

The travel element is based on a per-trip flat fee.

At press time, Steve Singh, whose Madrona Venture Group portfolio holds a collection of innovative business travel and meetings technologies including Center, announced investment and incubation in an AI-powered travel agent called Otto. It is targeted to companies with unmanaged travel, and he said Otto would begin to wrap in elements of Center as the new product continues development. Singh isn't the only one eyeing the very big small market as the ripest segment of the bunch.

Expensify also is focusing on the lower end of the SME spectrum—companies with 50 or fewer employees—via its "New Expensify" app, which is pulling together payment, document-sharing and chat capabilities into a single app. With the addition of travel, it brings a cost-effective way for those small companies to combine travel and expense they didn't have before, according to CEO and founder David Barrett.

TMCs Still in Play

Of course, use of these platforms is not exclusive of working with a TMC. In fact, Mesh's Zehavi said his platform was developed with the capability of working across multiple regional TMCs in mind, which has been a growing need among the increasingly multinational SME market—especially in "long-tail" countries with only a handful of employees.

"Before Covid, most of them were looking for one global TMC to give them unified service," he said. "There was the realization, especially with a struggle to provide service in all territories, more and more companies acknowledge they need to work with multiple TMCs. That also makes an impact on their infrastructure and policies, and this is pushing the industry in a different direction."

The Outsourcing Option

One other alternative for SMEs, of course, is outsourcing travel management. Midmarket-focused TMC Adelman Travel sees opportunity here, as it this summer launched a "Travel Management as a Service" program that provides clients with a dedicated travel manager who is up to speed with their specific requirements, preferences and policies. That travel manager can handle a portion or all of a travel management tasks needed at the company.

With 10 clients currently using the service, needs covered have "run the gamut," Adelman VP of corporate sales and client success Melinda Kirkham said. One client wanted the service to achieve a 20 percent travel spend reduction, she said. Others want to offload day-to-day tasks such as dealing with the travel index, and one client is looking for a full policy development.

Lingering effects of the Covid-19 pandemic is one driver to outsourcing, as some SMEs are still looking to right-size their travel program.

"Post-pandemic, a lot of clients who used to have a much larger program have fundamentally changed, and they don't anticipate having that big of a program again," Kirkham said, "at least not in any kind of timeframe for them to have a change in travel management investment."