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How Should Travel Management Companies Respond to Sharing Economy Providers Like Airbnb?

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by Onyx CenterSource in Blog , Hospitality Trends & Research ,

Reading Time: 4 minutes

More and more business travelers are booking accommodation directly through Airbnb instead of hotel stays that generate commission for travel management companies. How can TMCs turn what looks like a threat into an opportunity?

Why Airbnb is a challenge to TMCs …

The sharing economy is the hottest story in the world of travel. Almost unknown only a couple of years ago, companies like Uber and Airbnb now attract millions of bookings – including from corporate travelers. Airbnb, which markets overnight accommodation belonging to private owners, estimates ten percent of its sales are to guests on a business trip.
Airbnb and similar accommodation services have created a major challenge for travel management companies and hotel booking agencies – and for the corporate travel manager clients they look after. For TMCs and HBAs, Airbnb is a direct financial threat: every time business travelers book Airbnb, it means they aren’t booking a hotel and therefore the TMC isn’t earning any commission or overrides.

… and a challenge to TMCs’ corporate clients

For TMCs’ corporate clients, there is a similar financial threat: whenever a traveler books Airbnb, it is one less reservation counting towards their discounted deals with preferred hotel suppliers. That makes it much harder for the client to negotiate a good corporate rate with the supplier in future.

And that’s just the beginning of the headache for travel managers. Risk management is an even bigger concern. Travelers book Airbnb directly through its website or mobile app, which makes it difficult for employers to track them (unless using a corporate ID – see below) and is a direct challenge to their duty of care policies. And Airbnb properties aren’t inspected – are they safe, and is the employer liable if, say, an employee dies while staying in an Airbnb apartment on business?

TMC Sharing Economy Strategy

Time to engage

So what should TMCs do? TMCs may be very tempted to advise clients ban their travelers from using sharing economy accommodation providers. But is that like trying to hold back the waves? “The word ‘ban’ is bizarre in this context,” says travel technology guru and Onyx’ strategic advisor Philip C. Wolf. “Travel managers ‘banned’ online bookings for a few years when they launched in the mid-1990s until their folly became embarrassingly narrow-minded. I also remember when low cost carriers were banned.”

One TMC which has already started to engage with the sharing economy debate is BCD Travel. Asked whether companies like Airbnb are good, bad or neutral for TMCs, its director, research & intelligence, Claudia Unger, says: “I think the jury is still out. It depends on how integration can work with a provider like Airbnb: if the TMC is able to make (or at least capture) the booking, I’d say they are a welcome addition to the accommodation landscape – in some circumstances, such as long stays.”

Not surprisingly, when asked the same question by Onyx, Airbnb business travel lead Marc McCabe insists his company is good news for TMCs. “Any accommodation solution which supports business travel, and which business travelers like, should be considered good for TMCs,” McCabe says. “Airbnb has more than one million active properties worldwide, with high concentrations around major cities. Many companies and corporate travel businesses are crying out for more inventory, and we’re here to help.”

Analyze, Book, Consolidate

So how exactly should TMCs manage Airbnb for their clients? We recommend a three-step approach that’s as easy as ABC: Analyze, Book, Consolidate.

Analyze

Love it or hate it, you can’t ignore Airbnb. Therefore priority number one is to help your client decide its policy on Airbnb – which could range from making it a preferred supplier to refusing to reimburse bookings made through the service. A recent white paper from BCD Travel on the sharing economy says travel managers need to figure out what sharing economy companies mean for their managed travel program on five key issues:

Cost

Traveler satisfaction
Safety
Regulation
Integration into the travel program
There are arguments both for and against sharing economy providers on all five of these issues

Book

If your client decides it will allow employees to use Airbnb, encourage them to instruct travelers to book through you, their TMC, so their data can be tracked. Even if you can’t earn commission on the booking, it can still be a source of revenue: “Why not charge a fee for making the booking?” asks Wolf.

Consolidate

Clients may decide instead to let travelers book directly with Airbnb. If so, there is a box on the dedicated Airbnb Business website for the traveler to fill in an assigned corporate ID number for their company. Urge clients to make corporate ID entry mandatory.

“By rolling out a managed Airbnb program [through using the corporate ID], TMCs and travel managers can streamline the process,” says McCabe. “The first step in any successful travel program is to track the itinerary data. We can help get this data back into the travel manager’s hands and by proxy to their TMCs also. We have spoken with many TMCs and the conversations have been very positive so far. TMCs fulfill a very valuable role in how they track and report travel activity back to their clients. We want to make sure TMCs have the Airbnb reservation data related to their clients. This would allow them to include that data in their reporting and increase visibility for their clients while opening up a huge set of wonderful properties around the world.”

It may not be the perfect answer for TMCs, but Airbnb is here to stay and there isn’t going to be an ideal solution when disruption as significant as the sharing economy blows into anyone’s business. Engaging and adapting has to be the way ahead.

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