The great convergence, part 1: Is travel the product, or the means to an end?
Over the past two years, managed travel has attracted significant investment from companies that once operated largely on the peripheries of our industry. Banks, payment card providers, supplier loyalty programs, expense platforms and technology providers are all converging around the same corporate customers and business travelers. Travel is becoming part of a broader commercial ecosystem and corporate travel buyers must pay close attention.
The investment and innovation generated by these different players should create more choice and benefits for customers. However, those who manage corporate travel programs must better understand the motivations of these new suitors. They are coming to the table with different commercial objectives, which influence the products they develop and the experiences they deliver. This could carry risk for managed travel.
Financial institutions move into managed travel
Let’s start with the banks and financial institutions. Many of these organizations have built successful leisure travel propositions, where customers redeem loyalty points for flights and hotel stays while remaining within the same financial ecosystem. That model has proven highly effective. Today, some of those same organizations are extending their ambitions into managed business travel.
American Express, for example, has operated Travel & Lifestyle Services (TLS) for decades, supported by Fine Hotels & Resorts, Membership Rewards, Pay with Points and supplier programs often focused on co-brand partners. But now its proposition extends into mobile booking, expense capabilities and SME solutions through the new Graphite card tailored for the SME sector, giving Amex a broader role across travel, payments, loyalty and business spending.
JPMorgan Chase has followed a similar path through the acquisitions of cxLoyalty, Valerie Wilson Travel and Frosch before launching Chase Travel Corporate Solutions. Capital One has built up Capital One Travel, buying Hopper technology, the Brex expense platform and promoting its travel rewards card Venture X. Citi continues to expand its travel proposition through Navan and its relationship with American Airlines, while U.S. Bank strengthened its position with the acquisition of TravelBank. Each week seems to bring another announcement and another offering.
Why the SME market is especially attractive
The opportunity is particularly attractive in the SME market. Smaller companies increasingly want booking, payment, expense and reporting to work together through a single platform. Banks already have relationships with those customers through credit cards, lending and treasury services. Adding travel allows them to extend those relationships across a larger share of business spending. However, SME corporate travel is different from leisure, and much of these banks’ leisure volumes have been built around paying with points on large portions of lower value airline tickets, and with no policy or control elements.
Is travel the product or the means to an end?
All of this begs important questions for buyers: Is travel the product being delivered? Or is travel helping the provider achieve something else? The answers give buyers valuable insight into what a company will prioritize and how it will define success.
For these deep-pocketed financial institutions, travel is a means to an end. Every booking creates card spend, encourages customers to earn and burn points, promotes co-branded credit cards, generates customer data and strengthens long-term loyalty. Travel, for them, supports a much broader commercial strategy – one not centered on travel or travelers, but rather on spend, loyalty and card related products.
Travel management companies (TMCs) approach the market from a different vantage point. Their business depends on managing travel programs, supporting travelers when plans change and delivering consistent service every day. For them travel and service is the product. That difference influences where organizations invest, how they develop their products and what success ultimately looks like. For them, travel service is the end, not the means.
The difference becomes clear when service is tested
Let’s take a real-life example. New M.O. co-founder Michael Qualantone had a recent experience using American Express Membership Rewards that illustrates this point. Booking the flights online using points, and in only nine minutes, was straightforward. Changing those flights became more complicated because neither the online service nor the app is set up to handle changes. It took two calls. The first lasted 15 minutes, during which the agent unfortunately booked the wrong dates. That led to a second call lasting another 30 minutes. Hardly the most efficient use of time.
Conversely, TMCs and airlines have efficiently enabled self-service. And if a call is needed, it is handled quickly by a skilled agent (or an agency). Amex ultimately resolved the issue and acknowledged mistakes made during the process. The experience, once again, begs the following questions: Would it have been different if travel service were its core business? Would the travel service and solutions be better if it were not the means to an end based on other priorities?
Managed travel demands more
Customers burning points for leisure travel are often booking restricted, low-end rates and fares. And as Mike found out, the basic support falls well short of “agency” level. Managed travel places very different demands on a provider. Corporate programs involve negotiated supplier agreements, flexible fares, multi-sector itineraries, policy compliance and frequent itinerary changes that require experienced servicing.
Success in the consumer market does not automatically translate into success in the corporate environment, which is why buyers should examine these new propositions carefully. And they must ask: if banks, payment companies and other financial institutions want to play a larger role in managed travel, are they prepared to meet the standards corporate buyers already expect?
A framework for evaluating new entrants
Corporate buyers have spent decades defining what successful managed travel looks like. Through its Client Advisory Board, New M.O. captured those expectations in its Core Tenets of Managed Travel. Trusted Partnerships, Traveler Care, Program Visibility and Performance, Traveler Satisfaction, Scalable Standards and Innovation with Integrity provide buyers with a practical framework for evaluating any proposition entering the market, regardless of whether it comes from a bank, a TMC, a technology company or another new entrant.
We’re not here to question whether financial institutions should invest in managed travel. Greater competition is good for the industry. We need to know if they can deliver to the standards, the service and the quality corporate travel buyers already expect.
What’s next?
Financial institutions are only one example of this trend. Airlines and hotel groups are investing just as heavily because loyalty has become one of the industry’s most valuable commercial assets. That commercial model is now influencing product development, partnerships and investment across the wider travel ecosystem.
Loyalty connects many of these developments. It links banks, airlines, hotel groups and travelers through a shared commercial interest. Understanding the loyalty economy is becoming essential knowledge for every corporate travel buyer, which is where our next article begins …
