Over the decades, we have seen the aviation industry change dramatically, for leisure and also for business travel. During the economic downturn/recession, many companies decided to cut back on their business travel expenses. Some companies even decided to overhaul the process of booking business travel and they’ve said goodbye to the travel agency on retainer and have begun to embrace the sharing economy. Is this the future of business travel? Has the corporate travel agent become a thing of the past? The jury is still out on the sharing economy concept but tech companies are embracing it.
In 2013, managed business travelers spent an estimated $175 billion globally on services through travel management companies, according to Euromonitor International (source: http://bit.ly/1hCetPK). Managed business travelers are travelers that have to abide by travel policies set by employers and usually have to book their travel through travel management companies.
Despite the economic upturn, many companies are getting creative with their travel expenditures and are looking to embrace the sharing economy. Taxis and rental cars may be falling out of favor with business travelers as they turn to companies like Uber and Lyft to get to and from business meetings and Airbnb for their accommodations. It seems like a simple solution for some, but not everyone is quick to jump into that bandwagon.
Here is what you should know about the shared economy to determine if it’s right for your company.
Testing the waters
The Global Business Travel Association expects U.S. business travel spending to grow by 3% this year to approximately $300 billion and by 6% in 2016 (source: http://nyti.ms/1TBPPuq), so why not test the waters?
Technology companies are indeed testing the waters. They are known for having an entrepreneurial mindset and pushing the envelope when the rest of corporate America is sometimes content with maintaining the status quo. As a result, companies like Google spent $2 million last year with Airbnb (source: http://bit.ly/1hCetPK) despite the issues facing the sharing economy such as regulatory and tax issues. Entrepreneurial and innovative mindsets are more likely to embrace the sharing economy because it can save them money and act as alternate solutions to sold out hotels, especially in convention-busy cities like Las Vegas or Orlando.
Can the millennial tech industry disrupt the business travel industry?
I’m going to categorically say YES! The business travel industry is being (and will be) revolutionized by these tech savvy millennials who are used to having everything they need at their fingertips. They will be the ones dictating to c-suites all over corporate America how business travel ought to be and how companies can save money in the process. Furthermore, in this economic climate corporations can now add travel policies as a corporate perk to recruit new and highly skilled employees. This can only be a win-win for both parties. Businesses need to adapt if they want to move forward. Otherwise, they run the risk of becoming dinosaurs. My motto is, “Adapt, change, or die!”
Areas of Improvement
Despite the success of companies like Google, Salesforce, and Eventbrite using the sharing economy, there are still some existing trepidations that are making corporate America a little gun shy about putting all their eggs in this particular basket. In the sharing economy, companies will have to overcome a number of hiccups like safety assurance and simple integration if they want to be the main thought in corporate America’s mind.
Sharing economy companies rely on people to provide safety and security and one big obstacle they face is assuring companies of their employees’ safety while using their services. There are also smaller issues that need to be dealt with before going mainstream, such as cancellation policies. While this isn’t a huge obstacle, it can be annoying enough to turn away customers. You don’t need an MBA to know that dissatisfied customers can spell doom for any business. In my upcoming book, Think Big, Act Bigger, one of the things I focus on is how can entrepreneurs can steamroll their obstacles in order to succeed. And while steamrolling obstacles is not specific to entrepreneurs, everyone can learn to steamroll a few things. Obstacles are like bullies that stand in the way of thinking big and acting bigger. Steamrolling them will always take us to the next level and the best way to do it is putting those obstacles front and center.
The Cons of the Sharing Economy
Not everything is sugar and spice and everything nice. The sharing economy has its fair share of critics and issues that need to be worked out. For example, most cities and states tax and regulate hotels, but Airbnb’s customers are not paying the taxes required under the law. There are also safety issues for its customers, lack of inspections and zoning restrictions. Not to mention the potential of ‘neighbor issues.’ In regards to Uber, many cities in the U.S. and abroad, have expressed their concern about the shared-ride service creeping into their taxicab business. Uber is currently in negotiations with regulators over whether their cars meet safety and insurance requirements imposed on standard taxis.
While the sharing economy isn’t perfect, I believe it is here to stay. It’s yet another case of the industry, and respective laws, needing to catch up to the technology and level the playing field so all sides can reap the benefits. I am a business traveler. I travel all over the country for my Best Seller TV and Executive Perspectives shows, hundreds of keynote speaking engagements and pretty soon my new book tour will take me to every corner of this country. I use Uber, a lot. I share an office and while I’m not ready to try Airbnb just yet, the sharing economy is here to stay, especially as more and more millennials continue to enter, and dominate, the work force. The reality is the pros do outweigh the cons across the board. I’m sure even Orville Wright himself would approve of this. The Wright Brothers steamrolled a lot of obstacles with a small fraction of the technology we now have. They were thinking BIG back then, the sharing economy is getting there, too. Rome wasn’t built in a day.