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Unmanaged Travel Industry Overview
Hello, and thank you for your question concerning the unmanaged travel industry. The most useful sources I found to answer your question are the small business article found at BusinessTravelNews.com and the open booking article on the Rocketrip.com blog. The short answer is that as of 2015, the unmanaged travel industry accounted for 25% of the total online travel in the U.S. With this rush to open booking, many start-ups are falling by the wayside while successors are focusing on niche targets. The following is a deep dive of my findings.
MARKET SIZE
The online travel market in America was showing returns of $145 billion in 2015. At that time, Expedia's chief marketing officer, David Doctorow, was reporting that the unmanaged travel sector was claiming 25% of that market.
It is further estimated that by 2020, 50% of business travelers will be under 32 years of age. This group will most likely choose business travel options that reflect their desire for ease of use and autonomy.
FUTURE OF THE INDUSTRY
Currently, there is a power struggle in the business travel industry between the traditionally managed travel groups and the newer open booking groups. Opponents of unmanaged travel see a threat to companies' bottom lines due to unrestricted travel spending. They also feel that travel policy compliance will be difficult to maintain. Proponents of unmanaged travel feel there is a need for more efficient travel systems that are convenient to use. They also want greater choice in booking options.
While true open booking allows complete freedom to the employee to choose their booking preferences, most of the successful start-ups in the industry are building a blended system. Companies like Expedia and Booking.com for Business, have created a managed-lite system that gives rebates to the business owners while offering loyalty points to the travelers. These companies also offer simple reporting tools to travel administrators to help them track travel costs and policy adherence. Booking.com for Business even offers budget filters for business owners to control spending.
Another company that is seeing lasting success in this industry is Rocketrip. This company has chosen to play all three markets, so while they still offer traditionally managed systems alongside a managed-lite model, they also offer open booking.
WHY HAVE SOME FAILED
There has definitely been a rush over the past two years for start-ups to claim a part of the market. Many start-ups saw a flood of money in the beginning but their level of growth wasn't sustainable. Too many tried to be everything to everyone and their cash outflow exceeded their reach.
WHAT SUCCESS LOOKS LIKE
The companies that have seen success managed to carve out a niche market early on. There are many verticals in this industry that are being targeted by start-ups. MagicEvent, a French company, is specializing in diverse accommodations located in the heart of business centers for business travelers. Beepry, which is an Italian start-up, focuses on complex itineraries. Their unique algorithms provide cost effective and efficient solutions for business travelers. FreshMenu has seen great success in meal planning for business travelers. This service saves businesses a great deal of money by streamlining employee meal expenses while on the road. Other unmanaged travel businesses like Stayful are offering add-ons like concierge services which are popular with business travelers and keep travel expenses low for travel administrators.
CONCLUSION
In closing, unmanaged travel accounts for 25% of online travel in America and is changing the way business handles its travel expenditures. The successful start-ups in this industry are focusing on niche targets like meal planning for business travelers. Thank you for using Wonder! Please let us know if we can help with anything else.