The Hidden Trends In Corporate America's Expense Reports As Online Services Take Over

Work follows life. The same services employees use on their own time are showing up on expense reports as they become popular for work, as well. The impact on traditional vendors is likely to be profound.

The larger question is what sorts of services will be impacted next: minibars? JL


Rani Molla reports in Re/code:

As long as employees stay under a certain price point, companies let them spend where they please. 42% of travelers prefer to book directly with a hotel or airline rather than through work portals. Uber the leader in business car rides, is also the most frequently expensed vendor; in 2014, Delta and Starbucks topped the list. 60% of stays on Airbnb are for two or more guests; mean(ing) companies have employees stay together in apartments as opposed to individual hotel rooms. Employees order meals through GrubHub and Uber Eats. The food delivery market has grown 91% from 2016

The world’s $1.4 trillion business travel industry is changing. As companies spend an increasing amount on travel and expenses, online disruptors have sprung up to take market share from entrenched travel industries. And as business travelers gain more control over their itineraries, their personal preferences are emerging in the way they spend for work trips.

Thanks to data from online travel and expense software companies, including Certify, SAP Concur and Egencia, we know what some of those changes are. Here are five of them:

Companies are giving their employees more freedom on where to spend

It used to be that when traveling for work, employees could select from certain hotels and airlines with which their employer had worked out deals. Increasingly, that’s not the case, and business spending is being directed by consumer preference.

“You’re allowing consumer behavior to sort of drive business travel spending. If it’s all the same, people will just as soon stay at this restaurant, take this plane, this transportation,” according to Certify CEO Bob Neveu. “More and more we’re seeing the consumerism of enterprise.”

As long as employees stay under a certain price point, many companies are willing to let them spend where they please.

The result is that business travelers can exercise their own travel preferences and pick the companies they travel with, which increasingly includes lodging and travel disruptors like Airbnb and Uber.

Approximately 42 percent of travelers prefer to book directly with a hotel or airline or other suppliers rather than through their work portals, according to a survey by SAP Concur and GBTA Foundation. There are a number of potential reasons for this, including wanting to get points on personal credit cards and reward systems that help them earn discounted travel in the future.

“You’re seeing companies letting productivity and satisfaction trump preferred relationships,” according to SAP Concur Chief Product Officer Tim MacDonald. He warned, though, that “a huge segment of our companies would take great exception to that.”

Ride-hailing services like Uber and Lyft have eclipsed taxis

It’s no secret that online ride-hailing services have wreaked havoc on the taxi industry, but the situation is particularly dramatic among business travelers. In the less than 10 years since it launched, Uber and its competitor Lyft have gobbled up a whopping 93 percent of business ride-hailing receipts (Uber, 74 percent; Lyft, 19 percent), according to expense report software company Certify, while taxis make up 7 percent. Note that smaller ride-share companies were not included in this exercise, so the market shares of Uber, Lyft and taxis should be slightly less.

Not only is Uber the leader in business car rides, it’s also the most frequently expensed vendor on Certify; in 2014, Delta and Starbucks topped the list.

Business travelers are staying at Airbnbs — but in groups

Airbnb is a small but growing part of business travel. “Alternative accommodations” — which include online services like Airbnb and HomeAway — represent single-digit lodging market share but are growing at two times the rate of traditional lodging for business customers, according to Expedia’s business travel booking company Egencia. A 2017 Egencia survey found that 20 percent of U.S. business travelers said they have booked shared lodging; 47 percent haven’t, but said they would consider it.

Perhaps most interesting, the majority 60 percent — of stays on Airbnb for Work, the company’s corporate travel vertical, are for two or more guests. That means companies are opting to have their employees stay together in apartments or homes when traveling, as opposed to in individual hotel rooms. This is pitched as an opportunity for bonding and collaboration, but it’s likely that companies simply find this method cheaper than booking separate hotel rooms for team trips. Airbnb says this segment is one of their top growth segments.

The most popular destinations for these work Airbnbs:

1. London
2. Paris
3. Los Angeles
4. New York
5. South Bay, Calif. (Silicon Valley)
6. Toronto
7. San Francisco
8. Boston
9. Sydney
10. Washington, D.C.

Note that many of these are among the most expensive cities in the world to book a hotel.

Employees are opting to dine in

Meals are the most frequently used category of corporate expenses. Employees are increasingly choosing to order those meals through online platforms like GrubHub and Uber Eats. The food delivery market has grown 91 percent from 2016 to 2017, and it is on pace to more than double again in 2018, according to Certify.

Among those companies, GrubHub (which owns Seamless) has the biggest share of expense receipts. However, it is losing ground to newer competitor Uber Eats.

Employees are spending more money on food — at Starbucks

Starbucks is clearly not just for coffee, according to corporate expense receipts. On average, employees spent $13.21 per visit to Starbucks in 2017, up nearly 40 percent since 2013. That means people are buying more than just coffee, which costs about $4, depending on your order. Certify CEO Bob Neveu credits spending on Starbucks’ increasing variety of food options, in addition to rising prices, for the increase.

How much customers spend at Starbucks is important as it’s the most-expensed food vendor, according to Certify.