Can start-ups disrupt the business travel sector?

by Business Travel iQ | 06 December 2018

Last month’s “unicorn” valuation of TripActions means some are betting that the industry is about to be disrupted

There has been talk for many years about how the business travel sector is ripe to be disrupted. Yet despite valiant attempts by disruptive start-ups, it has not yet come to pass.

That may be about to change – or at least that is what some venture capitalists are thinking.

Many large companies operating in business travel have aimed to avoid “doing a Kodak”, the film company that invented but failed to exploit digital photography, by setting up skunkworks or investing in start-ups.

Last week, Air France KLM announced the launch of a new start-up studio, called BigBlank “whose mission is to explore all the latest trends in the travel sector and to create companies with innovative projects and high growth potential”.

BigBlank will be led by Hubert Riondel, an Air France Boeing 777 pilot, and will work with entrepreneurs and give access to the expertise of the Air France-KLM group.

The group said, “By creating BigBlank, Air France-KLM is setting up an autonomous and agile entity that will be fed by permanent contacts with the start-up ecosystem.”

Lufthansa launched its innovation hub in 2014 while  IAG launched a similar start-up accelerator called Hangar 51 in 2016.

The interest in start-ups will have intensified with the news last month that TripActions gained “unicorn” status (a US$1 billion valuation) when renowned Silicon Valley investor Adreesen Horowittz invested US$154 million in the company in a Series C round.

"TripActions is reshaping the stone age corporate travel industry with a solution that uses modern software and machine learning to deliver a personalized, delightful experience for road warriors and their employers,” says Ben Horowitz, co-founder and general partner at Andreessen Horowitz. “It's a real breakthrough. When we interviewed their customers, both the employer and the employees loved the service. We rarely see that and never in travel.”

The money will be used in part to fund “a large engineering and data science hub in the company’s EMEA headquarters in Amsterdam”.

The company will also invest further in TripActions Luxe, its VIP travel programme, an in-house meetings and events solution, consulting services and Guest Invite Portal, which allows HR and recruiting teams to co-ordinate candidate travel.

In July, the company announced the opening of an office in Hoxton in London, run by UK general manager Elad Cohen.

At the time, TripActions’ CEO Ariel Cohen said, “A lot of people tried to disrupt the major travel management companies, and they always failed. We had this vision to be a start-up that is always going for it and creating an end-to-end business travel solution that includes the globe.”

In the past start-ups in the sector have suffered because of the huge barriers to entry – notably access to distribution. Yet the rise of GNEs and the recent focus on NDC has helped challenge these barriers. Indeed, Farelogix itself was recently bought up by Sabre which has its own heritage of working with start-ups.

The unicorn valuation of TripActions and the involvement of Andreesen Horowitz will inevitably encourage other entrepreneurs to see if business travel can be disrupted. All the signs are that it can.

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