Expedia targets Australian corporate travel market with Egencia

Egencia, the corporate travel arm of online giant Expedia, is looking to make further inroads into the Australian market, where its growth rate exceeds rivals such as Flight Centre Travel Management and Corporate Travel Management but from a much smaller transactional base.

Egencia entered the local market in 2011 through its purchase of local corporate travel manager Travelforce. However, Expedia chief executive Dara Khosrowshahi said it had at first struggled to migrate Travelforce's technology onto the superior Expedia platform.

"Now that everything is integrated, we are seeing very healthy double-digit growth," the Seattle-based chief executive said during a visit to Sydney last week. "Australia is a profitable market for us and a market we are really leaning into on the sales side."

Egencia has grown to become one of the five biggest corporate travel agents globally, with more than $US5 billion of gross bookings last year, making it slightly bigger than Flight Centre's corporate travel arm on the world stage.

But the latest local accounts for Egencia Australia filed with the corporate regulator show it reported gross bookings of $66.8 million in the year to December 2014, up 36 per cent from 2013. That compares with Flight Centre's $2.3 billion of transactions in its Australian corporate business in the year to June 30 and Corporate Travel Management's (CTM) $814 million for the same period.

Both Flight Centre and CTM have pointed to growth rates in the high single digits in their Australian corporate businesses in the current financial year. But their much larger bases than Egencia mean the United States-based player has yet to pose a major threat to their businesses.

"I don't come across [Egencia] much in Australia," CTM global chief operating officer Laura Ruffles said last week.

Earlier this year, Flight Centre managing director Graham Turner said the "jury was still out" on the Egencia model. "There is no question you get what you pay for," he said. "Egencia on a transaction basis is cheap. But you will miss out on cheaper airfares they don't have access to."

Expedia chief financial officer Mark Okerstrom said the Egencia platform allowed for controls on travel policies and for companies to designate preferred airlines and hotels with which they had corporate relationships. The technology is also backed by call centres.

"I think the other advantage that Egencia has is when we are developing these applications is you don't know what is going to be good and what is going to be bad when you are changing features," he said. 

"Because it is part of the broader Expedia family, it is able to take a lot of the learnings from Expedia and Hotels.com and the tests that Wotif will be running and see what works and then roll that into the Egencia experience on your desktop or app."

But rival corporate travel agents, including Flight Centre, CTM and global giants American Express Global Business Travel, Carlson Wagonlit Travel and Hogg Robinson have also invested heavily in technology. 

Mr Khosrowshahi said Egencia's offering was superior because it was a single product rather than a series of several products developed separately, thus offering a smoother experience.

However, Ms Ruffles said CTM was focused on providing the best offering tailored to the needs of each specific client rather than a one-size-fits all solution.

The Brisbane-based company has developed a mobile app allowing employees of a company to share taxis when travelling in the same cities. It also offers travelling employees of a single company to read hotel reviews of colleagues before booking a property that is within the company's guidelines. That feedback can then be used by companies as leverage when corporate contracts with hotels are up for renewal.

"It is being agile and listening to customers," Ms Ruffles said of CTM's success. "We are growing through winning market share."

Source: The Sydney Morning Herald, Jamie Freed, 11^th October 2015
Originally published as: Expedia targets Australian corporate travel market with Egencia