Is Bigger Better in the Travel Sector?

Being bigger can help companies learn, negotiate better, and innovate, according to the representatives of three big travel brands who participated in a panel discussion from Center Stage at GBTA Convention 2018. On the other hand, integrating people from different cultures challenges even the largest corporations.

With 4,200 locations worldwide, Best Western CEO David Kong said being bigger provides greater brand awareness and cost savings. With greater scale, companies such as Best Western are in a better position to negotiate with suppliers. “If you think about industry today, one of the biggest challenges that we have is the ever-rising distribution cost. And when you are bigger you have better leverage in negotiating more favorable commercial terms.”

This, in turn, allows Best Western and other similarly-sized companies to boost investments in marketing and new technology to meet consumers’ evolving expectations. “What used to be amazing is now ordinary, obsolete. That expectation keeps rising so we have to respond to that,” said Kong.

Enterprise COO Christine Taylor agreed, even though her grandfather (who founded Enterprise over 60 years ago) often said, “It’s not about being the biggest, but it’s about being the best.” But being large provides unique opportunities, according to Taylor, which are critical to innovation. Her company’s “diverse, global network…push[es] us to innovate every single day. And we’ve got to do that.”

With the resources needed to develop and apply new technologies, big companies can take more calculated risks and become more innovative. For example, Best Western has invested in artificial intelligence and augmented reality for training their customer service staff. Now, said Kong, the company is partnering with IBM Watson to help consumers plan vacations.

Taylor explained that Enterprise is also using technology to meet consumer needs—the company wants to provide a rental car to a consumer when and where it is needed instead of only by walking into the rental car office.

Size also helps companies use scale and technology to reduce costs, which in turn can be passed along to consumers, said the panelists.

Technology, the panelists said, can help today’s big businesses operate more efficiently and nimbly, allowing them to give consumers experiences anywhere in the world. “Scale has brought us the ability on the demand side to create options for consumers that literally would have been impossible for them to find a generation ago,” said Rob Greyber, CEO of Egencia, a business travel platform within the Expedia Group.

Greyber said that, most importantly, Expedia sees size as an opportunity to learn from the vast amounts of data they collect as consumers use their platform. The Expedia platform is “almost a central nervous system” that helps the company understand travelers’ needs. “Each element, each addition, each optimization to the platform helps our customer service consultants to be more effective, it helps our customers to be more effective,” he explained.

With 11 brands under the Best Western umbrella, its size gives consumers more choices, said Kong. “We bring more solutions to the table,” he explained. Being big enables companies to offer a more attractive loyalty program too. “It makes the loyalty program more powerful, because you’re offering more earnings and redemption options.”

Being large creates disadvantages too.

Creating a global company brings tremendous competitive advantages, but if you grow through acquisition, you must assimilate and integrate cultures and systems.

“Culture eats strategy for breakfast,” said Greyber, who said that you can set forth corporate principles “on posters, you can talk about them in the town halls,” but “all of that will be undone in an instant” if leaders don’t model these principles. “Culture is not something you say; it’s something that you do every day–it’s the set of expectations that people can have and can rely on about how we will work together to solve problems.”