Despite the lag in post-pandemic business travel, small and medium-sized businesses (SMBs) emerged as the frontrunners in recovery, surpassing their larger counterparts.
Representing approximately 45% of every dollar spent on business travel globally (a staggering $900 billion opportunity), SMBs are reshaping the priorities of the business travel sector.
It is safe to say that this renewed enthusiasm for travel by the SMB community flies in the face of some experts' assumptions, given the economic turbulence caused by the pandemic. SMB travel behavior before the pandemic typically involved budgetary constraints and conservative travel policies as they attempted to control costs and minimize risk. However, recent travel trends reveal that SMB travelers are prioritizing convenience and basic travel essentials over budget-friendliness. This means that they are willing to pay more for quality service and convenience.
The budget-makers at SMBs have also demonstrated a willingness to commit to spending on travel for growth and expansion. Besides, the key decision-makers in SMBs value flexibility and customization options in their travel relationships. Travel brands that provide better or more useful services for a similar price tend to have an edge in winning SMB customers. In addition, SMB leaders consider tangible value, such as upgrades, flexible usage policies, and inclusions in their travel packages when making travel purchase decisions.
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Where does this determination come from?
SMBs are often described as the “nimble fighters,” with trademark flexibility alongside less bureaucracy. On top of that, many SMBs couldn’t afford the luxury of remote work once travel restrictions began to lift back, compared to their larger counterparts.
"The recovery by SMBs has far outpaced the recovery by the multinationals," said Jeremy Quek, a consultant at Amex GBT.
Equal parts tenacity and survival.
The SMB Spotlight
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Some large hospitality players are ahead of the game developing SMB-dedicated business travel programs, recognizing the heft these travelers bring.
IHG Hotels & Resorts has seen growth in its SMB-focused Business Edge program, created to bring incentive, reward, and simplicity to business travel.
Best Western has also launched an SME program, Business Advantage, bringing benefits to smaller businesses across the world.
Additional programs like Delta Small Business and American Business Extra offer similar enticing perks, cementing the idea that if you’re not actively targeting the SMB sector, you’re behind the curve.
However, over-reliance on baseline perks and points is also dangerous.
Travel points and free breakfasts are all well and good, but if travel brands do not continue to evolve their offerings, incentives will quickly become stale.
What are small and medium business travelers looking for beyond standard, expected discount incentives?
BTN acknowledges a lack of SMB-focused booking tools, with traditional booking portals historically designed with larger enterprises in mind. SMBs are often very confident in knowing what flight they want and the price they want it at, and coupled with SMBs trademark flexibility, they’ll search high and low to match it.
MODIV Takeaway
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Travel brands must respond to SMB travelers' preferences by prioritizing convenience and "the basics" in their offerings. Travel providers should provide cost-effective solutions, such as finding the best travel deals, to help SMBs optimize their travel budget. A travel company that offers personalized, flexible, and value-oriented travel plans will be the one that SMBs choose to partner with.
Additionally, after price, value tangibly looks like upgrades, inclusions, and flexible usage policies for SMB decision-makers, so travel brands and operators should consider these factors to provide value to SMB travelers.
SMB travelers are set to become leaders in the travel industry soon, with an increasing number of small and medium businesses relying on travel partners to support their growth and expansion. Travel brands have a unique opportunity to be innovative with this segment. Where to start? Creating an ideal travel experience for SMBs that prioritizes cost-effectiveness, flexibility, convenience, and customization lays a strong foundation. The future of travel belongs to those who can provide superior travel experiences to SMBs.