Before COVID-19, most of the corporate world had travel policies in place for their staff, but little or no control over non-employee work trips.
This meant that, for example, the potential new hire coming in from Boise to San Francisco for an in-person interview or the contract attorney flying from New York City to London for a six-month gig would book their own transportation, flights and hotels, and then submit the various receipts for reimbursement with their next invoice.
The existing solution was manual, patchwork, and left lots of room for error and visibility gaps for lone individuals, but when you multiplied that by thousands of non-employees traveling millions of miles daily, it was an administrative and logistical nightmare for some enterprises.
“We simplify and address this space by applying corporate travel policies and a duty of care, increasing safety, and creating visibility of the non-employee travelers for the enterprise,” explains Filip Bloch, CEO and co-founder of the startup, which already counts Google and Vodafone among its clients.
This July, the Poland-based company raised a $3.45M round from DialCom24, Alfabeat and a number of private backers to help grow its corporate travel service platform.
We recently Zoomed with Filip to hear how he managed to close a round in the middle of a pandemic, how corporate travel will emerge changed post-COVID, and what he plans to do to grow his 50-person team and weather the perfect storm.
How did you manage to close a funding round in the most difficult time for the travel industry?
Well, it wasn’t simple. We were already well within the fundraising process in March, so most of the money came from existing investors and shareholders. COVID-19 hit us by devaluation because the valuation was set up higher than the final deal we had at the end of the day.
We plan to actually go much higher with this investment and maybe wait a bit longer. But the situation in March was so hectic, and the travel industry was so impacted by COVID, that we decided to close the investment as soon as possible to secure the company’s runway, our people’s employment, and our platform’s development.
This year, the current dollar allocation budget is near zero for corporate travel. What do you think is going to happen next year?
It’s something that’s not said loudly, but this COVID situation, lockdowns, and no-travel policies will look great on the P&Ls. So the enterprise companies of course won’t want to go back to overspending and the same level as 2019 for travel budgets. In my humble opinion, it will be about 50% of what we had in 2019.
Can you tell us about your participation in the SAP Foundry cohort?
SAP has separate products, which are like silos. I’m talking about SAP Concur, which is the leading global provider of travel booking for employees and travel expenses. They also have SAP Fieldglass. Most of the Fortune 2000 companies use SAP Concur.
SAP reached out to us January 2020 with an invitation to take part in the selection process for their SAP.IO accelerator — the Foundry in San Francisco — and the spring cohort. We already knew back in 2018 that SAP would be the perfect partner for us if we were to become a global provider in our non-employee business travel niche. And then the magic happened.
We’re the first Polish startup to become a part of the SAP Foundry selection process so far, the first Polish startup to become a part of the SAP marketplace ecosystem, and we’re also in the target quotas of SAP account executives.– Filip Bloch
What niche did you carve out that SAP Concur didn’t already cover?
Concur is great for full-time employees, who have profiles that are known by the travel management company, which is behind the bookings. But when it comes to the non-employee — who doesn’t have a profile, who might be a one-time traveler, who is not insured, who is not covered by the company’s duty of care — then the research shows that the travel management company needs to make five times more calls to serve this person. As a result, before Hotailors, this travel segment for non-employees was not visible to companies.
What is Hotailors doing for the next four months?
We believe that a crisis like COVID-19 is an opportunity for a tech company — for an agile and flexible company — that can really adjust to the situation very quickly. We’ll be growing the sales team, the business development team, hiring a couple of seasoned sales executives, and we’re investing more into our technology. It’s going to be technology, technology, technology.
And, just this week, we set up a deal with Oracle, which is the second largest global provider of enterprise solutions after SAP. This means that if we’re the preferred solution for non-employee travel within those two ecosystems, then we’ve basically covered the market.
Do you think layoffs will make the market more efficient, or is this just everyone trying to survive and prepare for better times?
There’s always a good side and a bad side of this situation that you can look at. Layoffs are always not the good side. But sometimes people can start something completely new and get much better results with their lives, so I don’t judge.
But companies will need to secure funding, that’s for sure. And this is what we have seen in the last six months — closing rounds with huge discounts on conditions that a year ago were a laugh.
What do you think about some of the big incumbents in your industry, like Amex or Egencia?
Let’s put it this way: we’re not the competition for Amex, CWT, or anyone in this group. We’re focused on a segment of non-clients for those companies. This segment is non-employees, contingent workers, one-time travelers, and the people who usually book themselves on the B2C channels, and then bring the invoice to the company and say, “Please refund me.”
These travelers are not visible for Amex or CWT at the moment. And Amex doesn’t want to deal with them, because it takes five times more calls to make those people fly, right? So we see a lot of partnership opportunities with those giant companies.
How do you approach these giant companies to partner with them?
We position ourselves in this kind of partnership, not as a product, but as a feature in their existing products. And the product, in this meaning, is to make business travel happen for a company like Google.
We see a lot of possibilities in partnering with companies that already have human capital, even more than they need, and adding together our technology. We want to stay as small as possible and as automated as possible in the field of customer service.
How will the travel industry address risk management, traveler safety, and the possibility of COVID spikes?
This is now a must — to have non-full time employees be visible to the company and reachable when something happens. The duty of care needs to apply to them. And this duty of care, this is one of the important pillars we’ve been working on during COVID this year.
We launched a special project where we only focused on the duty of care for contractors within our development team.
Today, we can track our users in real-time within a mobile app; we can send them push notifications about emergency situations; and we can connect international providers like International SOS to make the whole loop.– Filip Bloch
We also provide insurance for the travelers, and 24/7 real human support to ensure that everything goes seamlessly, and without safety issues.
We have another project of so-called “dynamic travel policies” on our product roadmap, which require a lot of machine learning, AI, and neural networks. Sometimes you cannot wait for the human decision — sometimes the situation changes minute-to-minute, so it’s important to automate as many decisions as possible, but still keep safety the number one priority.
What do you think about all the canceled air tickets and hotel stays?
Yeah, this will be a nightmare for the next 12 months. The rules around the lockdowns are changing like crazy. For example, we recently faced a situation where most of the flights to-and-from Spain had been canceled, which was like 50% of the bookings we had at the time.
I’ve heard about different approaches from the different airlines for these canceled flights, credits, and tickets. But there are two factors. On the one hand, they need to keep clients happy because, without their clients, they do not exist. Many more flight tickets and hotels are refundable now to address this, with flexible rules around bookings.
On the other hand, they need to keep a cash flow and investors happy. And I think this is the time for great CEOs in travel industries that will lead their organizations — even technology providers that are not having an easy time right now — through this crisis with wise and smart decisions.
And fast decisions, because it’s super difficult to lead public companies in the travel industry through the time of COVID. So yeah, we’ll see. Someone needs to fly us from one continent to another, and this won’t stop for a long time.
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