Rearden's Travelport Partnership: History, Context and the Future of Travel Procurement (Part 2)

Spend Matters would like to welcome Richard Lee, the co-author of this post. Richard is a partner in Spend Matters Group, an M&A advisory firm serving the software, services, outsourcing and travel sectors. He is the former North America corporate development lead for Orbitz and has extensive strategy and finance experience in the travel industry.

In the first post in this series, we covered the basics of Rearden's recent partnership announcement with Travelport. Today we'll look at some of the needs of B2B travel, as well as how Rearden is addressing the market with their solution. We'll conclude with a final post in this series next week by looking more closely at Rearden's relationship with Travelport and their overall direction in the market. And we can't resist tossing in our perception of what we believe are unmet travel needs from a cost management and cost reduction standpoint today.

From our vantage point, it's clear that Rearden has carved out a niche for itself in the travel market by offering just enough content to be able to effectively compete. This approach is in marked contrast to many of their competitors who have focused on content (including direct connections into air, hotel, car suppliers or boutique global distribution systems or GDS, for short). Rearden's path has been to try to distinguish themselves based on what they perceive to be differentiated products, services and overall Spend Management (e.g., integrated T&E) approaches to help define next generation business travel. The fact is that Rearden's content is quite vanilla (e.g., connectivity to the major GDS -- Apollo, Galileo, Worldspan, etc.), and that they offer no direct connect or merchant program for further cost reduction today -- despite a planned aggregate SMB purchasing model -- suggests they've chosen a very different path than their competitors.

Case in point, Rearden has opted to focus on the overall booking and usage experience to drive adoption. They've also expanded into the T&E market to provide a broader offering that captures an extended element of the travel management process. But from a core solution perspective, Rearden has differentiated itself by building out a transactional network for users that does not require going off the system (i.e., punching out) for booking travel, restaurant, entertaining, shipping, conferencing or other related spend.

This approach has enabled Rearden to build tight transactional NDAs into its contracts, but more important, differentiate with the solution itself by building in a new level of service, capability and integration solution mash-ups into their products. For example, by delivering location-based services on mobile devices, Rearden does not only simplify lives for business travelers looking for the best meal in their general area of travel, but can ensure corporate compliance to preferred restaurants that offer corporate discounts and rebates.

Moreover, Rearden designed its interface to provide a common view across different personal spend categories beyond travel that integrates actions performed in a browser or on a mobile app with a user's chosen e-mail and calendaring solution (e.g., Google, Outlook, etc.). The main principal behind these investments is to facilitate the solution's ease of use -- and thus drive higher adoption levels -- to reduce the likelihood that rogue travelers will use more familiar B2C booking tools or go through another booking means.

The single point-of-purchase policy and related enforcement and "visual guilt" tools that drive users to make better decisions (i.e. encourage them to stay within cost/compliance boundaries) can help reduce spending. However, Rearden's offering from a travel-specific perspective does fall short of leading competitors in more technical booking areas, including the lack of proprietary agent desktop or native GDS screens, which some TMCs prefer. Moreover, Rearden's strategy of providing cached content at an appropriate refresh rate to minimize time-outs is not a foolproof means of avoiding booking challenges. Rearden's higher-tier corporate travel customer support is also questionable since other OTAs have more experience in a hybrid online / offline world, especially when it comes to servicing corporate executives.

Stay tuned for the final post in this series later this week or early next.

Jason Busch (and Richard Lee)

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