Steve Hafner on why Kayak is going deeper into business travel

Metasearch platform Kayak entered the business travel arena in late 2019, with the beta version of its free Kayak for Business tool for small- and medium-sized companies. After 20 months of testing, the full launch came in July 2021 and since then, Kayak says more than 30,000 companies have used the product.

In the midst of developing that solution, Kayak has been quietly developing a more advanced version targeted to large corporations in partnership with Blockskye, a startup developing a blockchain-based solution for corporate travel.

Since 2018, Blockskye had been developing its system through tests with United Airlines and a corporate client that was not named at that time. In 2020, Blockskye approached Kayak about creating the booking tool for this new enterprise travel solution.

In August PhocusWire’s sister publication Business Travel News reported the corporate client is PwC and that, since last fall, the global professional services firm has been using Kayak for Business’ new Enterprise solution for all of its employees in the United States – numbering more than 65,000 – and processing more than 400,000 bookings, with the blockchain providing a single source of truth for each booking.

So Kayak is now looking to sign up more corporate clients for its Enterprise product, with features such as:

• Direct NDC connectivity with suppliers so travelers can book directly with the airlines
• Direct payment between companies and major airlines
• Integration with loyalty program rewards
• Flight emission estimates 

Kayak co-founder and CEO Steve Hafner spoke to PhocusWire about building the new Enterprise solution, the benefits of using blockchain and what competitors may think of this new product. The conversation has been edited for brevity.

Over the years you – along with many other industry leaders – have ranged from quiet to critical on the topic of blockchain for travel. What is the value in it that you now see through this partnership with Blockskye?   

What blockchain is, it's a digital ledger that is distributed so different third parties can interact with it – which is great for something like an airline ticket because you can see who touched the airline ticket, last made changes, did the upgrades and you can hand it off to the next third party to continue on the path. That is a big sticking point in this industry, because historically who you bought it from were the only people allowed to touch it. To this day, if you buy on Orbitz or Expedia and you call the airline to make a change, they refer you back to the [online travel agency]. Nobody wants to deal with that, especially in a business environment when your flight just got cancelled.  

So then what happens to the PNR (passenger name record) in this system?  

It's in the blockchain. The part that was really important to us - that you could make all these changes in the Kayak app that everyone knows about, and you are indifferent on whether it was [booked] airline direct or agent. So regardless of who made the last change or where you booked, any party can touch it, which is pretty darn cool.

And by the way, it's not just about the customer service angle of the itinerary, it's also about payment. The payment mostly goes through blockchain, which is great because it cuts out the credit card companies and their associated fees, and the airlines absolutely love that. And for the consumers, they love that too, because it means no more expense reports for those itineraries. 

That’s a bold statement – “it cuts out the credit card companies.” A lot of these airlines have partnerships with these credit card companies. Does this really upset the apple cart as far as the way things have traditionally functioned? 

It will over time if it gets traction. Right now we have one enterprise client. We need to go roll it out to a lot more corporations for it to work. But you know the holy grail for the airlines is first, let's disintermediate the OTAs, particularly the corporate travel OTAs, because they don’t want to pay them commissions. Then second is let’s try to disintermediate the GDSs [global distribution systems], because they don't want to pay them segment fees. So that's where NDC came in - the new distribution capability and everything that we've built is NDC. And then the third piece of the holy grail is, let's stick it to the credit card companies. To get that third piece to happen, you need to start pushing a lot more volume through this NDC channel and through the blockchain-enabled payment, and the jury is still out on whether we can pull that caper off. But it’s pretty cool.  

Is the booking tool running through the same Kayak app that is used for your consumer-facing services or is it a different app?

It's going to be the same app, you just have to have a Kayak for Enterprise account. Once you have that, you have a different login, and you have a different user experience and you can toggle between personal and corporate. In the corporate view the itineraries you see are more comprehensive, they are compliant with the corporate policy. You’ve got payment and everything else in there, tracking. 

What benefits does Kayak bring to the table for this solution?

From the user perspective, we're a brand name they are familiar with and an app they are familiar with. So we think that will help with onboarding. From the industry perspective, all the airlines know who we are. We have very good engineering and commercial connections with those airlines. So when we got into NDC and into payments, we knew what we were talking about and we knew we could deliver on our promises - which means a lot to the travel industry community.

Where we had to earn our chops was with our first enterprise client, actually. That's where we were total newbies. When they … bring 20 people to the [first] meeting and we bring three [laugh]. And they had this list of “We need all these things fulfilled” and we say “Why don't we have an MVP product and just have these top five … we’ll race this forward as fast as we can.” [And they say,] “No, we need this whole list before we get the next thing done, and it has to be done by this date.”  

So you are potentially building that and customizing that with each new customer you would on-board, correct? 

We hope that there's a lot of overlap between the requests and demands of our first enterprise client and the next batches. We built it in a way that it anticipates a little bit more customization, but not a lot. 

There are a lot of competitors in enterprise travel space, of course. Why should a large corporation choose Kayak for Enterprise? 

The decision maker there is usually the corporate travel manager at the enterprise level, a [chief financial officer] or financial type and then someone on the commercial side. And the appeal of this solution is it gives you better content for your travelers because you get all the direct content from the airlines plus the GDS plus the Kayak metasearch capability. For the CFO, you save money, particularly on the trip’s credit card fees, which should also give you a kickback from the airlines on the direct bookings. And then for the commercial person, it's the best of both worlds. You get a great interface that your folks are used to using for their leisure travel and then they don't have to file expense reports.

How much of a benefit do the names Kayak and Steve Hafner bring to this effort? 

I have no idea. I'll tell you that we launched the free product Kayak for Business a couple of years ago, [and] we haven't put a dollar of marketing behind it and we have 30,000 clients who have signed up for it. In this effort, we don't intend to have a of dollar of marketing or even a large sales force. 

What we're really trying to do is to have our first enterprise client - who has lots of other enterprise clients - be able to say look you should come over to this solution because it's worked so well for us, and we've saved so much money and our travelers use it. It means nothing coming from a Kayak person. An enterprise person telling it to another enterprise person that's that traction. So hopefully if we can get some top tier companies to sign up for this and love it, the word of mouth effect goes into place and it turns into a real business for us. Right now it's just a great product.

What kind of pushback or challenges are you anticipating? How much of it is just the inertia of these large enterprises?

Habit and inertia are the biggest obstacles to change. Everywhere. I’m on the board of a company called SeatGeek. We have a better software stack for consumers and teams and arenas, and it's taken us eight years to start beating the pants off of Ticketmaster - and nobody likes Ticketmaster.

I think people feel the same way about GBT [American Express Global Business Travel] and Concur, honestly. Everyone wants a new solution. They're all just scared to make the leap because every time they made the leap in the past, they've been disappointed with the next solution too.  

How much of a heavy lift was this for your team to get up to speed on enterprise corporate travel and and booking tech? 

We’ve known the industry very well for a long time. I used to run Orbitz for Business back in my prior life. It didn't take as long to come up to speed - it took us a while to build the stuff that we needed to build. The commercial agreements were easy, but then we actually had to write the code, and it took a lot more resources than I anticipated. Kayak for Business was basically a light improvement to Kayak for consumer. Kayak for Enterprise – totally different beast.  

The new enterprise solution calculates the CO2 emissions for user’s flight and sends it to the company. Are you working with a partner on that?

Yes, we're working with a couple of partners. I'm not so sure the methodology or the partner that we're using is the right one yet. So that's still something that we're tooling around with and we're not the only ones trying to figure that out. 

There are many theories on the long-term outlook for corporate travel. What is your take?

I don't know if the total, volume-wise, is ever going to get back to where it was - maybe post 2026 - because people's habits have changed. And it's just a lot easier to do stuff via Zoom. But I think the value of in-person meetings is still there. It’s still a very, very high [return on investment] activity. It's just sometimes Zoom is even higher. And easy. There are a lot more people thinking about it more intently than I am because, even with this effort, 98% of our business is still going to be leisure. So I am much more focused on what’s happening with leisure travel than I am business travel. But maybe this product takes off and I feel differently in a few years. 

What are you still working on for this new enterprise solution?

We have a long laundry list of to-dos, but for the moment we're just focused on securing one to two more clients. So we can help … the P&L a little bit to cover the cost of our engineers. But also just to understand the feature set before we roll it out. The scope right now is still limited to the U.S. We've got a lot of work to do to take this show on the road to the geographies. So job one is to get two to three more clients here in the U.S., get meaningful scale in terms of usage so that we can better refine the feature set and how we roll it out. We have a ton of bugs to fix too still, by the way.  

Regarding the free Kayak for Business, when you spoke to my colleague Linda Fox last year, you said, "Our challenge is to go how deep we can go into corporate travel without providing customer service. That's where we're going to draw the line.” So is that line still there? 

That line is still there. We're partnered with other TMCs to actually do that customer service, and it's the enterprise client who picks the TMC. 

What's next for Kayak’s work in business travel?

We've got two goal posts now. We've got the free Kayak product and now we've got the enterprise product. We are working on something for the middle, a dumbed down version if you will of the enterprise product with a different pricing setup. … So those are the three big things for us. And hopefully a profitable P&L for this segment emerges, because unlike a lot of the other corporate travel startups, we like to make money, not just great products. 

Who is going to be bothered by the creation of Kayak for Enterprise? 

The big leaders in the travel space, particularly GBT, have legacy products. It's tough for them to close the gap here in that they also have P&Ls that are disincentivized to actually cut costs out of the system - because they get paid a ton by pumping volume through the GDS. They don't want to go direct to the airline. They get a ton of kickbacks. They take a scrape on those credit card transaction fees. They don’t want to use blockchain technology there. So they're in a tough spot because, yes, they have the greatest scale and customer relationships, but they don't have the product, and they don't have the P&L to help facilitate the transition to the new world.  

And then on the flip side, you've got companies like TravelPerk and … Navan … who have pretty good product feature sets now. I’d say that some of our stuff is better than theirs. And they have a lot more traction in terms of customers than we do. But they haven’t figured out a way to make money. And it's really hard for companies that are losing a ton of money to go raise more right now. You may have noticed.