Case study: Travel changer

Travel platform Serko Online's co-founder, Darrin Grafton, discusses how his business is disrupting the $900 million corporate travel sector and his methods for getting major corporations to see value in the services of a small business.

Mention corporate travel and most people immediately think of a mountain of expense receipts and rushing between appointments and connecting transport options.

However with the corporate travel sector estimated by IBISWorld to be worth close to $900 million in Australia and growing, Darrin Grafton (pictured left) and his Serko Online co-founder Bob Shaw saw an opportunity to shake things up.

“Originally we were attending to corporate RFPs [request for proposals] for travel agencies and listening to the problems they had in trying to manage their policies,” Darrin recalls.

“We realised we could produce an online solution or a SaaS (software as a solution) that would actually give them … buying strategies and managing that whole policy area.”

The result is an online service and mobile app that effectively co-ordinates a company’s entire travel requirements, from booking flights and hotels,
arranging transfers to managing itinerary changes tracking expenses.

Serko, which was founded in New Zealand in 2007 and quickly travelled across the Tasman, even gives individual travellers the ability to keep tabs on their bags, using innovative GPS technology and tracker pods capable of tracking bags to within around 80 metres – potentially making lost luggage a thing of the past.

Partnering, not conquering

While some business operators openly state their ambitions of crushing competitors, Darrin says he is focused more on delivering for his customers than keeping tabs on what his competitors may be up to.

It is for this reason, he suggests, that Serko has been able to forge valuable partnerships with people and organisations that may, to the outsider, not seem like complementary players. For instance, in the early days of Serko, travel agents were major embracers of Serko’s technology.

“I think they were looking at ways of being able to scale up,” Darrin says.

“By putting technology in that could bring more transactional volume … it sort of made sense to them, and it made the transaction more profitable for them.

The same number of staff could potentially increase their turnover by three to four times.

“So it became a sort of mutual partnership, where we were doing the technology and the travel agency was doing the selling,” he adds.

Seeing opportunity in a crisis

The GFC hammered businesses large and small around the world, and smaller firms, particularly, felt the pinch as access to funding virtually dried up overnight.

For businesses operating within the travel industry, any economic slowdown – but particularly one the size and severity of the events in 2008 – hit especially hard.

“During a recession, [travel] is one of the areas that people focus on for efficiencies,” Darrin says.

“I think that while Australia hasn’t been through a recession [in around 25 years], if you look at the mining industry and travel in general in Australia when the GFC hit, it had probably a 20 per cent reduction in spend.”

However for Serko, this sudden efficiency drive was something of a blessing in disguise, and Darrin and his colleagues sought to capitalise on the crisis as a means of delivering businesses these much-needed cost savings.

“Companies immediately focused on how they could save money, which meant technologies like ours were an ideal solution,” he says.

“That in turn meant that they started to then look at how they could innovate better around those savings.”

The mining industry in Australia was one of the first to take this up, given that employees often travelled large distances from Perth or other capital cities to remote areas and offshore platforms.

“We were given the task of looking at where the future of travel expense management is,” Darrin says.

Sitting on the floor

Part of being able to adapt quickly and embrace new opportunities, according to Darrin, is being able to keep an ear to ground and get information first-hand from his roughly 140-strong workforce, which is spread across offices in Sydney, Gurgaon in India, Xi’an City in China and the company’s Auckland headquarters.

“To sit on the floor and actually listen to the conversations that are occurring around some of the strategic paths that Serko is taking, you can actually pick up on things and you can hear about potential challenges that are occurring … and you start to get a feel for the pulse of the business,” he says.

“Sitting on the floor, in amongst the team, is quite essential. And I move around within the company just to listen to what’s going on and hear if there are any concerns, or [conversely] to hear about what great things have happened so that we can make sure the teams are celebrating their successes.”

Innovation never ends

In early February, Serko announced the launch of a new ‘best rate of the day’ feature, allowing travellers access to the best possible rates on hotels and flights – particularly useful when itineraries change last minute.

Rather than compete against established comparison sites such as Expedia and Booking.com, Serko partnered with these well-known entities of the leisure travel space to harness their content and expand their service offering to corporate travellers, without having to leave Serko’s platform.

Serko is then able to maintain their corporate clients’ controls over the listings and recommendations, such as the inclusion of certain hotel chains or eliminating services that do not meet with the company’s policies, such as health and safety.

“A competitive hotel marketplace will offer more value for business,” Darrin said in a statement at the time of the announcement.

“Based on personal preferences and corporate travel policy, the ‘Best Rate of the Day’ feature will ensure you’re getting the best rate with every search.

“The whole trip can be booked in Serko Online, giving businesses visibility of where their staff are staying.”

Darrin says such transparency for corporate travel has never been more important, given the need for companies to maintain the safety of their employees.

Disaster recovery from the likes of natural disasters and terror attacks, as well as more everyday events such as flight cancellations, are just some of the interruptions that can have profound implications for a company with employees travelling interstate or overseas.

Investing in the future

While having already listed on the New Zealand stock exchange in 2014, Darrin says his company plans to become jointly listed here in Australia by the end of the year, recognising the core role its Australian operations play in Serko’s profitability.

“The difference has been the scale – I think [the New Zealand market] could be one twentieth the size of the Australian market, so naturally the scale of the clients in Australia and volume of travel spend makes it a lot more profitable,” says Darrin.

“The New Zealand market has a different context – a lot of it is tightly held through a single airline proprietor, whereas it’s split more evenly in Australia, so consumers have a lot more choice and are used to having competitive choice.”

This increased level of choice is what is driving Serko to continue funding further innovations and developments.

He points towards geographic advertising (“Imagine being able to send advertisements for a special deal to someone’s phone as they walk past the duty free store at an airport”), and delivering highly targeted predictive recommendations to travellers based on their own experience as well as that of others, as some of the strategic options the company is pursuing.

“Our aim is to bring the everyday competitive rates of the internet to the corporate travel sector, and this means maximising all the data available to us,” Darrin says, adding that the personalisation of corporate travel is another key goal for the business.

As he is quick to point out, while the corporate travel is sizeable, it is roughly one third the size of leisure travel. And who hasn’t taken inspiration from places they have visited or services they have used during work travel and incorporated them into their private holidays?!

Serko Online in numbers

  • 140 – Number of people Serko employs worldwide.
  • 25 – Number of countries in which Serko operates.
  • 30% – Proportion of Australia’s corporate travel spend captured by Serko.
  • 2 million-plus – Number of people with access to Serko’s platform.
  • 12,000 – Number of sites on Serko’s Australasian hotel database.
  • 2014 – Year in which Serko listed on the New Zealand stock exchange.
  • 15-20% – Estimated cost savings being generated for users by Serko’s partnerships with Expedia, Wotif and Booking.com.

A snapshot of Darrin Grafton

DarrinNew Zealander Darrin has 25 years’ experience working within the travel technology space. He began his career building the first travel accounting systems for travel agencies, before working his way up to senior management positions with Gullivers Travel Group and Interactive Technologies.

In 2007, Darrin was awarded the NZX Hi-Tech Entrepreneur Award, and was a finalist for the Ernst & Young Entrepreneur of the Year award the following year.

Darrin is a member of the Institute of IT Professionals NZ and the Institute of Directors NZ. He spends a significant amount of time in Sydney overseeing Serko’s Australian operations.

For Darrin, the top four traits to being a successful business leader are:

  • Be approachable.
  • Become a great storyteller as you share your vision for the company to the market.
  • Have passion.
  • Lead by example.

 

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