Rewriting the Rules: How the Next Generation Is Shaping the Future of Business Travel

Business travel has, without question, changed drastically over the past few years, leaving many wondering if it will ever be the same again. While it’s hard to know what exactly the future holds, there is one certainty: a new era of business travelers is upon us. While for the past several years the travel industry at large has predominantly focused on the wants and needs of the millennial traveler, those eager to stay ahead of the game have shifted their focus to Gen Z — and for good reason. With Gen Z on track to comprise roughly 30% of the workforce by 2030, bringing with them an entirely different set of expectations than the generation before, organizations must be prepared to evolve the employee experience to meet these new expectations that aren’t just anticipated — they’re inevitable.

“We have and are experiencing what I would describe as one of the greatest paradigm shifts in the evolution of the travel and expense industry,” reflects resident SAP Concur thought leader Ralph Colunga. “This is going to require a modernization of the T&E [travel and expense] management mindset, and of the end-to-end processes in use today in order to meet not only the current employee experience expectations with this paradigm shift we're in, but also then the new one of the next coming generations.”

So, how can organizations evolve their T&E program from a recovery state to one of resilience and adaptability for these next generations as they enter, and will soon dominate, the workforce? Find out in this episode of the SAP Concur Conversations podcast as thirty-year travel industry expert, Ralph Colunga, breaks down how organizations can ready themselves for the next era of business travelers — and why they should.

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Transcript:

Jeanne Dion:

Hi, I'm Jeanne Dion, and I'm the host of the SAP Concur Conversations podcast. I am the Vice President of the Value Experience Team here at SAP Concur, and my team works with customers on thinking through business outcomes, and using data to provide new and exciting ways to solve for problems. Today I have Ralph Colunga with me. Ralph, would you go ahead and introduce yourself?

Ralph Colunga:        

Sure, you bet. Thank you so much, Jeanne, and it's a pleasure to join you on this podcast discussion today. And as Jeanne said, I'm Ralph Colunga, I'm a thought leader here at SAP Concur.

Jeanne Dion:

So thought leadership. I think today what we're going to be talking about here is travel. And I was thinking about this conversation with you, Ralph, I think about it every time I talk to you about travel. I was talking to my daughter the other day who is working. She's 26 years old and she travels a lot for work. And I was thinking about how when I was that age traveling for work, heavens, I had only been on a plane maybe three times in my life. I wasn't very travel savvy. But I think about my daughter now at 26. She's been to multiple countries. She started traveling when she was two months old.

Ralph Colunga:        

Wow.

Jeanne Dion:

She's had a lot of... Yeah, yeah. I started taking her along. And she's had a lot of travel experiences, a lot of opinions on how she travels, her loyalty to brands. She's got the idea that she would prefer to stay in a place that makes her feel more like home rather than a hotel. That whole idea of going earlier, staying later, because she's still with her friends all spread around the country, she wants to visit them and so if she's in an area where they're near, she'd love to extend her travel or even take vacation time to areas where she had never really been before. And I started thinking, all this really ties back to how generations are really adapting to how they travel. It's not just technology, but it's who they are. It's the time they were born in and what we brought to it. So I was just thinking, have you been seeing that kind of change? My daughter hopefully isn't an anomaly, is she?

Ralph Colunga:        

Oh, not at all. And let me just state that you're absolutely correct, Jeanne, in that each decade has bought new challenges, new technologies, new opportunities, and a next generation's level of expectations. And a new generation's approach to work and problem solving will simply be different from the previous generations.

Now, what I'm absolutely astounded, when we start talking about this topic, and I get really excited about it. And in one way I get excited, but it's also a little bit concerning, and that concern really is this. Is that no one could have predicted the devastating global impact that the C-19 pandemic had.

And as the pandemic morphs to becoming endemic, we have and are experiencing what I would describe as one of the greatest paradigm shifts in the evolution of the travel and expense industry. That's something that we've just lived through. And also really it's not only the paradigm shift of the industry, but also it's the management thereof in terms of these services.

Now, while the fundamental pillars of teeny programs remain. Being compliant, spend governance, employee experience, process optimization. The rapidly coming new paradigm shift as I see it, which we can predict and prepare for, it'll be a generational one. And what I mean by that is that this is going to require a modernization of T&E management mindset, and of the end-to-end processes in use today in order to meet not only the current employee experience expectations with this paradigm shift we're in, but also then the new one of the next coming generations. And how this is really about moving your T&E program forward from a recovery state to one of resilience and adaptability for these next generations that are coming.

Jeanne Dion:

I know you've mentioned to me before as it relates to the differences in how we used to run programs to how we're looking at this new age of hybrid work and the changing of the guard as if it were from the leadership to the next new sets of leadership. It's more of a sell, don't tell approach. I know I've lived through some of the old ways where it was always that you shall do this. How is that changing, and how is that resonating with our travelers as we move into these new phases and new generations of travel?

Ralph Colunga:        

I think when we're talking about the generations, and we should probably kind of define that. But it's interesting, I'm a Baby Boomer. And of course after Baby Boomers you had Gen X, then Gen Y or the Millennials, or Gen Y not as I call them. And then from there we go to Gen Z. But then we're coming into, in addition to that, the Alpha generation, and I'll go into a little bit more detail on each of these.

Now, pretty much the millennials as I see it, are moving into certainly positions of power. And the millennials were born anywhere from 1981 to 1996, but they are definitely moving into positions to where they're going to start taking over the management. And then you've got Gen Z, which were born pretty much 1997 to 2012, and then again, Alphas follow after that, starting with 2013. Now when we start thinking about, again, each generation being a little bit different, I normally try to focus, I guess really all of my attention on what I would say are the Zoomers or Gen Z, if you will, as well as then what we have to really start thinking about is the Generation Alpha, and I'll describe a little bit more why that's so important.

But one of the things, generally speaking, with Gen Z and the Alphas, Millennials were smarter than certainly Xers or Baby Boomers with regards to their adaptation of technology and understanding that use a little bit more. Now in many ways, millennials were kind of reared on technology, but not completely absorbed in it, as they had to kind of balance between the analog and digital worlds. Now, with regards to Gen Zs, and especially Gen Alphas going forward, there is definitely, these are two generations that are very well in tune to technology. Now certainly with Gen Zs, as we kind of witnessed with kind of the great resignation in '21 and '22, they're not afraid to leave a job if they're not happy with it. They're willing to stand up for causes that they believe in. They socialize online, it's kind of their main method of interaction, and they definitely are hardworking and somewhat risk-adverse as far as that goes.

And I think for the most part they are quasi-independent, although they like traveling in groups. Definitely strong advocates on things like sustainability, et cetera, and I give them a lot of credit for driving that forward. Gen Alphas, again, because they are so in tune to technology, kind of technology wins over human connection. They're definitely going to be very heavy social media users. I think that they have really a much more, they're going to be hyper connected. Their social acceptance is going to be of high significant importance, meaning how they interact, because they're going to utilize the mobile tools, if you will, for that interacting much more, and probably much more efficiently than any previous generation. They're independent. They have their independent needs, and they want those adhered to, or they want those taken care of. Kind of think personalization, if you will.

And they're going to be very versed, obviously, in digital learning, highly opinionated. And again, I think in some ways it's probably true with both these generations, the future generations we just described and talked about. There are going to be somewhat, I would describe that as being somewhat, their attention spans are not, I guess they're going to be definitely multitaskers. Now, when you talked about the value proposition, let me, if you don't mind, let me just kind of revert back to... These are almost, this is nothing new in terms of these generational changes, right?

Jeanne Dion:

Yes.

Ralph Colunga:        

And certainly, I didn't want to be like my parents, and on and on and on.

Jeanne Dion:

That's right.

Ralph Colunga:        

But when I think back with regards to, specifically around the area of travel and expense management. Now, where this is a kind of deja vu moment for me when I think about the travel expense managers of today and what they're going to be going through very shortly here, is that when I joined Salesforce back in 2008, the average age of the company at that time, I was told, was 27 years of age.

Now, that would be just about the tail end of the Millennial generation. And my age was two times that, plus a few. So as I came on board as this new director of travel and expense management, and I had been in the industry for 20 something, almost going 20+ something years, one of the things that I had to immediately figure out was, how do I understand and manage to the expectations, and in addition to that, communicate with this younger generation?

Now, the bottom line is that it required, it really required that I change. That I think differently if I were going to survive in this strange new environment, if you will. Not so much as, again, I understand travel and travel management, but this wasn't about me teaching these employees how travel expense was to be managed in the corporate world. But really, rather how I needed to listen and move away from the old command and control mentality that I knew about, to one more about employee empowerment and choice enablement. And so it really was moving away from a sell, not tell, if you will messaging, meaning it was about selling the value proposition, but allowing employees to make their business decisions based upon their business needs within the framework of our policies. But it wasn't about me just telling them how they had to do things. It was a quite different, it was quite a shock for me to step away from that, quite honestly.

Jeanne Dion:

And I think about that, what you just said really resonates with me because I look at my team, they're all X and Ys, and the way that they travel is far different than what I remember traveling at their age, where it was really tied to exactly what the policy could say or do. We're going out and we are looking for things, we're trying to find the best food truck in the area that we're going to, or we're looking for that really amazing experience that we've seen on social media that we want to experience when we get there with my team.

And I love that about them. It's the experience of travel, they're still seeking experience in that type of travel, whether it's business travel or personal travel. And I think about that often as well, because I think about it from a cost savings perspective. Where we're looking at these things, part of what policy is there to do is to help guide on cost savings, but it's really not about that straight travel savings anymore, is it? It's across multiple areas. You mentioned how we have generations now who are really invested in the sustainability, not just the carbon footprint, but all sorts of pieces of sustainability. We're talking about the, you said they're willing to move if they have to. They're not tied to an organization if it doesn't meet what they're looking for, they will get up and move. So those costs across the entire organization, retention, recruitment, how are we looking at travel policies to accommodate that travel savings, but also the savings to the organization in many different areas?

Ralph Colunga:        

Absolutely. It's really interesting that most corporate travel programs are really geared towards the prior generations of travelers, and most companies hanging on to policies and processes that were born from the kind of really a pre-digital timeframe. And it's always been kind of a new generations approach to work and problem solving from the previous generations. And it's not that the new generations can't learn from the previous generations, but there's a newer approach and a more diverse approach and a more open mindset that comes with each of these newer generations. So as a result, I think it is something about these next generations. They're going to prefer to want to work for companies that align with their principles and really embrace how they see a diverse work environment should work for them, quite frankly.

Now, it's definitely, we have to keep in mind... I think one of the concerns with regards to the great resignation, as an example. And to your point earlier, we got to keep in mind that it's estimated that the average cost of an employee is about a $100,000.

Now that's just rough estimates, and that was last year. And it's pretty safe to say that you can look at an employee and the cost to replace that employee is anywhere from 100 to 150% of their base salary. And for the C-suite over 200% of their salary. So if an employee makes a $100,000, that's what it's going to take to cost and/or more to replace that employee at a minimum. And then to your point, we have not only the recruiting costs, the onboarding cost, the lost productivity, potential impact for employee morale if they're seeing a lot of people leaving the company, you've got the training cost, the lost institutional knowledge, and then I think there's the potential for culture impact as well whenever someone leaves a company. So those are things I think we definitely have to consider going forward, because those things are real cost, real dollars to the bottom line, and have a real impact, without question.

Jeanne Dion:

You just made me remember, one of my first customers in the value space was looking at T&E as a retention tool. Because they were a high tech organization, and so they were hiring people who were whizzes at High Tech.

Ralph Colunga:        

Absolutely.

Jeanne Dion:

But their back office and their travel policies were outdated. And so as these employees came on board and started to have to travel and were running into issues along the guidelines and the policy itself, and then the tools they were using and how they were put in place, they started to lose people because they felt that the company wasn't walking the walk. And I think it's something that we all have to keep in mind as we move forward as an organization. It isn't so much talking about how high tech we are or how we are able to support all areas of the business, we actually have to support all areas of the business in the best and most advanced way possible that makes sense for the organization.

Ralph Colunga:        

Absolutely. I could not agree more. The keeping up with technology is something that is just, it's just going to be, you're have to do this without question, you know?

Jeanne Dion:

Right. Because we have things like artificial intelligence, and then you bring in blockchain, you bring in biometrics, you bring in virtual, even as we go down to things like virtual car usage, the usage of mobile. All of these pieces are, to your point, something that the next generation of leaders have lived with for the majority of their lives.

Ralph Colunga:        

Absolutely.

Jeanne Dion:

They've come up with technology, they are just expecting technology to make their life better. And if it doesn't, they're willing to move forward. So if we talk a little bit about that, can you give me a little bit of insight into where we should be looking from a technology perspective for these next generations?

Ralph Colunga:        

Absolutely. The acceleration of technology is, it's really happening faster than anyone ever thought possible. And all those areas that you just mentioned, whether it's AI, machine learning, blockchain, biometrics, et cetera. But it's moving faster than anybody thought, both in subtle and not so subtle ways. And as an example, artificial intelligence is not something that's coming, but it's already here, and impacting and influencing, really enriching our lives in every way. And technology will just keep accelerating as it's continuously improving itself. And it's also saving companies millions of dollars in handling typical mundane tasks, reducing and eliminating human error. The fact that it can conduct work 24/7 365, and really that helps with increasing work productivity. So what companies wouldn't want that within their business operations. And in our increasingly AI and ML driven world, organizations that embrace and understand the importance of data algorithms and the effective use of computation, are the ones that will thrive, and in the very near future.

Now, in addition to this tidal wave of coming new T&E technologies, again, as we previously mentioned, it's going to be essential to line these with a dynamically shifting employee demographics. And just to keep in mind, just as an example of this. It is estimated by 2025, just two short years from now, Gen Y and Gen Z will make up the demographics in the workforce. And these generations will be the early adopters of new technologies as it will be what comes natural to them. And by 2030, just five more additional years from 2025, Gen Z will be the largest workforce demographic, and Gen Alpha will be coming on board.

So, in less than a decade, we got two major shifts that'll be taking place. And two major shifts that are very, very astute with regards to, and the use of technology. And at least for Gen Z, study after study is showing their requirement for greater travel flexibility, personalization as you mentioned before, and really this increased use of mobile devices and apps. Generation Alpha will be the most technology advanced generated generation to date. Growing up with mobile devices, AI, ML, social media, and really robotics as part of their everyday lives, and thus they're going to be, again, considered to be the most technology infused demographic to date as well. And Gen Alpha and technology are so intertwined, that it's estimated by the time they are eight years old, they will surpass their parents in technology skills. Think about that. I mean...

Jeanne Dion:

I believe it. I believe it. 100% I believe it.

Ralph Colunga:        

I do too. No doubt about that. And also, the Alpha generation will never know a world without the internet of things, smart technology and virtual reality. The Alpha generation are really born at a time when technology devices are getting smarter, everything is connected, the physical and digital world are coming together, and as a result, as they grow up, new technologies will become part of their lives, their experiences, their attitude and expectations of the world.

Now, collectively, these two trends being technology and employee demographics, will reshape the necessary rethinking of travel and expense management as their expectations become norm over time.

Jeanne Dion:

Yeah.

Ralph Colunga:        

There's no getting around that.

Jeanne Dion:

No, not at all. I mean, you mentioned about the Alphas being so far advanced technologically. I was talking to a friend of mine who has a grandchild in that age group, and he was staying with her, and she asked him to turn on a light and he kept saying, Alexa, turn on the light.

And her lights weren't attached and she said, no, you used this switch. And he had never actually turned on a light from a switch. He just would walk in a room and say, Alexa, turn on the lights. So I get what you mean about that. As we face these changes, as we look to how we future proof what's happening and rethink those norms of travel to not only attract and retain, but actually survive these changes, if you were to have three recommendations for companies to really kind of future ready their travel programs, what would they be?

Ralph Colunga:        

Well, I think that the first thing I'd say is that, with in particular to travel, specific to travel and expense management. I would say to the travel and expense managers to think bigger picture, and more strategically. It's so many of the travel managers really have used their roles to be the police, if you will, and I would just strongly urge them not to do that. Don't waste the time on trivial things that really don't matter all that much. Realize that it's more important for them to sit down and try to focus on, how do they improve things overall for their travel community? And also, I think, recognize their place in their role within the larger picture, meaning that, this isn't about their needs, meaning that the needs of one being the travel managers don't outweigh the needs of many, being the travel community.

And so it's a matter of focusing on how do you serve them and serve them well? How do you sit down and understand that your role is to help provide them the tools that they need to allow them to be successful in business? So that's one of the things I firstly remind people about how to improve that.

The second thing I would say is, it's extremely important to align with your travel community, really like never before. You have to keep your finger on the pulse of their expectations in this rapidly changing and really evolving business landscape. Again, focusing on what will the next generations need and want within the program. And how can you help, again, improve your program to make sure it's trying to meet all those business needs that you possibly can?

And lastly, I would just state that this is a moment of change. It's an opportunity for these leaders, if you will, to go forward with an innovative mindset, allowing your teeny programs to become more agile by adjusting policies to the current business landscape, by simplifying and automating processes with technology as much as you possibly can. And really by eliminating as many friction points for the employees, and supporting, if you will, an inclusive environment where employees feel like they're being heard and actually helping to make a difference in a positive way across so many different areas. And that would really be my advice.

Jeanne Dion:

So, if I can just kind of summarize that back to make sure I've got it right, it's that whole idea of thinking strategically, not tactically.

Ralph Colunga:        

Yep.

Jeanne Dion:

Let's really make sure that we're serving the people that we're there to serve.

Ralph Colunga:        

Absolutely.

Jeanne Dion:

The company and the travelers. Aligning with those travelers so that we know what they need and maybe what they want so we can deliver more quickly on what they need and what they want, because we've got our ear to the ground. And then that idea that change brings opportunity. And if we can eliminate friction and show them that we are listening and that we care about the things they care about, we become more agile as an organization.

Ralph Colunga:        

Absolutely. I could not have said it better.

Jeanne Dion:

All right. Well, Ralph, I know you are deep in research all the time as one of our thought leaders, so I can't wait to hear what you're looking at for even a more expansive future proofing of our organization. So I hope to have you back on the podcast at some other time to talk a little bit further about some of these topics in a deeper discussion.

Ralph Colunga:        

Yep, I'd gladly welcome that Jeanne, anytime.

Jeanne Dion:

Yay, yay. On behalf of Ralph Colunga and I, I want to thank you for your time today in listening to our SAP Concur Conversations podcast. Please feel free to drop us a line and let us know how you liked it, if there's any topics you'd like us to explore further. So on behalf of SAP Concur, thank you again and talk to you the next time on SAP Concur Conversations.