Loyalty Bonus: How A Travel Unicorn Has Grown In A Constrained Market

“Out of 400 people on our payroll, 350 had no work to do. Essentially they were travel agents, and there were no calls.”

Avi Meir – co-founder and CEO of European business travel unicorn TravelPerk – is recalling the point in 2020 when it became clear his business had essentially been rendered illegal by the restrictions imposed to slow the spread of COVID-19. And with no furlough money available – or so he was advised – it seemed there was only one possible course of action. Staff would have to be sacked.

It was a call from an investor that changed his mind. “He told me if I didn’t want to sack people, I shouldn’t do it.”

So Meir made the decision not to shed jobs. Three years later and looking back on those times with the 20/20 vision that hindsight confers, he believes that by keeping the company’s teams together TravelPerk was well positioned to move forward again once the lockdown restrictions were lifted.

And since then, TravelPerk has made considerable progress. Following a $104 million funding round in January, the company cemented its unicorn status with a valuation of $1.4 billion. Today, the TravelPerk – which focus on arranging business travel and managing the associated expenses – employs 1,200 people compared with 400 in 2020.

When I spoke to Meir I was keen to find out more about how TravelPerk had navigated the pandemic and addressed some profound changes in the business travel market. As it turned out, much of our conversation revolved around the importance of the workforce. As Meir sees it, the decision to retain staff made a vital contribution to the company’s ability to bounce back when the business travel market began to reopen.

Employee Loyalty

So let’s return to the early months of 2020. On a personal level, Meir says he was reluctant to throw people to the economic wolves. “We have company values – the first is a seven-star experience to customers and team. How can I claim a seven-star experience if we lay staff off? I didn’t want to fire people.”

But the decision delivered dividends for the business, not least in terms of workforce loyalty.

“People saw how we fought for their jobs. We got a lot of loyalty from that,” he says. “People don’t tend to stay in tech but we kept people on board.”

That begs a question. Is a heightened degree of loyalty and/or engagement worth the cost. Well, if you have the resources to avoid redundancies, it can make sense to tough it out. Oliver Shaw is chief executive of Orgvue, a U.K.company that provides a range of workforce organization and transformation services. At the heart of the company’s operation is a SaaS platform that maps and visualises the organisational structure.

In a survey of 500 businesses, Orgvue found that 93% of managers had made snap decisions on layoffs. Subsequently more than a third (38%) expressed regrets, citing negative outcomes such as lower engagement and reduced productivity.

And as Shaw sees it, firing people in hard times and rehiring when growth returns itself has a cost. “Even without the productivity issues and any other hangovers, the effort to take people on again can be considerable,” he says. Hiring or rehiring he says can cost up to a year’s worth of salary for each individual. In other words, you don’t necessarily save anything by cutting the payroll.

And going into bat for employees does have an impact on performance, according to Eloise Skinner, a workplace psychotherapist. “Research indicates that successful teams are built on a foundation of trust, strong support from senior leaders, and a shared vision – all of which are reflected in a choice to protect the workforce through challenging times. As a result of this decision, management might find team members are more willing to go ‘above and beyond’ for the company’s values and mission,” she says.

All well and good, but the challenge for TravelPerk – and this would be true of any company – was to make it work, both financially and in terms of keeping people occupied. On the finance front, it helped that the company had raised capital prior to the pandemic, therefore having a financial buffer. Nevertheless, even with finance in place, the challenge was to chart a path out of the crisis. The plan was to turn lemons into lemonade,” he says. “The goal was to emerge stronger.

To that end, the company set about using the protracted downtime to upskill staff and make acquisitions. These included U.K companies Click Travel and Susterra, Spanish risk management company Albatross and NextTravel from the US across 2020 and 2021.

Essential Travel

All this represented something of a gamble. No one could really know when the crisis would end and how quickly the business travel sector would recover. All logic suggested that normality would, at some point, return, not least because human beings tend to place a huge amount of importance on face-to-face contact.

“We didn’t evolve to be zoom animals,” says Meir. “We evolved to be social animals. During the worst pandemic moments, that was my mantra. I told myself we will go back to meeting in person. If you believe that, there will be another side of this pandemic. Either the species will be extinct or there will be another side.”

It’s a view supported by research carried out recently in Britain by the Confederation of British Industry for the British Travel Association. The report found that 90% of businesses see travel to meet partners and customers as an essential part of relationship building. However, the report acknowledges that the decision to spend on travel is no longer quite so clear cut. Video calls remain popular. This is reflected in the number of journeys. Last November, a report by the European Union’s statistics agency Eurostat found that business travel had still not rebounded to 2019 levels.

But Meir says those figures don’t tell the whole picture. The term business travel tends to conjure up images of men and women in suits attending sales meetings. But there is another group of customers – people who physically have to be on-site, often to do physical work. This cohort of people began to travel again, almost as soon as it was possible. “From the summer of 2020, we started adding customers. How? They weren’t knowledge workers. Think about people working for engineering companies. They have to travel.”

Meir says this was where the decision to hold onto staff began to pay off. “In the summer of 2020, no one else had a sales force. So by 2020, we were heading back to pre-Covid numbers,” he asserts.

New Market Opportunities

Meir says companies have to be aware of how the markets have changed. There are new reasons why people travel. Perhaps surprisingly, he cites flexible working as a driver. “In the era of hybrid working, team building events are crucial. There is more need to bring people together,” he says.

Meir says the company has sought to respond to the changes in the marketplace while continuing to innovate. He cites the importance of AI-driven systems in improving the experience of customers, particular around booking complex trips or rescheduling. “We trained our data. We found that if you want to change your flight we can do it in real time using AI,” he says. “If you are working for say, Ikea, it could take you three days to change a flight. You would wait too long and get few options. In the meantime the price would change. Using AI you can change in real time. “

The technology is also playing an important role in driving down unit costs and increasing margins.

TravelPerk’s ability to survive the pandemic and grow in a still constrained market has been undoubtedly been helped by timely funding rounds, including a $104 million Series C in 2019 just ahead of the pandemic. This has enabled the company to navigate market challenges and invest in technology. That said, at a time when tech companies around the world are continuing to cut staff, the company’s experience suggests that short term cutbacks are not always the best way to achieve long-term growth.