Q&A: Steve Hafner on the development of Kayak for Business

Kayak quietly launched its Kayak for Business (K4B) corporate travel solution just before the pandemic in late 2019 with a full launch in July 2021.

The product has been developing over the past year but is still treated as a startup within Kayak, according to CEO Steve Hafner.

He talks to PhocusWire about the ups and downs of operating in the pandemic as well as the challenges Kayak for Business faces now.

The first mention of Kayak for Business was in late 2019. What was your thinking in launching it?

The origin story is that we built it for our own use. Similar to what we did with Kayak originally, we couldn’t find a travel site we liked to use as consumers so we built Kayak.

In combination with OpenTable [which Hafner also oversees] we’re approaching 2,000 employees and we didn’t like the corporate travel solution we were using, particularly on the OpenTable side, so we put a small team together and said let’s innovate and build some stuff on top of the Kayak consumer site and that eventually become K4B.

What was it about what’s out there that you didn’t like? What didn’t they have?

They just didn't have good search results or user interface. We thought we’d start with Kayak’s consumer user interface and then add on the stuff that big corporates need like policy, expense tracking, approval queue, corporate fares and rates and easy booking solutions too.

How difficult was it to do some of the approval and policy stuff?

It wasn’t hard for our policy but while we were building we thought, "Why not build it in a way others could use it too?"
That took a little bit more work particularly from the data privacy security angles. It’s one thing to have a consumer site that everyone can access but when you have corporates putting special policies in there and travelers being able to track each other you want to make sure you have robust login and data privacy rails.

Is it true you launched in the pandemic?

We made it public in February of 2021, but between 2019 and February 2021, we had a beta site up that corporations could request access to and we’d allow them in, in bits and pieces, as we iterated the product so we could get wider usage of it and find and fix bugs. But, we actually didn't launch it to the world until July 2021 .

Can you break down your customers for us?

We built it for small and unmanaged corporations, and 87% or thereabouts of our sign-ups are companies with fewer than 250 employees, so the product really appeals to folks who don’t have a travel manager on staff and in the past may not have had even formal travel policies but the product makes it easy for you to do that. But, there are some big companies using K4B.

Why do you think that is? Has there been a shift in how people view these tools and what they need? Why would a big corporate turn to Kayak for Business?

Because it’s a good product and the price point is great - it’s free! I think big corporations have kicked their traditional travel managers to the curb and are using Kayak for Business side-by-side with their traditional program. Someday, I presume, we will catch up with some of the more advanced features that corporations have that K4B lacks and then maybe they’ll turn off the GBTs or the CWTs of the world. The one major distinction between K4B and those others is that they provide customer service and we don’t.

What were the benefits and any disadvantages of launching in the pandemic?

It wasn’t the way we drew it up. We thought we’d launch, get some traction and add features over time. The pandemic was a bit of a silver lining because it gave us a longer runway to build features without having a lot of usage.

Airlines were a lot more receptive to partnership discussions as they were trying to find business anywhere they could find it.

It had a real chilling effect on competition so all the big corporate travel agencies and even some of the new upstarts were all in survival mode; we didn’t have to worry about that because we hadn’t build up a big staff or overheads because we still had the consumer business which during the pandemic was actually pretty resilient.

The downside is that it took us a long time to get PnL impact from effort which we’re seeing now although it pales in comparison to the consumer side of the business.

How big do you think it can grow?

That’s a question we debate all the time. In healthy times the consumer side and the business travel opportunity should be about the same in terms of travel spend. I don’t think our market share is going to be as high in business travel as it is in consumer. I think consumer is probably always going to be seven times as big.

Apart from talking to press and adding new features, what are you doing to get more customers?

That’s the real beauty of the business model - we can intercept people who use Kayak and divert them into the business travel path. We’re not trying to create a brand name, we’re not out there calling on corporate customers, we just intercept those corporate customers when they’re using us for leisure or they’re cheating on their corporate travel program with Kayak.

How do you intercept them?

If you visit Kayak you’ll see there’s a lot of access points there where we could coax you into the business program. We can drop [a message] from the header, based on the searches you're doing, if we detect it’s a business search, if you’re searching with a lot of frequency, we’ll show you the message more often. If you’re a registered user and you have a corporate email address we’ll hit you with the message as well. On average, without having a sales force, we’re signing up two to three thousand corporations a month just from that activity.

What about retention? Are you giving them enough to keep them?

Retention hasn’t been an issue because it’s a free program and what people typically will do is sign up and either use us or not. The issue really is usage and right now we think the broken windows on that are that not too many corporations on the small side are traveling yet.

What kind of functionality is being used most?

On the business travel side it’s flights. We have robust policies now that companies put in place and if you have an approval queue through Slack and email that’s better than calling someone, corporate fares and rates. But the thing I most enjoy using, and this is anecdotal, is the Expensify integration, so if you're booking something on Kayak it automatically populates your expense report on Expensify.

What kind of functionality would you like to integrate going forward?

There’s still a lot of integration we don’t have. Concur, for example, doesn’t play nice with Kayak yet and a lot of companies use Concur so I’d love to find a way to partner with them somewhere down the road. We still have supply to connect. I think we’re live in 60 markets but the world is a much bigger place than 60 markets. And, I think there’s still some bugs we know about that need to be fixed.

Have you kept the team that originally devised and developed it small so that you can address these things?

The team is a bit bigger than it was in 2019 and they are always angling for more resources but it’s still being treated as a startup within Kayak, which is great.

And presumably that’s your preferred route to keep it fresh and innovative?

We have a team on K4B and we another have team, that’s also a startup, on Kayak Hotels, so we’ve got some experience of how to do this stuff.

Do you think it will remain free or is there an opportunity to built something premium or a subscription?

It’s something we talk about internally quite a bit. I’m more focused right now on getting adoption and usage. K4B will always be free at a basic level. We are looking at an enterprise version for big corporations and that will have some type of a SaaS charge.

Do you see yourselves up there with the TripActions and TravelPerks or up there with the Amex GBTs, CWTs and those guys?

I think we’re better than those characters in terms of our tech chops and our consumer and data insights. I think they’re better than we are in terms of the customer service side because they all provide it. My challenge is how deep can we get into corporate travel without providing customer service and that’s where we’re going to play, that’s where we’re going to draw the line.

What’s your wider view on business travel coming back? Bill Gates said 50% would never come back and others say it will be more like 20 to 25% that will never come back.

Both of those opinions have already been proven wrong. In the U.S. we’re already back to 85%. If you talk to the big airline CEOs they’ll tell you we’re already 85% back. That’s without international coming back and that’s without testing requirements being waived and masks on international flights going away. I think once that goes away, and provided we stay in a relatively robust economy, business travel has a bright future.

How can you see via the technology that the blending of business and leisure is happening?

It’s definitely happening, we’re seeing it because of query parameters. It used to be that you could easily discern between a business traveler and a leisure traveler just by the search query - the duration of the trip, the origin, was it a Monday or a Tuesday? Did it have a weekend stay, etc.?

What we’re seeing now is that it has got a lot blurrier and the average length of the trip is longer than it used to be; we don’t see these day trips any more and the advanced purchase window is changing too. It used to be that leisure customers booked way in advance and business travelers booked close to the day of departure. Now leisure folk book a couple of days in advance so I think bleisure is definitely happening although I hate that word.

How else can you build out K4B?

We have introduced a lot of fun stuff into the product to gamify it a little bit and get some word of mouth. One of the best things I’ve seen our folks do is that individual employees can recommend places to stay or things to do for folks visiting their location which is really cool. When I go to visit our office in Berlin, I stay at the hotel that our Berliners tell me I should stay at and do the activities they tell me to do.

The other thing is that we just moved to a work from almost anywhere [policy]. We’re remote-first across Kayak and OpenTable which means our folks are actively encouraged to switch our offices and they can go and work in another office for up to six months and they can use K4B to do that.