By Sean O'Neill, Skift - Jan 08, 2020
Most corporate travelers would rather think about anything else than booking and expensing travel. That’s why companies are scrambling to help reduce that pain point for road warriors. We expect Coupa, Certify, Chrome River, and SAP Concur to acquire more travel tech companies to help seize the opportunity.
SAP Concur has a target on its back. After all, the unit of the German software giant boasts the largest market share for helping the world’s largest companies manage their travel expenses.
Yet new rivals — Coupa, a business spend management company, and a group of brands including Certify and Chrome River that a private equity firm has rolled up — are nipping at SAP Concur’s heels.
For one, Coupa is looking to beef up its expense portfolio to compete. The company on Tuesday acquired Yapta, a Seattle-based service for tracking travel price changes and rebooking trips if airfares or hotel rates dropped. The companies didn’t disclose the deal terms. Yapta had disclosed raising $25 million in funding. In 2018, it generated $13 million in revenue.
“Coupa helps companies spend smarter by giving them visibility and control over their business spend,” Rob Bernshteyn, the chairman and CEO of Coupa, said in an interview. “Now that Yapta is part of Coupa, we will deliver even greater value to travel spend, one of the most significant spend areas in most organizations.”
Coupa helps businesses manage their procurement, invoicing, and expense tracking across categories using internet-based tools. SAP leads in this sector, but it has been racing to adopt cloud-based solutions rather than offer hardware and licenses.
Coupa’s move challenges SAP, which acquired Concur, the largest travel and expense management company, a six years ago. Yet Coupa, which has a $10 billion market capitalization, remains smaller than German software titan SAP, with a $166 billion market capitalization for all its software services for operations beyond the expense niche.
“Coupa has room to disrupt the spend management market in ways we have seen with other SaaS [software-as-a-service] companies,” wrote Barclays analyst Raimo Lenschow in a research note.
Other rivals are chomping at the bit. In the past year, private equity firm K1 rolled up via majority ownership stakes a half-dozen expense management companies, including Certify and Chrome River. These companies together serve more than 4.5 million business travelers at 14,000 companies. Some analysts valued the group at more than $1 billion.
All these companies also compete against the expense management tools of travel management companies, such as Egencia Expense.
WHAT YAPTA BRINGS
Coupa’s acquisition of Yapta shows its interest in taking share in the travel vertical. Yapta has 9,000 companies, including half the Fortune 500, as travel buying clients. Coupa hopes to cross-sell those companies on other travel and non-travel related software services.
It also has distribution partnerships with 4 of the top 5 largest travel management companies operating in the U.S. CWT is one of those clients.
“Yapta’s technology can save our clients up to 2 percent – that’s a huge sum of money for any company with a sizable travel program,” said Patrice Simon, vice president and chief technology officer, strategy, and new product development, at CWT.
In June 2019, Yapta claimed to become the first company to automate the re-booking process for both airfare and hotels.
That said, Yapta has relied on sources for pricing information that may miss some discounts. Coupa will need to invest in it to achieve comprehensive coverage.
Coupa already had a travel offering. A road warrior can open a Coupa mobile app and use it to speak aloud expenses for travel that get recorded along with camera shots of receipts. The app also has a mileage calculator that uses the mobile phone to sense the miles a traveler has driven. The app then volunteers an expense item to file in a report for it. Coupa also acquired a tiny open booking tool called TripScanner in 2015.
SAP had a chance to foil Coupa’s acquisition if it had wanted. Concur had a $5 million investment stake in Yapta, that SAP inherited with its acquisition of Concur. Price may have been an issue. Last year, Inc magazine estimated that Yapta was last year one of the 5,000 fastest-growing companies in the U.S., and, assuming a multiple of at least five times investment value, Yapta may have asked for about $100 million.
MORE DEALS LIKELY
Corporate travel may see more dealmaking, but some debates about technology are holding the sector back.
“My perspective on the broader technology landscape is that you’ll see a lot of point solutions in quote-unquote ‘services’ come into play in the travel industry soon that can solve very specific problems on behalf of corporations,” said James Filsinger, CEO of Yapta since 2012 and now general manager of travel optimization at Coupa. “Yet for these companies to succeed in the long term, the travel industry has to adapt a standardized consumption mechanism for those services.”
“Right now, I don’t think a Fortune 100 company is going to want to deal with 100 point solutions from small vendors,” Filsinger said. “Yet if companies could consume the services from those vendors in a standardized data exchange format, they would.”
“For expenses, there’s good standardization,” Filsinger said. “But some travel suppliers, especially in airlines, are adamant that they’re different than their competitors and as such need to serve their content distinctively. There must be a way to solve that problem as other verticals have done it, but we’re not there today in travel.”
Who needs to lead forward an effort to solve the divided approach to data exchange?
“The problem with a consortium or committee approach is that they haven’t been effective in pushing standards forward,” Filsinger said. “I feel we in the travel industry may need to have an independent third-party organization come up with an interface or standardized consumption pipe for data that would allow all these point services to be consumed by corporations and fulfilled by suppliers.”
Coupa intends to keep all 70 Yapta employees, though the Coupa name will replace the Yapta brand. Coupa hadn’t had a commercial partnership with Yapta before the acquisition.