Ride-hailing services grab ever-larger share of business travel

The popularity of ride-hailing services Uber and Lyft grew exponentially among business travelers in 2016 and now account for well over half of paid ground transportation among those travelers, according to a report based on business expense reports filed during the fourth quarter of 2016.

"There was perhaps no bigger story in 2016 than the shake up in the ground transportation category, led by ride-hailing pioneer Uber," according automated travel and entertainment expense management software provider Certify, which tabulated the results for its quarterly SpendSmart report. "With continued momentum in the fourth quarter of 2016, Uber now has the largest share of ground transportation overall."

Data compiled by Certify showed that Uber and Lyft were claimed on 56 percent of the expense reports that had expenses for ground transportation during 4Q16 compared to 42 percent for 4Q15. Uber continued to dominate the category at 52 percent while Lyft had four percent of the market. Traditional taxi use continued to decline and accounted for only 11 percent of paid rides.

Part of the reason may be the comparative cost. According to the report, the average cost per ride in 4Q16 was $24.75 for Uber, $24.99 for Lyft and $34.62 for a traditional taxi.

Car rentals also continued to decline and were claimed on 33 percent of the expense reports analyzed.

The results were based on the analysis of more than 10 million business expense reports processed by Certify for 4Q16. They are detailed in the Certify SpendSmart report, which is compiled each quarter as a tool to help controllers, accountants and business travelers make informed choices about company T&E expense spending, according to the company.

Certify initially identified the emerging ride-hailing growth trend among U.S. business travelers in the first quarter of 2014, and the most recent data shows the continuation of that trend as the services now have the majority of paid rides in the corporate travel segment.

Ride-hailing isn't the only player in the sharing economy that is experiencing growth. AirBnB is also becoming increasingly popular with business travelers.

While currently accounting for only a fraction of a percent of total hotel receipts and expenses, that represents a whopping 49 percent increase from 2Q16 to 3Q16, the company reported, showing traction in its position as a viable alternative to traditional hotels.

“AirBNB has doubled in transaction growth year over year since 2014 and now represents 0.27 percent the total lodging category," the company said in its 2016 Year in Review.

While that is still under 1 percent of the total, Airbnb’s growth is significant in the context of lodging use overall. Specifically, Certify reports on the to on the top 15 hotels by expense percentage. No. 1 Hampton Inn garners less than 9 percent of all lodging while No. 15 Residence Inn appears on only 1.18 of expense reports.

The SpendSmart report also showed business travelers’ preferences in air travel providers, business meals and lodging. As in previous reports, there are some discrepancies between the travelers' preferred providers and those that are actually expensed the most often. For example, although travelers named Westin Hotels and Homewood Suites and their favorite two hotels, neither chain was among the top five of hotel stays actually expensed.

While the report does not provide a reason for the differences between the preferred providers and those used, factors are likely to include corporate travel policies and vendor agreements, availability of the preferred providers at the time of travel, and other reasons.

Most Expensed Restaurants: 
Starbucks (NASDAQ:SBUX): 5.1 percent of expenses, averaging $12.62 per receipt
McDonald’s (NYSE:MCD): 2.85 percent, averaging $9.76
Panera Bread (NASDAQ:PNRA): 1.68 percent, averaging $42.10
Subway: 1.53 percent, averaging $19.16
Dunkin’ Donuts (NASDAQ:DNKN): 1.36 percent, averaging $13.80
Chick-fil-A: 1.31 percent, averaging $26.55
HMS Host: 1.02 percent, averaging $16.61
Wendy's (NASDAQ:WEN): 0.74 percent, averaging $10.06
Burger King: 0.72 percent, averaging $9.94
Jimmy John's: 0.66 percent, averaging $38.78
Chipotle (NYSE:CMG): 0.58 percent, averaging $27.09
Taco Bell: 0.50 percent, averaging $9.80
Applebee's: 0.50 percent, averaging $37.54
Chili's: 0.48 percent, averaging $33.28
Buffalo Wild Wings  (NASDAQ:BWLD): 0.44 percent, averaging $43.88

Most Expensed Restaurants by Meal 
Breakfast: Starbucks, 15.56 percent, averaging $8.67
Lunch: McDonald's, 3.57 percent, averaging $7.29
Dinner: McDonald’s, 1.89 percent, averaging $8.24

Highest Rated Restaurants (On a scale from 1 to 5, as indicated by travelers)
1) Chick-Fil-A 4.4
2) Panera Bread 4.3
2) Chipotle 4.3
2) Jimmy John's 4.3
2) Olive Garden 4.3
6) Dunkin' Donuts 4.2
6) Starbucks 4.2
6) Texas Roadhouse (NASDAQ:TXRG) 4.2
9) Cracker Barrel (NASDAQ:CBRL) 4.1
9) Outback Steakhouse 4.1
9) Pizza Hut 4.1
9) Ruby Tuesday (NYSE:RT) 4.1
12) Buffalo Wild Wings 4.0
14) Subway 3.9
15) Applebee's 3.8

Olive Garden is owned by Darden Restaurants Inc. (NASDAQ:DRI). Outback Steakhouse is owned by Bloomin' Brands Inc. (NASDAQ:BLMN). Pizza Hut is owned by Yum! Brands Inc. (NYSE:YUM). Applebee's is owned by DineEquity Inc. (NYSE:DIN).

Subway Sandwiches, Chick-Fil-A and Jimmy John's are privately held companies.

Most Expensed Airlines 
Delta (NYSE:DAL): 20.22 percent, averaging $416.98
American Airlines (NASDAQ:AAL): 17.3 percent, averaging $319.81
United Airlines (NYSE:UAL): 14.02 percent, averaging $374.66
Southwest Airlines (NYSE:LUV): 11.15 percent, averaging $285.30
jetBlue (NASDAQ:JBLU): 1.49 percent, averaging $233.64

Alaska Airlines Boeing (NYSE:BA) 737 departs SEA
Alaska Airlines Boeing (NYSE:BA) 737 departs SEA
Top Rated Airlines
(On a scale from 1 to 5, as indicated by travelers)
Alaska Airlines (NYSE:ALK) 4.6
Southwest Airlines 4.6
jetBlue 4.5
Delta 4.2
American Airlines 3.9

Most-Expensed Hotels 
Hampton Inn: 8.82 percent, averaging $233 per stay
Marriott: 8.23 percent; $261.09
Courtyard by Marriott: 7.2 percent, $175.47
Holiday Inn Express: 4.67 percent, $219.30
Hilton Garden Inn: 4.49 percent, $210.17
Hilton: 4.12 percent, $233.07
Holiday Inn: 3.47 percent, $191.79
DoubleTree: 3.37 percent, $221.63
Hyatt: 2.5 percent, $250.60
Fairfield Inn: 2.45 percent, $228.72
Sheraton; 1.86 percent, $232.92
Comfort Inn; 1.8 percent, $167.38
Embassy Suites; 1.59 percent, $261.25
Best Western: 1.21 percent, $223.60
Residence Inn: 1.18 percent, $327.20

Top Rated Hotels (On a scale from 1 to 5, as indicated by travelers)
Results from 4Q16 broke the five-way tie that marked the 3Q16 report. The top-rated hotel was Westin at 4.6, followed by Homewood Suites at 4.4. Three chains tied for third place with scores of 4.3: Embassy Suites, Hilton Garden Inn, and Hyatt.

Westin is one of the Starwood Hotels (NYSE:HOT) brands. Hampton Inn, Hilton Garden Inn, Hilton, DoubleTree, Homewood Suites and Embassy Suites are owned by Hilton Worldwide (NASDAQ:HLT). Hyatt is NYSE:H while Marriott, Fairfield Inn, Sheraton and Residence Inn are brands of Marriott International (NASDAQ:MAR).

Holiday Inn and Holiday Inn Express are owned by InterContinental Hotel Group (NYSE:IHG), while Comfort Inn is owned by Choice Hotels International (NYSE:CHH). Best Western is a privately-held brand that has more than 4,000 independently owned and operated hotels around the world.

Most Expensed Car-Rental Services
National: 24.59 percent, $181.69 per rental
Enterprise: 16.76 percent, $181.92
Hertz: 14.4 percent, $194.61
Avis: 12.42 percent, $172.74
Budget: 3.79 percent, $183.87

Top Rated Car-Rental Services (On a scale from 1 to 5, as indicated by travelers)
Enterprise: 4.3
National: 4.3
Avis: 4.1
Hertz: 4.0
Budget: 3.8

Hertz is (NYSE:HTZ); all other rental car companies are operated by Enterprise Holdings, which is privately held.

The company's 2016 Year In Review provides additional detail on how businesses spend their travel and entertainment dollars.

Perhaps surprisingly, the largest share of the T&E pie was taken up by meals, which account for 19 percent of travel dollars spent. Airfare was second, at 15 percent, followed by lodging at 14 percent. Miscellaneous expenses account for 13 percent while 11 percent went to fuel costs and nine percent to paid rides including taxis and ride-hailing services. Cell phone, car rental, and supply expenses each took up five percent while shipping accounted for two percent and tolls and parking were one percent each.

The majority of expense categories increased in average cost per transaction from 2015, the report noted.

Airfare costs were the largest single item of expenditure, averaging $316.17 in 2016. While hotel stays were listed No. 2 at $210.91 and car rental No. 3 at $190.74, adding the cost of fuel ($29.77), tolls ($24.38) and parking ($34.10) yields an all-in average of $278.99 for a rental car with associated expenses, making it the second-largest item of expenditure. Supplies and shipping averaged $108.89 and $99.24, respectively, while cell phone expenses were $89 on average. "Miscellaneous expenses" averaged $68.20 followed by paid ground transportation at $27.90. Meals, which take the largest share of T&E dollars in total, averaged $27.02 per meal, the second lowest of any line item.

Visit my main page at TheTravelPro.us for more news, reviews, and personal observations on the world of upmarket travel.

InfoGraphic provided by Certify
Photo by Carl Dombek
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