Serko Ready to Capitalize Off 'Foundations'

Serko's Grafton discusses:

Hitting the accelerator on customer growthTackling hotel attachmentExecuting a broad content strategy

New Zealand-based travel technology supplier Serko, along with its Zeno corporate travel and expense platform, has been building a customer base both among large enterprise travel programs and, via its relationship with Booking.com for Business, small and midsized clients. Serko co-founder and CEO Darrin Grafton spoke with BTN executive editor Michael B. Baker during the recent Global Business Travel Association Convention in Atlanta about how Serko is making inroads with U.S. customers and the company's content, servicing and development strategies. An edited transcript follows.

BTN: What's Serko's current growth trajectory?

Darrin Grafton: We've been on quite a big growth journey. We've been setting the foundations, coming out of Covid and waiting for the markets to fully recover. We signed a lot of deals during Covid to get the markets ready. We've had the renewal of Booking.com for another five years for Booking for Business. 

On the managed travel side, we've been continually growing in our home markets, onboarding companies like Rio Tinto, and now in the U.S., we've been highly focused on getting the core group of companies as highly referenceable sites and having all of that put in place—companies like Visa. We've really focused on how we can hit the accelerator now and start to push forward. We're working a lot with the midmarket travel management companies and also the megas as well. We're really just starting to now find that sweet spot of how to go fast.

BTN: What strategy are you using to draw in U.S.-based business?

Grafton: We're a public company, so we're well-capitalized. One of the key parts of our technology is we sometimes feel new to businesses until they realize they use us in Australasia. They find that they can reference themselves. Some of it is a push from the Australian companies saying they want to use it in the U.S., and sometimes it's a pull from the U.S. division. Our own customers can be our best advocates. From now, it's how do we amplify that.

BTN: Are you looking to expand more in other geographies outside of Australasia and the U.S.?

Grafton: We're in 180 countries with Booking.com. Our focus is to do well in the regions we are in and get a really strong base. Most American companies have some form of global rollout with customers, but being highly focused on being awesome in the area those customers need us to be right now. Our focus is always what the customer is actually going to need in that region, so we want to build a phenomenal system for North America then wider as they need us, Europe and wider.

BTN: On the Booking side, is it largely previously unmanaged clients you are seeing?

Grafton: You've got our unique selling proposition, which is what we do with Booking and other players. We have that ability to now bring the technology we've done for Booking to managed travel. They can bring consumer experience where they had leakage of hotels. We can bring that inside the system, and we can shift that monetization so that 40 to 60 percent leakage they may have been getting, we can bring that back into program, give them a great user experience and give them all the content frameworks. That's quite huge, and that's helped TMCs make money and is the main pain point for why they have to mop up all the expenses. We bring it back into the managed travel program, so that increases the savings and the profitability of the TMC. 

BTN: What's been your technology focus?

Grafton: Comparison shopping is quite key. It's one of the foundations of the Zeno platform. You can shop normal and [New Distribution Capability] at the same time and mix and match. It's the same with hotel content, being able to compare your global distribution rates and your negotiated rates to your Booking.com rates. If the customer wants loyalty, they can go through that channel, and if they want savings for the business, they have the right process through that selection. If you have the right content and the consumer-grade experience, you have that ability to drive that through.

We've learned a lot working with Booking.com and how you drive that experience. It's taking the learnings from driving a big consumer brand site into the managed travel space. We add a bit of AI, and that's working out. If you always stay [in a particular hotel], then we preference that and shop that automatically in the shopping cart, which means you are saving time as well. Rather than having to wade through 50 options, you get the 11 curated options that are doing that. 

What we found is that people would shop flights and shop hotel later, and what happens is every day or week that goes by that you don't attach the hotel, the rate increases. By the time you make the choice later on, you're paying 15 or 20 percent more for that rate. The Zeno technology is about trying to shop that one transaction and get the right selection at the cheapest price. That's the logic that creates huge savings for business.

BTN: How has your content strategy changed in light of the fragmentation we are seeing?

Grafton: We've been doing NDC since the start. We were one of the first certified applications on NDC. We've done Travelfusion, ATPCO, TPConnects, and now we've launched on Sabre. We've done all the Sabre connections. What we're trying to do is make sure whatever systems the travel management companies are using, we're connecting into those. It's all about trying to get rid of the friction. If it's easier for us to do it on Sabre or a GDS, then we'll do it that way, or do it as a direct connect, whichever is the easier way to get the transaction through. Our NDC shopping is quite unique, because you can do the NDC fare and the low-cost and don't have to do two shopping experiences.

BTN: What about servicing capabilities?

Grafton: We've done advance flight changes now. Our philosophy is, what is booked online stays online, so we're trying to build all the technology that when disruption happens and change happens, we put that into the technology and make sure the traveler or travel manager can do it. We're continually improving on that cycle. We've rolled out even more advanced change technology very recently over the last couple of months, rolling that through Australia and the U.S. at the moment. 

BTN: What does your development roadmap look like?

Grafton: We're continually moving the product forward. It's how you can do more forward-look at how you can manage disruption. If you're flying in from New Zealand to New York, and you're going by [Los Angeles], and your main flight is delayed, can AI automatically do the adjustment for us? We're looking at all different aspects of AI around booking, reshopping, changes, reporting and sourcing. Those four AI engines are the foundation of how we look at the evolution of the platform. It's continually enhancing for the U.S. market to bring more and more customers online. 

BTN: In your most recent earnings, you mentioned the goal to become cash-positive this year. Is that on track?

Grafton: We've guided that market that we're trying to go to cash-flow break-even now into this financial year and get that whole scale of revenue where we want it to be. We haven't had to increase the employee count too much because we've been building up the high-performance team, so we're able to do so much more with the same team as we've gone through that curve. We've still been growing our topline revenue by 48 percent. It's quite a good model right now.