The MacNair Travel Leadership Blog

Uber vs. Lyft: Which is Best for Your Corporate Travel Program?

Posted by Mike MacNair on Mar 22, 2016 12:00:00 PM

Uber vs. Lyft: Which is Best for Your Corporate Travel Program?The era of the sharing economy is upon us, presenting a myriad of choices for everyone, but especially travelers. Web sites like Airbnb have dramatically changed how consumers look for places to stay while travelling; ridesharing services like Uber and Lyft have transformed the speed by which people get from one place to the next.

Businesses are also being impacted by these services, specifically Uber and Lyft. At first virtually ignored by businesses versus the traditional car services including taxi and rental car companies, ridesharing services are staking their claim with corporate business travelers, expanding their consumer-driven services through the launch of Uber for Business and Lyft for Work for business travelers.

Download this workbook to learn how to create an effective travel policy that  supports the needs of your SME and the demands of your travelers in the sharing  economy. 

Their business is growing. In the fall of last year, Uber announced that it had signed up 50,000 for its Uber for Business services. According to Fortune in the fourth quarter of 2015, expense management system provider Certify found that Uber made up 41% of all ground transportation receipts among Certify clients, while car rentals constituted 39%. The remaining 20% went to taxis. The article continues, stating that Lyft also experienced tremendous growth, 712%, but still represents a small portion of ground transportation.

The increase of the use of these services makes sense considering their mobile ease of use and ability to quickly meet the needs of its millennial customers – both personally and for business. A recent article from the New York Times states, “Since then [the Great Recession], a revolution in mobile technology has taken firm hold. The business travel market seems ripe for the kind of disruption that has transformed retailing, entertainment and other areas, offering technological solutions to make cumbersome transactions more intuitive and seamless.” Business travelers have higher expectations for making travel easier, and businesses like Uber and Lyft are meeting those needs.

5 Benefits of ridesharing

Clearly the ridesharing phenomenon is growing, providing solutions for busy travelers and highly competitive, global businesses. But what makes this option attractive for employees and businesses?

  • Ridesharing saves time. Employees who utilize ridesharing can avoid long taxi lines and are able to utilize the full on-demand convenience of ridesharing options. Scheduling an Uber ride is as simple as a few taps and swipes on your phone. This convenience increases productivity for employees and their travel managers.
  • Ridesharing is rated higher than taxis. Online ratings results have shown that ridesharing typically receives better ratings than taxis or other car services, appealing to corporate business travelers, especially millennials.
  • Ridesharing reduces travel spend. Services like Uber and Lyft are typically less expensive than taxis or sedan services. According to Uber’s web site, businesses find that Uber is 40% less expensive than taxi services, and employers can save up to $1,000 per employee by utilizing their service.
  • Ridesharing services can be integrated with business’ travel management systems. Uber and Lyft apps seamlessly integrate with current travel management software systems, like Concur, to allow business travelers the ability to access and integrate their rides with their full travel itinerary, saving time and increasing productivity. In addition, corporate accounts can be merged with the ridesharing app allowing expenses to be accounted for in the appropriate account or project, in real time. This avoids the use of employee personal credit cards and increases overall control of T&E budget management.
  • Uber for Business contributes to travel policy compliance. Specific to Uber, this feature “red flags” a potential travel/ride options if it doesn’t fit in with your business’ travel policy. This service addresses the question of traveler compliance for your company, reducing the headaches, expense and extra work involved with reimbursement.

The benefits mentioned above apply to both Uber and Lyft, unless otherwise noted. In essence these two services are almost equal to each other, with Uber offering the benefit of more history as it’s been in the market for a longer period of time. Lyft has a more “casual” persona – the large pink mustaches on the front of Lyft cars needs to be mentioned here – yet provide an equal service to corporate business travelers.

Challenges with ridesharing

After reading through the above list, it’s hard to discount the ridesharing economy. Why wouldn’t your business want to be involved in this transportation transformation? As with every “next best thing,” travel managers need to be aware of and understand some of the challenges with using ridesharing services.

  • Pricing for ridesharing services are not always consistent. The practice of “surge pricing,” is a factor when determining the expense of ridesharing services. According to Travel and Transport, “If Uber determines traffic to be busy and rider demand high, it will tack on what it refers to as ‘surge pricing,’ which can force rates to double, triple or in some cases surge even more. Lyft has the same add-on, called ‘prime time,’ and both companies notify users about these increased prices before they agree to a ride.” This inconsistency in pricing poses budget management problems, reducing control and predictability in expense reporting.
  • Insurance and liability are still in question with ridesharing businesses and drivers. Both Uber and Lyft provide liability insurance for their drivers, yet because of the lack of regulation of ridesharing services in some cities, businesses may still take the brunt of expense in case of an accident. This poses a risk to employees and businesses that needs to be taken into account when determining the use of this service.
  • There’s potential lost savings from preferred vendors. Black car services and rental car agency contracts already established in your travel policy may still present the best financial option for your travelling employees. When they choose Uber or Lyft instead, expenses may increase and travel policy compliance is compromised.

When considering the best options for your business, understanding the challenges is critical in determining your best solution.

Decide if Uber and Lyft should be included in your travel policy

The best way to integrate the ridesharing revolution into your business is to assess how it may or may not fit into your travel policy based on your business’ corporate travel goals.

  1. Gather feedback from your road warriors or your travel squad to determine how and when these services are used, both personally and professionally.
  2. Assess the potential risk of and benefit from including this option for travelers. Speak to your legal department to ensure liability is appropriately communicated with leadership and travelling employees. A thorough risk assessment can improve control and increase traveler compliance within your organization.
  3. Consider the cost of Uber and/or Lyft and compare this with your list of already preferred vendors. You may determine that there is room for all of these options within your policy. If so, clearly communicate the how’s and why’s of using each service to your travelling employees, ensuring policy compliance.

Once you’ve determined your relationship with ridesharing services like Uber and Lyft, develop a travel policy that effectively addresses these services as well as additional preferred ground transportation vendors. Your travel policy will work to manage the options for employees, create a seamless tracking system of transportation expenses and contribute to overall employee compliance.

How has your business adapted its travel policy to ridesharing services? Have any practical advice to share? Please give your ideas in the comments section below. If you would like additional direction on establishing a travel and expense policy, please download our Travel Policy Workbook.

Travel Policy Workbook

Topics: Corporate Travel, Travel Management, business travel, travel policy, Travel Trends, sharing economy, ridesharing