A recovery built on staying safe
Serko has made an impressive return to form since its travel booking platform hit rock bottom in April 2020. Chief executive Darrin Grafton tells Chris Keall about the new face of business travel in light of ever-changing Covid rules
‘New Zealanders are less confident in Australia’s [anti-Covid] programmes than Australians are in New Zealand’s,” Serko chief executive Darrin Grafton said during a recent Weekend Herald Business Hub interview.
That assessment proved prescient. The Sydney outbreak hit soon afterwards.
The latest trouble across the ditch is likely to exaggerate the trends that Grafton was already seeing for users of his company’s platform for booking and managing travel.
“Business travel is different now,” he says. “It’s all about our ‘safe’ cycles.
“We travel quite freely in New Zealand, where we feel incredibly safe.” But even when the stop-start bubble allows, things are different when we fly across the ditch.
“When we go across the Tasman now, we travel in shorter trips. Where we might have stayed a week, we’re now staying for 48 or 72 hours.” The changeable duration of trips, and constantly shifting Covid measures, means business travel needs to be more intensively managed.
Serko has added new features to its cloud-based “Zeno” platform to make sure health and wellbeing standards are being met, custom policy configurations to restrict high-risk travel, hotel hygiene data, consolidated traveller tracking and live updates on airlines’ pandemic measures.
But locally, things have picked up. “In New Zealand we’ve seen our growth rate hit around 158 per cent on our peak on 2019 numbers. And that’s because through Covid more businesses are using our technology to really help them manage their travel and expenditure.” Things are starting to perk up worldwide, too. Overall, Serko says bookings processed through its system have increased each month since their April 2020 low. However, the comeback is relative. Its recent peak day of 13,000 bookings in May 2021 was still some way off its pre-outbreak peak of
24,000 daily bookings in February
2020.
But at least now the needle is moving strongly in the right direction.
And while they might not travel as frequently before, as they shift to shorter, sharper, more tightly managed trips, business leaders spoken to by the Weekend Herald are all itching to get back in front of partners and customers offshore.
Grafton says that’s just the human condition, and that some commentators could be overdoing the “Zoom Era” predictions.
“We’re hard-wired to compete,” he says. If we see our competitors jumping on a flight to woo new customers face to face, we’ll be itching to do the same.
And while it’s true that a day of travel can be replaced by a 30-minute Zoom call, he says, “often you work out a deal over coffee or a two-hour lunch”.
Serko shares have hit an all-time high over the past few weeks, and were recently trading close to $7.50, up 100 per cent over the past 12 months.
But when Covid hit, the situation initially looked bleak — at least to panicked investors. Serko’s stock plunged from $5.78 to 89c between the first Covid-19 stories out of China in the New Year of 2020 and airports worldwide emptying out in March.
But having lived through three previous “end of business travel” shocks — 9/11, swine flu and the global financial crisis — Grafton had more confidence that things would bounce back. And, more, that a downturn can be a time to grab market share if you offer new features while others pull back.
It helped that Serko had a strong balance sheet, in part from US travel booking giant Booking.com taking an anchor investment in October 2019.
“We had around $40m of cash on our balance sheet. And that was enough to run for at least two years during Covid. So we immediately notified the market that we would burn no more than $2m [per month],”
Grafton says.
“That gave investors a level of comfort that we had our costs under control.
“But we knew that if Covid lasted past 24 months, we really wanted to protect the business so we could really execute our strategy. So we raised another $67m. And that gave us the ability to take advantage of all the opportunities.” A three-year programme of work to flesh out Zeno, and creating a white-label version of the platform for Booking.com (now up and running as Booking.com for Business), was executed in just nine months.
“There was an incredible effort as our teams worked through the night,” Grafton says.
More bodies were brought onboard as part of the Auckland-based company’s push.
It’s part of a Booking.com-Serko partnership to create what they call a “connected trip” for business travellers, where every element of someone’s trip — from flights to rail to accommodation and rental cars — can be managed in a single booking.
“We had 232 full-time staff when Covid first hit,” Grafton says. “We immediately converted a number of contractors to full-time to make that 240. Today we have 320.” The Booking.com partnership has given Serko access to a global small business market that it didn’t have access to before, he says.
Grafton recently won the Leadership Award at the annual Institute of Finance Professionals (Infinz) awards.
So what’s his approach? “My leadership style is really around coaching,” Grafton says.
“We have a standard, which is ‘always be coaching’, or ‘ABC’.
“So my job is to take a group of what I consider champions in their own field, to employ people to take me on that journey where I’ve never been because they’ve either been there before or have the skill sets to do that.
“And my job is to make this group of champions become like the All Blacks; a championship team. The easiest way to look at it is that the All Blacks collectively are way more powerful as a team than they are individually.
“The other side of it is that we’ve always built this business on diversity and inclusion.
“We have a female chair, Claudia Batten, a phenomenal leader. But also what we do is try and employ people that will use our technology — every nationality, every diversity — and to really be part of a programme that lives and breathes their values.
“I also think it’s important that you lead by example.
“But you’ve always got to be creating the oxygen between what your people are and where you are, to give them the capacity to grow at the same time.”
When we go across the Tasman now, we travel in shorter trips. Where we might have stayed a week, we’re now staying for 48 or 72 hours.
Darrin Grafton