Amex GBT ensures that the investor pandemic is just a glimpse into corporate travel

take the change

The corporate travel agency management team was somewhat bullish during Investor Day at the New York Stock Exchange on Tuesday, but can anyone really predict what business travel will really look like in the next year or two?

Matthew Parsons

American Express Global Business Travel is sticking with its plan to go public later this year by merging with a blank check company backed by Apollo management, a vote of confidence in the future of business travel. In fact, a number of companies have pulled out of similar plans, including taxi company Gett and HotelPlanner.

The corporate travel agency confidently anticipates that within two years things will be back to normal – including the travel patterns and behaviors of global customers who haven’t yet fully reopened their offices.

Amex GBT transactions only recovered to 61 percent in the week to April 2, its CEO told investors on the New York Stock Exchange on Tuesday. But Paul Abbott also revealed that Amex GBT has upgraded its outlook, based on new research from Fitch Ratings and the American Travel Association.

It now expects global business travel spending to reach 90-100 percent of 2019 levels by 2023. It was previously pegged at 80 percent in its previous update. Abbott also noted how after previous crises, such as the 2001 attacks and the 2008 recession, travel returned after 24 to 36 months.

However, the company continues to base its financial forecast on a 70 percent recovery. “Not that we are pessimistic,” he said, “but that is what is required of us to get back to pre-pandemic earnings.” Part of that is due to the fact that it sees synergies from its acquisitions of Ovation and Egencia, and it has taken large chunks of the overhead.

Not hanging around

Chief Commercial Officer Andrew Crowley said that while some customers had more of their workforce distributed than before, not all customers changed their travel policies and that travel rationales, including sales, customer deliveries and internal meetings, were likely to revert back to what It was.

“Maybe I’ve read that people are spending more time on business trips, maybe they’re taking fewer trips, but we don’t see as much of that,” he said.

“I think what will actually happen is that people will generally go back talking to what they were before. Day trips to New York or London might take a little longer to get back, but customers spend as much as they need on their business trip, not hang out.”

Crowley also said so-called recreational trips are unlikely to play a major role in the recovery.

“(The recovery) is closer to the size and shape of the flight for 2019, not big structural changes in the nature of what they do travel,” he said. Customers will also “telephone” the importance of internal meetings, which have been scaled back during the pandemic.

However, Abbott added that Amex GBT’s Meetings and Events division has seen a growth in small meetings, due to a dispersed workforce, less mobility and a need to bring people together. He noted that forward bookings until March 2 reached 70 percent, outpacing the business travel recovery.

Unmanaged file conversion

During the Investor Day presentation, Amex GBT reiterated its intention to pursue the SME market. Therefore, it may depend on how Egencia converts “unmanaged” companies – that is, those without a formal corporate travel program, or a lightly managed company – to register. This market is worth $675 billion in global travel spending, with the managed segment being $275 billion. And Amex GBT has only 6 percent of that specific segment.

Mark Holyhead, president of Egencia, said the corporate travel agency had spent 15 years inside Expedia, so he knew a thing or two about transforming businesses. “Once you get into this travel management discussion, it becomes kind of a no-brainer,” he said.

It will also strengthen its relationship with credit card company American Express, which owns 30 percent of Amex GBT, which will refer its corporate clients to Amex GBT for any travel needs. Currently, 30% of unmanaged deals come from Egencia, and Abbott said he wants to constantly grow in double digits.

Smaller customers were also getting back to work faster.

Speaking at the event, Apollo Partner Itay Wallach confirmed his support for the merger that would value Amex GBT at nearly $5 billion. He said that after Amex GBT boosted its liquidity by creating a $1 billion term in December 2021, it is now able to “attack while many of its competitors play on defence.”

He added, “This opportunity has quickly leaped out as very attractive and very unique, which is why we are excited to partner with management and the company on this transaction…it plays a key role at the heart of the travel ecosystem.”

Amex GBT will list on the New York Stock Exchange later this year under a new name, Global Business Travel Group (GBTG), but will continue to do business under its existing brand name due to an 11-year trademark agreement that takes effect upon agreement. ending.

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