The
recent announcement of American Express' intentions
to acquire most of Rosenbluth International's
assets carries more significance than just another
episode of consolidation. Ballyhoo over synergies
and economies always accompanies such announcements,
so discount it accordingly.
American Express has been there and done that
when it comes to major, frequent acquisitions
in the interest of strengthening supplier negotiating
clout, shifting charge card volume and optimizing
GDS contracts. And Rosenbluth historically
eschewed such a combination as culturally incompatible.
No, this marriage-to-be portends something
else.
Not an oxymoron
Everyone knows travel volumes suffered during
the triple-whammy era of a sputtering economy,
terrorism jitters and global health scares.
Less understood, however, is whether corporate
travel agency (CTA) revenue will grow like
before as business travel rebounds. The short
answer is, "no." Corporate travel management
is not an oxymoron, but it is fundamentally
and irreversibly changed.
According to the Phocuswright/NBTA July
2003 Corporate Industry Trends Survey,
by year's end, more than nine in 10 companies
with managed corporate travel programs will
provide an online booking tool to their internal
travelers and travel arrangers (for transient
travel) and more than four in 10 will be
doing so for meetings/group travel. Average
adoption rates of such tools for managed
corporate travel programs have risen to 35%.
Because none of today's top online leisure
travel agencies was a travel agency pre-Internet,
it is feared among the entrenched that some
of the top online CTAs of tomorrow will be
companies that were not CTAs pre-Internet.
CTAs have considerable expertise and resources
in call centers, client services, RFP responses
and supplier relations, but with more bookings
moving online and companies usurping more agency
functions, the new void in corporate travel
management involves something travel agencies
have not excelled in: technology solutions
applications.
Real-time integration of multiple databases
(GDSs, CRSs, charge cards, expenses, pricing,
human resources, general ledger) and disparate
systems links (direct-connects) are critical.
Different organizations with these skills are
entering the market, namely online agencies
and technology consultancies. Corporate travel
management demands a "command and control center" approach
that enables travelers, travel arrangers and
travel managers to make sound decisions real-time.
Corporate travel tidal wave
Skeptics dismiss these online newbies to corporate
travel as focused on selling three-person
architectural firms and the like. Sooner
than later, however, an Expedia, Travelocity
or Orbitz will announce a travel management
contract with a Fortune 500 firm. I already
can hear the cries of shock.
Indeed, the pending American Express/Rosenbluth
transaction responds to many marketplace factors,
but the deal primarily recognizes the harsh
reality that the next generation of corporation
travel management is approaching like a tidal
wave. Better check your moorings.
These comments first appeared in Travel
Weekly, August 18, 2003.
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