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American Express Global Business Travel now has a new opportunity and $900 million bankroll to reinvent itself. The challenge will be to make meaningful and relatively rapid changes in an organization that historically has been very conservative.
It’s a new era for American Express Global Business Travel, which closed June 30 on a 50-50 joint venture between American Express Co. and private equity firm Certares, with participation by the Qatar Investment Authority.
With the joint venture comes a $900 million capital infusion from Certares and its partners, and that position is a stark contrast to the downsizing that American Express Global Business Travel experienced over the last couple of years.
Bill Glenn, who previously headed American Express Co.’s global corporate payments and business travel units, was named the president and CEO of the joint venture, and he’s obviously bullish on the new entity’s prospects.
Among the advantages, as Glenn sees it, is the ability to head a company that focuses solely on business travel, and he enviisons Global Business Travel expanding its global footprint through partnerships and acquisitions. There will also be investments in technology, including Big Data, and information management.
The joint venture and the relatively fat corporate wallet should be great news for travel startups because Glenn says Global Business Travel will be looking to partner with or acquire some of these travel startup or tech enterprises.
Skift caught up with Glenn several days after he was named CEO of American Express Global Business Travel. An edited version of the interview follows:
Skift: What changes now that the joint venture is in place?
Glenn: One of the things I’m most excited about is the flexibility of a standalone company, and the ability and technology to be a lot more flexible, from building, buying or allying with other partners out there. You talk about some of the technology startups you are exposed to. I think you’ll see that our technology strategy and technology actions will be a combination of build, buy and ally.
Those will include partnerships in some of the startups probably, startups either you’ve talked to or startups that are happening today in New York, Chicago, Canada, Silicon Valley. Outside of the American Express technology infrastructure, which is performing extremely well in our company, but it is a larger infrastructure, not fully dedicated to the travel business. So I see that as a huge competitive advantage and the way we are going to be successful.
Skift: Do you get frustrated by the fact that it takes so long to make changes in terms of technology at a company as large as American Express? I remember going to a GBTA conference, maybe five years or six years ago, when American Express Global Business Travel sought to convince everyone that it was the largest online travel company, and yet you said earlier that around 2011 or 2012 you realized that a lot of the business is moving online, and you needed to make changes to invest for the future. I do a lot of writing about startups. They don’t have this problem. What is your view on this?
Glenn: Just to correct one thing. In 2011, we just didn’t wake up and one day and say, God, the business is going online. We had seen the trends. The question was what infrastructure and technology do you need to effectively compete and be efficient. So when Amex announced a restructuring — I think we called out Global Business Travel for some of the downsizing — it really was a response to the trends we were seeing and moving ahead for the future.
Skift: For people who don’t know the back story, can you trace where American Express’ business travel unit has been over the last couple of years, and how we get to this point?
Bill Glenn: Through the course of 2011 and 2012 we recognized a couple of things about the travel business, and that there were very good synergies with the card business. The world had been changing, moving from offline to online in terms of transactions. And that depends on geography and market, but there was more of an online [trend]. The future was going to be heavily dependent on technology and innovation, information technology, and new product development. We’ve been thinking about what that would mean to the business model and determined a couple of things.
One is that the returns on the travel business were pretty healthy. They would always be lower than the other businesses of American Express. The way to get investments and focus was probably more achievable and winnable through a standalone travel company. We were approached and approached investors, and had a very, very attractive investor base, and we announced in September of last year our intention to sign a joint venture to sign in the first quarter of this year and to close sometime in the second quarter.
Skift: It sounds as if in order to get more focus you had to take the business outside of American Express proper into a joint venture. Would that be accurate?
Glenn: Absolutely. I’d say to win in the marketplace and to capitalize on the opportunities. It was how do we best do that, preserving the business model, preserving the brand name, and the organization, capitalizing on those.That the best construct would be the joint venture option.
Skift: OK, so what happens now? You have $900 million in new funding that comes into the business. Can you talk a little more about the new priorities?
Glenn: The strategic direction of the business that we’ve been on course for probably the last year I would say is the right one. This allows us to accelerate that and win at a faster pace. On the best use of capital, one is technology. The second is information management and using proprietary and Big Data. The third is strengthening our already leading global footprint. And the fourth is partnerships and acquisitions, growing through both of those. Those are the areas of spend.
I would tell you that the dynamics in the marketplace that put us on the strategic course we are on as well as the acceleration of our performance are threefold. One is the globalization of companies. That is companies not only headquartered in the traditionally highly developed markets like the U.S. and Europe, moving to BRICs countries, the emerging markets. The other phenomenon is the number of billion dollar companies starting up in the emerging markets and exuding outside of those emerging markets is expanding rapidly. So the whole dynamic of globalization is changing and we need to expand our footprint because our customers are these corporations.
The second is consumerization. Employees want to adopt in their business life what they’ve adopted in their personal lives so there is an opportunity and a need to innovate from desktop to tablet to mobile. To innovate off of that and make sure their experiences are similar to ones they are getting in their personal life. The third is the digitization of everything, and the capabilities and the online migration we talked about.
Skift: You mentioned that part of the funding will go toward partnerships and acquisitions? Do you see consolidation on the horizon in business travel?
Glenn: Certainly we think it is one of the opportunities for us to win in the marketplace and we have the capital to do that. An analogy in the U.S. is that there are three airline carriers and maybe there were 10 major carriers before. I’m not sure that going to happen across the globe in the industry. There may be consolidation regionally. Certainly there are synergies, there is value-add and synergies in making the right partnerships and acquisitions.
Skift: Speaking about competitors, when you look out there and when you are planning your next moves, do you see anything that your competitors are doing that you admire or respect for Carlson Wagonlit, BCD or Egencia, for example?
Glenn: I think BCD and CWT are formidable competitors. I do think that given our relationships at the corporate level, given the combination of that and our footprint, I would say what we are doing with American Express, given what we are doing competitively with the brand, I think we are competitively advantaged. Surely they have done some things over the years. I don’t see anything right now that is particularly worrisome about them.
I want to be objective and respectful of the competitors. Egencia has done a very, very good job in general, their tools and their capabilities. They have made a lot of progress. I still think if you look at our penetration of the large corporations and companies across the globe then we are best-positioned to add value to them. With the right levels of investment in technology, information management, I feel pretty good about our competitive advantages. I can’t point to anything with the legacy TMCs (travel management companies) that I would say gosh, I wish we had done that.
Skift: Is there any trepidation among your existing clients and potential customers about the joint venture given this is untested waters?
Glenn: If you asked me what my biggest concern was in September 2013 when we announced publicly the intention to form a joint venture and hoped to sign in the first quarter of 2014. That left five to seven months of a lot of uncertainty out there. That was our biggest concern because our folks were answering questions like what’s the construct, who are the investors? Is it another travel company? Is Amex just leaving the business?
We had those questions from customers and prospects, and I’m so proud of the organization because no one had all the answers at that time. And we kept our heads down and focused on customer service, and it’s worked out pretty well. I like our momentum in the marketplace. I like the trajectory we are on and the customer service levels are very strong.