The pandemic dust is settling, and now we're really starting to see consolidation take hold in the corporate travel sector. There's safety in numbers in the future.
American Express Global Business Travel said it has made a binding offer to acquire Egencia, Expedia Group’s corporate travel arm.
As part of the transaction, announced Tuesday, Expedia Group will become a shareholder in, and enter a long-term strategic commercial agreement with Amex GBT.
The proposed deal is subject to consultation by Expedia Group and Egencia with their applicable employee representatives, as well as customary closing conditions including regulatory approvals. No financial deal terms were disclosed.
Amex GBT said it wants to team Egencia with its Supply MarketPlace, and any deal would give it a significant boost. Could the acquisition be nothing more than a glorified content deal?
“We are creating the most valuable marketplace in travel,” said Paul Abbott, Amex GBT’s CEO, in an interview with Skift. “That really is our strategy. And the foundation of that is you’ve got to have comprehensive, competitive content. An important part of this proposed deal is we’re signing a long-term agreement with Expedia to benefit from the content inventory and technology Expedia has.”
On the technology front, Abbott also dismissed the idea that Egencia’s online booking tool would clash with its own Neo tool, acquired in 2016.
“I don’t see them as competing sets of technology, they’re very complementary,” said Abbott. “One of the competitive weaknesses of many travel management companies is they’re one dimensional, and they offer one product. In most industries, companies offer a range of products and services to customers. We need different solutions for different needs. Neo is for clients who don’t want a fully integrated technology stack, they want to procure different elements of the travel management process.”
Ariane Gorin, president of Expedia Business Services, also told Skift that there were other areas of technology within Expedia Partner Solutions. “The deal is a lodging content and technology deal. But there’s also other technology, which we’ll be excited to explore together,” she said.
The announcement follows Amex GBT’s acquisition of Ovation Travel, for an undisclosed amount, in January this year. Ovation will become a division of Amex GBT’s Global Customer Partnerships organization, and the purchase would help it grow business with small and medium-sized companies.
The deal fits in with Expedia’s strategy to streamline its operation, but offloading and closing down business units. The online travel giant last fall sold back Silverail to its management, and earlier last year shuttered two short-term rental businesses.
Investment firm Bernstein said the sale does not represent a vote against business travel, but brings simplification.
“Management’s push to simplify the business has driven strategic moves made in the last year, and the sale of Egencia fits this,” it said in a research note. “Given Egencia’s below Expedia group margins, the transaction should also be margin accretive (particularly in the near term as corporate travel underperforms).”
The transaction will also provide a larger partner for its private rental B2B business, a stated growth area, it added.
There have been a series of changes in the build-up. Egencia’s chief financial officer, Regi Vengalil, recently left the business, joining pay-per-mile auto insurer Metromile.
In April last year, Egencia president Rob Greyber stepped down at short notice, with Ariane Gorin, who at the time had recently been promoted to an expanded role as group president of Expedia Business Services, replacing him.
Some industry observers have also suggested that Amex GBT, or in particular one of its investors, Certares, was circling rival CWT as a possible acquisition.
The private equity firm has already made a string of investments this year, and been rolling up assets across several travel sectors. As well as its interest in Amex GBT, it owns Internova Travel Group, and is a strategic investor in Tripadvisor’s parent company, among other travel holdings.
It also recently led a nearly $42 million Series C round in Getaway, a startup specializing in small cabin rentals. It also invested in G Adventures.
Amex GBT denied it was looking at CWT.
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Tags: american express global business travel, corporate travel management, egencia
Photo credit: Egencia is being sold to American Express Global Business Travel. Annie Egencia / Wikimedia Commons