he 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 as 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, 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 in 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.
Philip C. Wolf is president and CEO of PhoCusWright, a
travel, tourism and hospitality research and intelligence
organization.