Amex GBT Assures Investors Pandemic Just a Blip for Corporate Travel

American Express Global Business Travel is sticking to its plan to go public later this year by merging with an Apollo Management-backed blank check company, a vote of confidence in the future of business travel. Indeed, a number of companies have receded from similar plans, including taxi firm Gett and HotelPlanner.

The corporate travel agency is confidently predicting that in a couple years things will all be back to normal — including travel patterns and behaviors from global clients that still haven’t really fully reopened their offices.

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

It now predicts global business travel spend will reach 90-100 percent of 2019 levels by 2023. It previously had it pegged at 80 percent in its previous update. Abbott also referenced how after previous crises, such as the 2001 attacks and 2008 recessions, travel returned after 24 to 36 months.

However, the company continues to base its financial forecasting on a 70 percent recovery. “Not because we’re pessimistic,” he said, “but that’s what’s required of us to return to pre-pandemic profits.” Part of that down is to the fact it’s seeing synergies from its acquisitions of Ovation and Egencia, and has taken out large chunks of its overheads.

No Hanging Around

Chief commercial officer Andrew Crawley said while some clients had more distributed workforces than before, not all customers had changed their travel policies and that the rationales for travel, including sales, client delivery, and internal meetings, were likely to return to as they were.

“You might have read perhaps that people are spending longer on business trips, maybe doing fewer in frequency, but we’re not seeing a huge amount of that,” he said.

“I think what will actually happen is that people will go back broadly speaking to where they were before. The day trips to New York or London may take a little longer to come back, but customers spend the amount they need to on the their business trip, and they don’t hang around.”

Crawley also said so-called bleisure trips would unlikely play a mainstream role in the recovery.

“(The recovery) is more akin to the 2019 size and shape of trip, rather than big structural changes to the nature of what the travel that they’re doing,” he said. Customers will also “dial up” the importance of internal meetings, after they were curtailed during the pandemic.

However, Abbot added Amex GBT’s meetings and events division was seeing growth in small meetings, due to dispersed workforces, less commuting and the need to bring people together. Forward bookings up to March 2 were at 70 percent, outpacing business travel recovery, he noted.

Converting the Unmanaged

During the investor day presentation, Amex GBT repeated its intent to pursue the small and medium-sized enterprise market. For that, it may lean on how Egencia converted “unmanaged” firms — meaning those without an official company travel program, or a lightly managed one — to sign up. That market is worth $675 billion in global travel spend, with the managed part $275 billion. And Amex GBT has just 6 percent of that particular slice.

Mark Hollyhead, president of Egencia, said the corporate travel agency had spent 15 years inside Expedia, so knew a thing or two about converting companies. “Once you get into that discussion to manage travel, it becomes a bit of a no-brainer,” he said.

It will also leverage its relationship with credit card company American Express, which owns 30 percent of Amex GBT, which will refer its own corporate clients to Amex GBT for any travel needs. For now, 30 percent of unmanaged signings come from Egencia, and Abbot said he wants to grow consistently by double digits.

The smaller clients were also getting back to business faster.

Speaking at the event, Itai Wallach, partner at Apollo, reiterated his support for the merger that would value Amex GBT at close to $5 billion. He said that after Amex GBT bolstered its liquidity by establishing a $1 billion term in December 2021, it was now able “to play offence while many of its competitors played defence.”

“This opportunity quickly jumped out as highly attractive and highly unique, which is why we’re excited to be partnering with management and the company on this transaction … It plays a key role right at the center of the travel ecosystem,” he added.

Amex GBT will list on the New York Stock Exchange later this year under a new name, Global Business Travel Group (GBTG), but gets to continue doing business under its current brand due to an 11-year trademark agreement which takes effect upon the deal’s closure.