Corporate travel companies must consolidate to make the technology investments required to prosper but will remain attractive to investors even if trip numbers fail to return to pre-Covid levels.
That is the view of American Express Global Business Travel chief executive Paul Abbott, who told the recent Institute of Travel Management conference in Birmingham: “It’s difficult to break the connection between GDP and business travel – there is such a close correlation.”
Abbott said: “I don’t think we’ll return to pre-pandemic levels, but even if 10% of [corporate] travel doesn’t come back, it is still a huge market.”
He pointed out: “We’re market leader with revenue of $40 billion in a $1.2 trillion sector.
“In March, we were at 61% recovered [compared with 2019]. That improved in the last weeks and is in an environment where there are still significant restrictions on routes representing about 20% of our volumes and a lot of large companies are only just phasing in a return to the office. We’ll see numbers improve.”
Abbott insisted: “There will be pressure for consolidation because of the requirement for significant investment in product and technology. It’s essential for any business to invest to compete. Consolidation will continue because of the investment needed to succeed.”
He rejected the idea of ‘legacy’ companies and ‘new entrants’ in the sector, arguing: “‘Legacy’ suggests there are companies with old models and companies with new models. Our company was founded in the separation from American Express in 2015, so we’re a relatively new company, but I would challenge the model of legacy companies and new entrants. There are companies investing in technology and companies not investing. We have close to 1,000 software engineers.”
American Express GBT has enjoyed private equity, sovereign wealth and pension fund backing since separating from American Express.
Asked whether the sector had developed more of a ‘voice’ in talking to government through the pandemic, Abbott said: “We have to be in a better place than at the beginning, but we started from a very low base. [But] tackling sustainability will require unprecedented cooperation, so we had better be better at it.”