American Express Global Business Travel (Amex GBT) is the largest corporate travel management company that is currently experiencing a net loss of $128 million. Despite this, the company has seen growth in transaction volume and revenue, with a 9% increase in transaction volume and a 5% rise in revenue in the third quarter. The company is focusing on a strategy to serve both multinational corporations and small- and medium-sized businesses through cost-cutting programs and acquisitions to achieve better supplier prices.
Amex GBT has been successful in gaining share among both large corporate clients and smaller players, with a market share of about 40% in the large corporate segment. The company has a 97% client retention rate among its large corporate customers and is projected to see an increase in travel spending in the fourth quarter. By acquiring smaller businesses, Amex GBT is able to negotiate better supplier prices and offer its corporate clients discounts on fares. The company’s strategy is to grow through acquisitions and maintain its position in the corporate travel management industry.
While Amex GBT has been successful in the large corporate segment, the small- and medium-sized business segment has seen slower growth with transaction volume increasing by just 2% in the quarter. This segment represents a significant growth opportunity for the company, as small- and medium-sized businesses spend about $675 billion a year on travel without the help of travel managers. By capturing this market, Amex GBT and its competitors could potentially gain over $80 billion a year in incremental transaction value.
Cost control and automation are key strategies for Amex GBT to drive profitability in the small- and medium-sized business segment. The company is focused on driving greater productivity and results from its sales and marketing channels through automation, reducing operating costs by 1% year-over-year. The use of artificial intelligence to automate manual processes, such as credit card reconciliation and responding to program change requests, has helped to increase efficiency within the company.
The pending $575 million CWT acquisition by Amex GBT has raised questions among analysts about strategic details, integration planning, potential synergies, and regulatory hurdles. The deal, expected to close in Q1 2025, would combine two of the largest corporate travel managers globally, with UK competition authorities reviewing its impact. If successful, the acquisition would test Amex GBT’s ability to integrate a competitor while improving margins, but if regulators deny the merger, the company may face challenges in achieving its growth forecasts while trying to reduce its net debt of $860 million.
