With American Express Global Business Travel's planned acquisition of CWT, the landscape of travel management companies will shrink yet again.
And industry experts differ on whether that's a good or bad thing for competitors.
The $570 million transaction will result in a "behemoth in the TMC world," said Charuta Fadnis, senior vice president of research and product strategy at travel market research firm Phocuswright.
Indeed, it thins out the very top of Travel Weekly's Power List and positions American Express Global Business Travel (Amex GBT) to remain ahead of other TMCs.
Amex GBT sits at No. 3 on the 2023 list, with $23 billion in 2022 sales. The TMC is behind only the online travel giants Booking Holdings and Expedia Group, in spots No. 1 and 2, respectively. CWT took fifth place on the 2023 list with $13.6 billion in sales. Sitting between GBT and CWT at No. 4 is another corporate travel-focused agency, BCD Travel.
Attorney Mark Pestronk, Travel Weekly's Legal Briefs columnist, thinks the merger would be a good thing for other corporate travel sellers. With less competition at the top, he argued, those corporate agencies would have more opportunities to gain accounts. Amex GBT and CWT have been "formidable competitors" for years, Pestronk added.
"The merger will remove one of these competitors, so winning corporate accounts should be somewhat easier for corporate-oriented agencies, all things being equal," he said.
Fadnis, however, pointed out that the merger would mean one less TMC with global scale. That gives corporations with a presence in multiple countries fewer TMC options and possibly less negotiating power.
Regulatory approval expected
Still, experts agree that the CWT acquisition, expected to close in the second half of the year pending regulatory approval, is not likely to encounter regulatory hurdles.
Fadnis pointed out that there are many midsize and smaller TMCs in every market. And while the acquisition would consolidate the global TMC space, new entrants like Navan, TravelPerk and Spotnana offer competition.
"I expect that the deal will be scrutinized in some markets but, ultimately, it will go through," she said.
Morgann Lesne, a partner in investment banking firm Cambon Partners and a specialist in travel technology mergers and acquisitions, agreed. Regulatory authorities tend to be more focused on the online travel world, he said, and neither Amex GBT nor CWT would be categorized as a "monopolistic company."
CWT will be the latest in a string of agencies that Amex GBT has acquired in recent years, including Hogg Robinson Group (HRG) in 2018 and Egencia and Ovation Travel Group in 2021. The HRG transaction was close in price to the proposed CWT acquisition; Amex GBT paid around $576 million for HRG.
CWT's financial problems
Amex GBT's acquisition bid comes at a difficult time for CWT, one of travel's oldest companies.
CWT traces its history back to 1872, when Georges Nagelmackers founded Wagons-Lits ("sleeping cars"), a company that put sleeping compartments on European trains. (He would go on to create the luxury train company Orient Express.)
After a number of changes and acquisitions over the years, Carlson Travel Network in the U.S. (formerly Ask Mr. Foster, the travel agency founded in 1888 in Florida) and Wagonlit Travel in Europe merged in 1997 to form Carlson Wagonlit Travel. In 2019, the company shed the full moniker in favor of CWT.
CWT has struggled in recent years, entering Chapter 11 bankruptcy in November 2021 but exiting it just a day later. CWT has also carried a heavy debt load in the past two years, Phocuswright's Fadnis pointed out, having recapitalized in November. Those financial troubles likely contributed to the sale, she said.
"It's very tough for any company to carry a high debt and continue to invest in its business," Fadnis said. "Especially when you're in a relatively low-margin business."
Amex GBT executives, however, said the acquisition would add 4,000 new customers, would be "highly accretive" and generate immediate synergies. It also brings CWT's AI technology into the fold; Amex GBT CFO Karen Williams said the company views automation and AI as a "significant opportunity."
Lesne said CWT's platforms will further bolster the "significant" technology assets Amex GBT gained from its 2016 acquisition of travel technology company KDS. Today, KDS makes up GBT's Neo Technology Group.
"The cost of technology is increasing, so in order to best serve the client, you need to really have a strong budget," Lesne said. With the increased scale of the combined company, Amex GBT will better be able to amortize the cost of tech, he added.
Fadnis also noted the potential benefits of that technology.
"This has implications for tech companies like those offering online booking tools," Fadnis said. "Corporations may prefer to use the TMC's tech tools, which are more integrated with the overall offering and make it easier to manage the travel program."
Fadnis predicted another area of potential impact: NDC. With greater scale, she said, Amex GBT could have more leverage when it comes to content acquisition and negotiation with airlines.