Let’s recap: American Express Global Business Travel (Amex GBT) announced its intention to acquire rival HRG in February 2018, with the deal completing in July the same year. As a result, there was a limbo-like six months between the announcement and final closing of the transaction.
Talking to BBT nearly a year on since that deal completed, Doug Anderson says a high level of UK regulatory scrutiny, which delayed the takeover, worked to its advantage. “When we set out on the long journey, I thought: this is a long time, there’s a lot of time here for distraction, I hope we can stay focused,” the chief executive of Amex GBT admits. “Well, the time went really quickly, and the joint teams worked on the integration planning – well, as much as we could under the regulatory scrutiny.
“When we closed the deal at the end of July, we had a sound integration plan ready to go. We could communicate senior appointments in the first couple of levels of the organisation from day one, make those changes, create stability so people weren’t distracted, knew what their roles were going forward.”
Anderson believes the Travel Management Company: An agency which manages business travel for a company. “governed the process well”, but did customers feel the same? “I was pleasantly surprised by the way we successfully communicated our plans to our clients. We have not lost a client as a result of integrating the two businesses,” he replies.
“That was our aspirational goal. I thought at the time when I set the goal, it would be a bit aspirational, but to date we’ve not lost a single client. I would not have guessed we would have achieved that objective. I’m not sure we’ll achieve that objective through the end of the entire integration process, but we’re tracking very well to date.
“One of the principles when it comes to clients is we will not propose any change to any client that we don’t feel is as good or better than what they have today. We had, or have, a large number of global clients that we, I’ll call it ‘shared’. We worked carefully with those clients to make sure they were comfortable with any change we made, and having a good understanding of their requirements was paramount. These are clients spending well north of £100 million a year on travel.”
Doug Anderson on its Lola.com partnership
Counting the cost
The integration process continues, with 100 associated projects and 15 or 16 “work streams”, and Anderson praises chief transformation officer Joanna Macleod for her work to date. It’s clearly keeping staff busy, and Amex GBT overestimated the potential job losses – but Anderson stresses the acquisition took place from a solid foundation.
“Under the UK takeover code, we had to put an estimate around job losses in the announcement,” he recollects. “I wish we had not been required to do that, but we were. We estimated 6-8 per cent, but the actual cuts have been less than half that, because during that seven-month period we held positions open in both companies, in anticipation of the merger.
Integrations like this, with a global footprint like these two businesses, can be complicated
“We have a number of senior executives from each of the two companies, working not only on these projects, but also the business-as-usual, so attracting and retaining our clients and delivering excellent service. I feel good we had met our objective of moving forward with a stronger platform that either of the businesses had on a standalone basis.
“In 2018 our transaction growth was nearly 5 per cent, and that creates opportunities for new positions. There have to be job cuts to make the economics of a merger work, but they have been less than half our predictions… It made the effort to integrate the two businesses somewhat easier, in that running the base business was not as challenging as in some years.”
So what happens next? In terms of next steps, technology consolidation and a renewed Small and medium-sized enterprises sector focus are on the cards. “[Technology] touches each and every one of our clients, our operations, our travel counsellors, everyone who supports our back office functions, and the detailed work and time to achieve is long. It’s complicated, it will take the most time of any of the work streams,” Anderson predicts. “But the migration to the data lake is going well, gives us the opportunity to create intelligence that, based on transactions and trading for both companies, covers the past several years.”
We have a very active M&A pipeline, but there are 15 potential deals we’re looking at around the world
“It’s not daunting in the fact we have the resources, the technical expertise, and the client management, to make this happen. But it takes time.”
The Travel Management Company: An agency which manages business travel for a company. will also refocus on SMEs. “We have long believed further leveraging our assets for the benefit of the mid-market segment made a lot of sense,” Anderson says.
“We have our travel counsellors, the KDS technology, supplier relationships that are second to none – all those assets create an opportunity for us to become a more significant player in this mid-market segment. We’re working hard to create value in a segment that the traditional global Travel Management Company: An agency which manages business travel for a company. model has not successfully attracted in the past,” he says, adding he expects half of new business sales in 2019 to come from the US mid market.
Acquisitions are back too. “We purposely stayed quiet in terms of M&A in the last six months or so because we had our hands full,” Anderson says. “We have a very active M&A pipeline, but there are 15 potential deals we’re looking at around the world. Between three and five of those will make it to the finish line in the next six months or so, and a couple in the next quarter.” (Not long after our interview, Amex GBT announced it planned to acquire German firm DER Business Travel, the corporate arm of the DER Touristik Group.)
The challenge is the integration of the technology. It touches each and every one of our clients
During our conversation, Anderson refers to “legacy GBT” and “legacy HRG” – it’s only logical, therefore, that a “new GBT” will follow once the dust settles. Anderson hints that there may be a brand announcement in the near future. But what will a “new” Amex GBT, or indeed any global Travel Management Company: An agency which manages business travel for a company., look like in five years?
“Relationships, customer and traveller connectivity, and intimacy, is more important than ever,” he says. “But in my view, where we’ve positioned ourselves at the new GBT, is we’ve created the first total travel and expense management integrated ecosystem that’s built primarily on proprietary technology. There isn’t another one in our industry.”
A combined legacy awaits, and no doubt more surprises along the way from the world’s largest Travel Management Company: An agency which manages business travel for a company..