Amex GBT Buys CWT: How Does it Affect the Corporate Travel Market?

What happened

One of the biggest acquisitions in the history of corporate travel finally concluded on 2 September when the travel management company American Express Global Business Travel bought its rival CWT for US$540 million. The deal was originally announced in March 2024, but was delayed by investigations by competition authorities in the USA and UK.

Amex GBT was already the largest TMC in the world before buying CWT. In March 2024, its annual total transaction value was $31 billion. CWT was either second or third largest TMC globally, with total transaction value of $14 billion, 9,000 employees and 4,000 customers.

The sale signifies the extinction of a legendary name in travel. CWT was an abbreviation of Carlson Wagonlit Travel, which can trace its origins to the creation in 1872 of Compagnie International des Wagons-Lits, a French operator of luxury trains with sleeper and dining carriages.

However, in recent times, CWT struggled. The company entered Chapter 11 restructuring in 2021after being hit hard by the Covid pandemic. The UK’s Competition and Markets Authority dropped its objections to the acquisition by Amex GBT partly because it concluded that CWT had become a weakened competitor.

What will Amex GBT do next?

Disclosure has been limited so far. However, Amex GBT has said it is confident of achieving synergy savings of $155 million over three years, including by reducing employee numbers and switching to Amex GBT’s back office systems, such as for human resources and accounting.

What will the deal mean for travel buyers?

This is a hotly disputed question. Amex GBT has a history of buying major competitors at least once a decade, including Thomas Cook Travel Management (1994), Rosenbluth International (2003), HRG (2018) and Egencia (2021). Each of these acquisitions has boosted Amex GBT’s market leadership, yet the market has remained fiercely competitive.

But the situation could be different this time. Amex GBT no longer identifies as a TMC. Instead, it now calls itself a “software and services company for travel, expense and meetings & events”. The increasing need for sophisticated technology makes it more expensive for other TMCs to compete.

Even so, there remain many excellent TMCs around the world, especially small and medium independents. The biggest challenge now CWT has been bought is for large multinational customers, who now have few options remaining if they want a single TMC across many countries. The Competition and Markets Authority estimated that buying CWT would give Amex GBT a 50-60 per cent share of the large multinational market, with only two other competitors, BCD Travel and FCM, having a share above 10 per cent.

At one point in its negotiations with authorities, Amex GBT proposed remedies to concerns about reduced competition. These included capping fees for two years, a commitment to maintain products and services, discontinuing some multinational customer contracts and making CWT’s partner network available to other TMCs. But in the end Amex GBT lobbied successfully to complete its acquisition without any concessions, although CWT did sell its German business separately to another TMC called ATG.

CWT customers will consider carefully whether they want to be converted into Amex GBT customers. But although the alternatives for large multinational clients are limited in terms of finding another single global TMC, perhaps there are other solutions. In particular, is it still necessary to use the same TMC everywhere?

Travel buyers could instead choose the best TMC in each country, or perhaps each region, and then use their own technology to consolidate data from the different TMCs serving them. There are also several good international networks of independent TMCs which commit themselves to common standards and processes.

There is no doubt that Amex GBT buying CWT has shaken up the market. This is a good time for all travel buyers to review what is now the best TMC option available to them.

Source: World Business Travel Forum