Corporate Travel Companies Are Bulking Up

10.04.2024 - 17:37 / skift.com / Paul Abbott / Steve Singh / Airlines

The big players in the world of managing corporate travel are gearing up to get bigger: Amex GBT’s $570 million bid for CWT and the sale of Direct Travel to an investor consortium are two of the latest examples of the race to bulk up through mergers. 

The trend is driven largely by two factors: Travel suppliers – primarily airlines – seeking greater efficiencies in their distribution channels and the enormous capital required to invest in the technology to sell to and service travelers around the world.

“I think fundamentally customer needs are driving consolidation in the industry,” Amex GBT CEO Paul Abbott told Skift. “I think supplier needs are also changing. Suppliers want their distribution channels to deliver a modern retailing experience,” he said.

For example, airlines are moving a growing share of their fares from the traditional global distribution system model to a direct NDC (New Distribution Capability) platform. And agencies are under pressure to adopt it. 

CWT merging into Amex GBT is “a perfect example of how it’s really only the big players that have the capital to do it,” Mike McCormick, a travel consultant and former head of the Global Business Travel Association, said on April 1 on the Travel Again podcast.

The largest corporate firms, such as Amex GBT, BCD Travel and Navan, have been forced “to really make big investments in technology and continued investments” given the aggressive push by American and others, McCormick noted. 

Navan, for example, last month touted its deeper integration with United Airlines to support that carrier’s pricing strategy for fares, along with other self-serve tools and more personalization for travelers.

“Getting bigger is critical in terms of  a lot of the airline changes and negotiation, and always pressure on earnings and commissions and business in general,” McCormick said.

Investor Steve Singh, the founder and former CEO of Concur, is managing director of Madrona, the Seattle-based venture capital firm that is among the four investment firms that acquired Direct Travel Inc. on April 2. 

Singh told Skift the investor group is keen to create a “next-generation” travel management company that would offer a seamless connected trip in which all of a traveler’s airline, hotel, meeting, ground transport, and appointment bookings would be integrated, allowing for far simpler itinerary changes. For now, it’s an aspirational goal, one the industry has long wanted but that has proven tough to attain. 

Travel management companies sell multiple technology platforms to serve customers and “the result is that it is very expensive to build and run a TMC,” Singh wrote in a blog post explaining the investor group’s view of how the managed-travel industry should