skift take
— Dennis Schaal
Much of the discussion around business travel revolves around large companies that have strict travel management policies. We require employees to use authorized tools to book travel with hotels and airlines that offer volume discounts to businesses.
In the first quarter, these companies delivered big profits to American Express Global Business Travel, the world's largest travel management company.
AmexGBT recorded 30% growth, driven by strong deals from global multinationals, particularly technology companies. Other sectors such as pharmaceuticals, mining, energy and utilities also recorded double-digit growth.
But there was also a downside. Small and medium-sized businesses offer the greatest opportunity to win new business, with transaction growth down 3 percentage points between the fourth and first quarters.
These small businesses spend less than $30 million a year on travel, and most let their employees book wherever they want.
You may not need a travel management company like Amex GBT. Additionally, travel budgets have been hit hard in recent months by rising inflation and interest rates, leading to tighter travel budgets.
Amex GBT CEO Paul Abbott told analysts on Tuesday's earnings call that of the $900 billion in annual business travel transactions, “$300 billion is in specialized managed travel programs. “The $600 billion represents unmanaged travel programs.” ”
He said the overall business travel market is worth $1.4 trillion, and “small businesses are the biggest opportunity in that.”
Amex GBT plans to acquire CWT in the second half of 2024
The earnings call focused on some unfinished business, including the $570 million acquisition of CWT, which is expected to close in the second half of 2024, the people said.
Abbott said the companies' combined teams are “well established.”
He said the acquisition would increase the company's revenue by a third and could contribute “significantly” to its bottom line in the long term. Abbott said the “annual occupancy cost synergies” would be $155 million. That means cutting back on staff and other redundant tasks.
American Express Global Business Travel said a recent survey of its top 100 customers found that they expect travel spending to increase by 8% in 2024.
Net loss narrowed, free cash flow positive
In the first quarter, the company's net loss narrowed to $19 million from a loss of $27 million a year earlier.
First quarter sales increased 6% to $610 million.
One of the more positive indicators was that free cash flow reached $24 million in the first quarter, up from negative $109 million in the year-ago period.
Photo courtesy: A business traveler about to board a plane.
