American Express Global Business Travel’s chief executive
officer Paul Abbott spoke to BTN Europe shortly after the company announced its
planned acquisition of CWT in a deal worth $570 million that will bring
together the world’s largest and third-largest travel management companies.

Announcing the acquisition on 25 March, Abbott said: “Bringing
CWT onto the proven Amex GBT software and services model will create more
choice for customers, more opportunities for people and more value for
shareholders.”

CWT currently has some 4,000 customers with expected total transaction value
(TTV) of around $14 billion and revenue of $850 million in 2024. Meanwhile,
Amex GBT is forecast to achieve TTV of around $31 billion this year and revenue
of $2.5 billion.

BTN Europe: How long has this deal been in the making and was it
only ever on the cards once CWT got its house in order?

Paul Abbott: We’ve been talking to CWT for several months. I think
certainly the fact that the company has put those financial challenges behind
them and gone through a restructuring and the fact that we’re acquiring the
business debt-free is obviously helpful and makes the transaction more
attractive.

BTN Europe: Is it fair to say the deal is primarily about
scale? Much more like your HRG acquisition in 2018 than Egencia in 2021, which was all about
the technology.

Paul Abbott: Absolutely. Egencia was [about]
bringing a software platform into Amex GBT to really strengthen our software
capabilities and to provide more choice to customers. I fully expect the CWT
acquisition to provide more value and more choice for customers but in a
different way. Egencia is a leading B2B SaaS platform whereas CWT has a much
stronger footprint in services, not software. That’s really what brings the
two companies together, right? It’s the opportunity to bring the software that
we have and the services that CWT have together and to provide a lot more
choice and a lot more value to our joint customers.

BTN Europe: Does that work both ways? A lot has been spoken about what Amex GBT can provide to CWT customers,
but is there anything you particularly like at CWT that you can see GBT
customers benefiting from?

Paul Abbott: Their footprint in certain industry verticals is really
attractive. Those are verticals that we’ve been looking to strengthen in our
own business, and they’re verticals that tend to be high-value verticals where
you can really add a lot of value to the customer relationship. So whether
that’s defense and government, whether that’s energy, marine, mining, resources,
media and entertainment, life sciences… these are more complex verticals where
you can really add a lot of value to the client relationship. And so certainly
we see that, and that expertise, as an attractive asset. But fundamentally, step back… it’s an
opportunity to welcome and serve 4,000 new customers and to be able to deliver
more value and more choice than those customers have ever had before.

BTN Europe: This is two big hitters coming together in a market
that’s long been consolidating. How much further can you continue to
acquire? Is that still a part of your strategy?

Paul Abbott: Look at the size of the market. We operate in a $1.4
trillion industry in business travel. I think after this transaction closes
we’d have $45 billion of that $1.4 trillion. So yes, there’s still a
significant runway for growth, both organic growth and inorganic growth.

BTN Europe: Amex GBT has sharpened its focus on SMEs in recent
years and you spoke again about the sector in your recent financial results. This
is another facet of the CWT deal.

Paul Abbott: We had $3.5 billion of total new business wins [in 2023]
and $2.2 billion of that was from SMEs, and then 30 per cent of the $2.2 billion
was from the unmanaged segment. We are actually getting traction in all of
those sub-segments of that $1.4 trillion. That’s why I look at the industry that
way, because if you look at that $1.4 trillion, $900 billion of it is in SMEs
but only $300 billion of that is managed today – $600 billion of it is
unmanaged. That provides a tremendous runway for growth.

BTN Europe: At the other end of the spectrum, for multinationals working with global TMCs, the market
is really narrowing. You must have heard those concerns aired – what’s your
response to that?

Paul Abbott: I think it’s ultimately customer needs that are driving
the consolidation in the industry. Customers want the best software and the
best services, and they want them integrated, and they want them to be
delivered consistently on a global basis. That’s hard to provide –
global software and services integrated at scale on a global basis. It requires
significant investment and significant expertise. Customers also want access to
a marketplace that has the most comprehensive, most competitive content. And again,
they want that proven on a global basis. Customer needs have been changing and
the industry is changing to meet those needs. This is something I’ve been
saying since 2019. I said at the time that you need to have a leadership
position in both software and services to meet future customer needs. That’s
why we acquired KDS, which is now Neo, and that’s why we acquired Egencia.
That’s why we’ve been building out our software capabilities. That’s why 78 per
cent of our transactions are now in digital channels and 60 per cent of them
are on our own software. Customers’ expectations are going to
continue to drive consolidation in the industry because it requires a
significant level of investment to deliver on those expectations.

BTN Europe: Even since the Amex GBT-CWT deal was announced we’ve
heard about the Steve Singh-led takeover of Direct Travel. Is consolidation a
trend that shows no sign of slowing?

Paul Abbott: It’s a trend that’s been continuing [for some time]. Navan
started life saying that established TMCs would disappear. Then they realised
that they needed to build out credible services and so they started buying
multiple legacy TMCs. I think Steve Singh’s investment in Direct Travel shows…
and he talked about bringing the portfolio of products together… it shows that
having a software platform like Spotnana, which doesn’t have scale and doesn’t
have services, is not necessarily the winning formula, right? He said in his
announcement that he wants to be able to bring together the software and
services. And so I think what you’re seeing, frankly, is exactly what we’ve
been saying for five years, but we’ve not just been talking about it, we’ve
been executing on it. We now have the best technology and the best people in
the industry. We’ve integrated the technology and the people, and both our
software and services are proven on a global basis. So I think what you’re
seeing is the market following our lead.

BTN Europe: The CWT deal is due to close in the second half of the
year but some have wondered whether competition regulators might look into it.
Is there any concern about that?

Paul Abbott: We do expect the deal to close in the second half of the
year. As I said, I think we operate in a very large and very competitive
industry. I think that the industry is becoming more and more competitive if
you look across all of the players established… TMCs, new entrants, suppliers…
so it is certainly our expectation that the transaction will close in the
second half of the year.

BTN Europe: You’ve talked about $155 million in synergies. Can you
expand on that… will people be leaving the business? And what ultimately
happens to the CWT brand?

Paul Abbott: If you look at the combined cost base of the two
companies, it’s $2.7 billion. I think you have to keep that in mind when you
look at $155 million of synergies over three years… I think that needs
to be kept in perspective. When you’re bringing two companies together of this
size that have a number of complimentary operations, then yes, there are going
to be efficiencies. In terms of the brand, no decisions have been made on
branding and the go-to-market strategy. That’s something that we will need to
address after the transaction closes.

BTN Europe: How is a deal of this nature different to past acquisitions
now that you’re a public company?

Paul Abbott: It doesn’t change our strategy. Our strategy has been
consistent for the last five years. Obviously we’ve made refinements to it but
our strategic direction has been very clear, whether a private or a
public company. As a public company you have access to different sources of
capital and you have more flexibility in the capital structure but it hasn’t
changed our strategic direction. It hasn’t changed the way that we would
evaluate potential acquisitions. It wouldn’t change the way that we look at the
returns that we’re looking for.

BTN Europe: What’s your sense of the industry response to the
deal?

Paul Abbott: Certainly the response I’ve seen from
customers and from investors has been very positive. I think they understand
it’s consistent with where the industry is going and they see it’s consistent
with our strategy. And certainly I think investors see the significant value
that can be created through the transaction. I also think customers understand that
increasing our investment capacity so that we can invest more in our software
and in our services is ultimately good for them. And I think our customers also
understand that we don’t just talk about providing more value and choice – we’re
fully committed to it. And I think we’ve demonstrated that over the last few
years with the transactions that we’ve done and we are now offering market-leading
solutions to each of the segments that we serve. Our customers can see very
clearly that we are delivering more value and more choice than ever before.