Skift Take
Many mergers, like the planned American Express Global Business Travel Group merger with CWT, face challenges similar to those of in-law relationships.
Corporate travel could become complex: Expedia Group has a significant stake in Amex Global Business Travel. Booking.com is partnered with CWT. What will happen to these relationships if the merger between Amex GBT and CWT is completed?
Amex GBT CEO Paul Abbott highlighted CWT’s partnership with Booking.com for Business as a positive aspect of the deal, as they aim to reach more small business clients.
“As you know, SME (Small and Medium Enterprise) is an important strategic focus area for us,” Abbott stated in a conference call to discuss the proposed merger. “And it also represents an important strategic focus for CWT, who have been focused on expanding further in this area including a relationship with Booking.com for Business….”
Expedia Group, a major competitor of Booking.com, held a 16% stake in Amex GBT at the end of 2023. Expedia also has a lodging supply agreement with Amex GBT that allows its clients access to Expedia hotel inventory for 10 years.
What to Make of the Expedia-Booking.com Mashup
Skift contacted several analysts to discuss the potential competition in hotel supply between Expedia and Booking.com.
“Thereâs room for only one winner at the top of the podium,” said Atmosphere Research Group’s Henry Harteveldt. “Unless there is something in the contracts with either Booking or Expedia that guarantees one of them the place as the surviving provider, I would expect that Amex GBT will have Expedia and Booking participate in a type of bake off where the two make their case for being retained. It would, of course, be easier for Amex GBT to retain Expedia, since they are the incumbent, but Amex GBT may view this as an opportunity for a fresh look â and, perhaps, the opportunity to negotiate more favorable economic terms.”
On the contrary, Richard Clarke, managing director at AB Bernstein, did not see the mashup as a problem.
“Why not have both?” Clarke suggested. “My understanding is there is no cost of connection (for businesses) and this way you can pick the cheapest price of a hotel from each. I believe Trip.com has a similar relationship with both.”
Asked whether China’s Trip.com Group indeed has a supply relationship with both Expedia and Booking.com, a Trip.com executive wouldn’t get into specifics but said, “We are a platform so we do multi-sourcing.”
Amex GBT already has a supply relationship with Booking.com, as well as with the three major global distribution systems, but these seem insignificant compared to the strategic relationship between Amex GBT and Expedia Group.
Expedia Group anticipates that its supply partnership with Amex GBT will continue.
Regarding the implications of the Booking-CWT relationship and its own with Amex GBT, an Expedia Group statement mentioned: “At Expedia Group, we power thousands of partners around the world with our best-in-class API technology and vast inventory. Our long-term agreement to provide lodging supply to Amex GBT was an important step forward in our ambition to power the entire travel ecosystem and help all of our partners achieve their goals. We look forward to continuing our partnership with them.”
Expedia’s Relationship with Amex GBT
Expedia Group’s equity stake and lodging supply agreement stemmed from the sale of its Egencia corporate travel business to Amex GBT in late 2021. Expedia received a stake in Amex GBT and secured a decade-long hotel-supply marketing agreement.
Amex GBT relies on Egencia to serve small and medium-size enterprises â a role similar to that of Booking.com for Business for CWT.
Even more than two years after Expedia’s sale of Egencia to Amex GBT, Expedia still provides transition services related to the deal.
In its financial results for the fourth quarter and full year of 2023, Amex GBT reported a record of $2.2 billion in SME client wins last year.
These small- and medium-size enterprises are defined as those with a total transaction value of less than $30 million per year â and Amex GBT aims to secure more of these deals, especially if CWT becomes part of their operations.
With the expected inclusion of CWT, Amex GBT predicts a 35% increase in its SME business, as mentioned by Abbott during the merger call.