Mergers and acquisitions were undoubtedly the headline in 2021, as corporate travel agencies regrouped after a grueling year battling the pandemic.
There’s always been murmurings of consolidation in the corporate travel sector, for a variety of reasons. Pre-pandemic it was mostly about founders of smaller, perhaps older, travel agencies deciding to call it a day, cash in and sell up to a rival. But consolidation escalated in 2021.
The bigger moves included American Express Global Business Travel buying Egencia, TripActions acquiring Reed & Mackay, and TravelPerk entering the UK with its acquisition of Click Travel. Even banks are buying travel-booking platforms. There’s more of a rundown here.
This all matters because the entire landscape is about to change. Not in 2022, maybe not in 2023, but whenever the true picture emerges of the dominant travel agencies (and there won’t be many) is the point when companies and their travel managers will react.
Travel managers and buyers choose their agencies for a variety reasons. Alliances are based on more than commercial terms; there’s culture, service, geographic locations and more. Yet all these go out the window when the agency they picked gets swallowed up by another one, and they discover the brilliant piece of software or booking tool they originally picked is being made redundant.
One startup agency CEO said travel managers simply weren’t feeling the love, or the attention. “You pick up the phone, the agents aren’t the same, your account managers aren’t the same. They’re focused on integrating their new businesses,” said TakeTwo Travel Solutions’ Chris Thelen.
Unfortunately there will be job losses over the next few years. New owners will look for efficiencies and won’t tolerate overlaps. And while most agencies restructured in 2021, the jury’s still out on how much less corporate travel will be booked.
There’ll be a lot of account swapping over the next few years, which will lead to disruption, and eventually provide more opportunities for a “third generation” of travel agency to sweep in.
A year before the pandemic, Skit’s Andrew Sheivachman pointed out that consolidation creates travel brand bullies. Admittedly he was writing about the wider travel industry when he said “travelers have no choice but to tolerate the effects of consolidation on the travel ecosystem. The good news for smaller and emerging travel companies, though, is that while big competitors are focused on beating each other, there is fertile ground below to work on the technology and products that will push forward the more stagnant segments of the industry.”
But it holds true for the business travel sector, and we’re already seeing several startups pick up the pace, including blockchain-based companies like Concur co-founder Steve Singh’s Spotnana brand and airline-focused Winding Tree, not to mention smaller boutique agencies that will pick their battles on specific routes.
And we may not have heard the last of SPAC, or special purpose acquisition company, mergers either. Amex GBT sneaked in an upcoming deal with a so-called blank-check company backed by manager Apollo in December, with a view to become a publicly traded company in the first half of 2022. Depending on the outcome, it may just whet investor appetite even further.