TCG has posted an initial response to last week’s announcement regarding American Express Global Business Travel (AEGBT)’s acquisition of Hogg Robinson Group (HRG), based on feedback from multiple internal TCG subject matter experts.

THE IMPLICATIONS OF THIS ACQUISITION ARE SIGNIFICANT AND RUN MUCH DEEPER THAN MERELY A SUPPLIER CONSOLIDATION EVENT.

THIS EVENT SHOULD SERVE AS A CATALYST FOR ORGANIZATIONS TO FUNDAMENTALLY RETHINK PROGRAM STRATEGY, SUPPLIERS, MANAGEMENT AND OPERATIONAL DELIVERY.

  • Due to regulatory and other closing requirements – which are still pending – the current Travel Agencies are likely to remain separate for an extended period
  • Based on benchmarks from similar historical transactions, this period will range from six to 18 months
  • We expect that with a very few “special” exceptions, there will be no immediate impact felt by organizations – some unique client specific situations only
  • TCG has forecasted this accelerating trend of supplier consolidation in response to the changing role of the Travel Agency for supporting organization programs in the market
  • While the large agencies continue to consolidate in an attempt to maintain or grow market share, benchmarks show that 71% of organizations managing global programs use two or more travel agencies, sourcing best in breed suppliers to support company strategic plans vs. the traditional agency bundled support model
  • Historical benchmarks show that 1 in 4 of the large agencies would elect not to bid in a competitive global sourcing event – this consolidation will further disrupt the market dynamic and force organizations to reassess the sourcing event business case and ROI projected outcomes as part of a broader program strategic roadmap
  • The continued aggregation of suppliers, combined with maturing of global programs, dictates that organizations approach agency sourcing, oversight and program operational enablement in a fundamentally different way
  • Regardless of agency or program size or scale, market benchmark averages still show only $0.59 of every dollar of total program spend is managed by the designated Travel Agency(s)
  • Leading organizations continue to look holistically at how best to manage, integrate and optimize total program spend across Travel, Meetings, Payment and Expense Management – leveraging the agency(s) as operational enablers of a broader Total Cost of Ownership (TCO) strategy

If there are imminent strategic or program issues created by this latest supplier consolidation, feel free to contact TCG Subject Matter Experts for a more in-depth discussion.