American Express Business Travel and Carlson Wagonlit Travel last month separately announced transactions designed to boost their respective presence and capabilities in Spain, a travel management market that both companies said is beginning to mature.
While the country still typifies southern Europe--versus northern Europe and the United States--in its greater emphasis on personal relationships, vouchers rather than plastic and onsite travel agents over remote service centers, both Amex and CWT are building for change. Consolidation, meanwhile, is beginning to grip both the business and leisure travel sectors, their executives said.
Amex in December signed a joint venture with Barceló Business Travel, which took effect last month and builds on Amex's similar partnerships in China, Italy and Japan. With a combined workforce of more than 450 professionals and more than 400 customers, the new venture will focus on large corporate accounts and meetings and incentives. Barceló is part of hotel operator Grupo Barceló.
Just a few days after the Amex announcement, CWT on 23 January said it had acquired Viajes Mapfre, the in-house travel agency of insurance company Mapfre. "The transaction encompasses business travel management, meetings and events and leisure travel activities in Spain," with annual sales of about €60 million (US$87 million), CWT said. About 40 percent of that business is with clients outside of Mapfre, the companies said. The agreement also calls for CWT to be Mapfre's TMC in Spain "for at least three years" and to "possibly" service the firm "on an international basis." Mapfre "will become the preferred travel assistance service supplier of CWT, [and] CWT will also promote their medical insurance to its employees in Spain."
American Express by April plans to merge Barceló call centers in Barcelona and Madrid into its own business travel centers in the same cities, according to Ángel Butragueño, managing director of American Express Business Travel in Spain. The partners will retain a number of corporate onsite offices and will emerge with two-thirds of its employees from Amex and one-third from Barceló. "They have more small- and medium-sized clients; we have more multinationals," said Butragueño.
CWT executive vice president for the Mediterranean and Latin America Marino Faccini said Mapfre had closed down some facilities before the acquisition. "We don't anticipate closing down more units, at least this year," he said. Asked about potential job cuts, Faccini said, "We agreed to integrate what they have and look at the results, like we have been doing for our own network. So I would say, today, no. After a few months, we'll see what happens."
Nevertheless, Faccini suggested that consolidation and possibly job losses are likely to characterize the broader Spanish travel market for some time. "In Spain, for the time being, it is the country in Europe with the largest number of travel agencies per inhabitant. It is still a fragmented market. There is no way so many travel agencies--more than 10,000 for a population of about 40 million--can survive for so much time. Globalization is arriving. We are seeing more or less every month a joint venture, a purchase of or a capital investment in a travel agency by a company, a ship company or, probably, an airline. The market is becoming, slowly, but surely, more mature and more globalized. The global players are coming, and they are buying."
Butragueño also noted that in Spain "There is a lot of concentration. There is a lot of conversation about what is happening in this market, with Amex and CWT--but as well on the consumer side, where there is a lot of consolidation between tour operators."
Supplier-side concentration parallels changes in travel management practices, the executives said--although change may still come at a slower pace than multinational buyers have seen in other markets.
"Travel management is [now] more professionalized as well within companies," said CWT's Faccini. "They are working on savings, statistics, reports, added value, security, tracking of travel, consultancy--things that we didn't even talk about five years ago."
"Commissions were cut only two or three years ago," said Butragueño. "We were still giving rebates to customers. [Onsites] are very good from an emotional point of view, which is the culture we have in this market. We also have what we call billbacks--a voucher the customer gives to the hotel instead of a credit card. But we will see market evolution."
Some of the evolution is driven by global clients, whose needs will push Amex to require its new partner to meet "common, standard processes that will mirror the Amex standard, especially for multinationals," Butragueño added. Those guidelines are under development. "We will be flexible enough to address the needs of the multinational customers, as well as the local large, small and medium enterprises," he said.
According to Butragueño, between 10 percent and 15 percent of Amex's bookings in Spain are made online by travelers, compared with less than 5 percent for the market as a whole. Faccini guessed that the nation averages 3 percent, compared with about 8 percent "online, untouched transactions" for CWT clients last year--"which is a lot compared to three years ago."
"International TMCs are more under pressure to use self-booking tools," said Faccini. "The local companies are interested in using self-booking tools, but to implement it is a little tougher."
Unlike Amex's, the CWT deal in Spain also contemplates business in Latin America, where Viajes Mapfre has small operations in Argentina, Brazil and Chile. "We are finalizing the integration of their travel in South America within Carlson Wagonlit locally," said Faccini. "They also have business in the Dominican Republic and Venezuela. We are analyzing those opportunities with our partners there."