CEO Remy Details Expedia Corporate Travel's Rapid Global Expansion

Expedia Corporate Travel president and CEO Jean-Pierre Remy last month spoke with BTN editor-in-chief David Meyer and travel management editor Seth Harris at Corporate Travel World about ECT's growth in Europe, garnering large corporate accounts and adding offline service.

BTN: How did Expedia Corporate Travel grow during the past year?

Jean-Pierre Remy: We enjoyed a very strong growth in 2006—50 percent plus, year on year. We expect the same kind of growth for this year. Something that is not so well known, especially in the United States, is that we actually have built a very strong presence in Europe. It's likely that in 2008 more of our revenues will be generated in Europe than in the United States.

BTN: When you say growth, are you talking about new clients or existing accounts?

Remy: It's more new clients. Now we already have some clients with whom we do business in more than 15 countries in Europe. We have more than 1,500 corporate customers in Europe.

BTN: HSBC recently has become one of your large corporate customers. Are you focusing on accounts of that size now?

Remy: If I look to the overall developments of ECT over time, it's very true that four years ago we didn't exist and we practically made no bookings. We made more than one billion last year. It's very true that the first three or four years of our existence we really built out the size of our business and also the credibility of our offering with small to medium-size companies. Over the last six months, we see more and more Fortune 500 companies that sign and talk to us. Probably 30 percent to 35 percent of our business worldwide is made up of Fortune 500 companies of the total gross bookings.

BTN: How does that growth stack up to other travel management companies in Europe?

Remy: Our size in France today is maybe about one-third the size of the big two: American Express and Carlson. We are really one of the leading travel management companies in Europe. We are very strong in France, very strong in Belgium, the Netherlands and the United Kingdom. We launched Germany at the end of '06 and we are just about to launch Italy and Spain in the coming months.

BTN: Why have larger clients been moving over to the ECT platform?

Remy: We don't have the weaknesses we had before on reporting and global presence, which were two challenges for us. On reporting, we have one of the best applications today and global presence is something we have been building very strongly. Now they reconsider us as strong potential partners, and when they look at the different options they have, one of the main differences with us is this integrated solution of service, technology and content. You won't reap all the benefits from online if you don't raise your adoption, so adoption rate per se is not a goal. It is just a means to something that is much more significant, which is the automation of the processing, the control on your spend, the control that you have on your policy, the control on your data and your travel information as a travel manager, whether it is pre-trip, during the trip—when you want to see where your people are at any time—or post-trip, when you can really check how you are doing against your travel policy and against the commitment you have made to your different travel partners.

The strong integration between technology, savings and content really allows us to deliver greater control, consistency and savings to clients. We talk to a lot of companies today that say "OK, I have some solution. I have achieved 40 percent online adoption and it's very tough for me to grow to 45 or 50 percent. How can we bring it within reason to the next level? If small companies can achieve 80 percent, why not me as a very large client? Maybe my organization is more complex and it took me more time, but why should I not achieve 80 percent now?" That's where we have a lot to bring to the market.

BTN: Is there really room to grow another 50 percent in the next year?

Remy: If you look at the market growth in Europe, it's huge. Online travel is booming there. Today, the European market is like the United States three years ago. For a lot of companies, it's the first time that they moved online. The United States is at a very different stage. It's more about renewal, this 80 percent challenge, but Europe is very much on the first stage.

BTN: What kinds of investments have you made to keep up the accelerated growth pace?

Remy: We are accelerating our growth now for 18 months. We have made a lot of investment in the technology side, but also in sales and marketing and the content side. I can't give you a ballpark in millions of dollars, but today we have the same size sales force in the United States and in Europe, more or less. All together, we have more than 200 people in sales and marketing.

BTN: At this point, do you have a sense of penetration of online booking in Europe?

Remy: We have 80 percent to 85 percent online adoption in the United States and in Europe. We actually have 85-plus percent in the United States and 77 percent or 78 percent in Europe. It's very different by country. I estimate overall online booking penetration to be 20 percent to 25 percent in the United Kingdom, which is the most advanced country. Interestingly enough, in France and Germany small and midsize businesses are well ahead of the very large companies, but not more than 12 percent to 15 percent. Northern Europe is the same thing and the south of Europe is well behind as Spain and Italy are just starting.

BTN: Are the Nordic countries, which are more advanced in online booking, fertile ground for ECT?

Remy: Not really. The way we look at our growth, we have five strategic markets in the world: The United States and Canada in North America and the United Kingdom, France and Germany in Europe. That's where we focus all our efforts in terms of sales and marketing. When we sign new clients there, we have to provide them with as much coverage as we can, but the way we cover northern Europe and southern Europe is more to provide service to the clients that we sign in these strategic countries than to go after local ones. It will be the same for Asia/Pac.

BTN: What level of offline services are you providing to your customers?

Remy: We have customer service centers like the ones you can find with Amex and Carlson. We have national service centers in our strategic markets: two in the United States, one in France, one in the United Kingdom and one in Germany. We are now opening a new one in Marseille for southern Europe—an extension of France plus Italy and Spain. All of them in Europe are in-house. It's a mix of in-house and outsourced in the United States. We have launched two new service centers. One in Tucson, Ariz., is for U.S. clients, especially large corporations who have a lot of international travel. The big difference for us is we expect our people not only to book a flight for the most complex transactions, but also provide real online support.

BTN: Are you looking to provide integrated service with expense reporting?

Remy: We have made the decision not to build our own tool or to link with any specific tool. Our approach has been to link our system and our technology with as many solutions as possible. We have clients working with SAP, Ariba and Concur and sometimes local solutions. In France, you have small companies providing this type of service.

We build easy-to-use connectors and solutions so we can link with any kind of system. That has been our approach for not only expense management, but integration with accounting systems and HR. We really want to remain focused on travel. We want to add additional information and services around travel and be as open as possible to link with all the information systems of our clients.

BTN: What are ECT's plans for other markets?

Remy: We have very strong plans within the coming months to enter Asia/Pacific before the end of the year. Our goal there is not to go and sign local clients, but more to bring support and local service to our international clients.

There are a number of countries—China, India, Australia, Japan—where we have to be. Our goal is probably not to be in 100 countries tomorrow, but to be in all of the relevant countries in which our clients do business and want to have control on their travel spend. They typically ask us to have control of 95 percent of their travel spend. To go after the remaining 5 percent costs us a lot, but also costs them a lot with low return. It requires us to expand our coverage to Asia/Pacific.

BTN: By year-end, which of the major Asia/Pacific markets will you enter?

Remy: Asia/Pac is not a major objective for this year. What I just want for this year is for us to make our first step there, set up some operations and start working with some clients and we'll see from there.

BTN: How are you going to provide the service to your clients in the region?

Remy: We will probably partner locally. Expedia Inc. has some presence in all these countries, one way or another. We can either partner with our partners already there—providing that they have corporate travel experience—or we can partner with local providers. We can leverage local presence. What we want to bring is our technology and also the consistency in reporting and data management.

BTN: Do you have the workforce that you need in the United States and Europe today, or are you planning to add additional manpower?

Remy: We have to continue to expand our team so that we can continue to support the 50 percent growth, year on year, but when I look to my teams in the United States and Europe everything is there. We just need to make sure that we continue to add talent, management and so on, so that we remain focused on our businesses and we continue to grow these businesses.