2008 Business Travel Survey: Mega Travel Mgmt. Cos. Stir Simmering Pot (BTNonline-Only Content)

In the year in which the mega travel management company pool was supposed to settle following the 2006 WorldTravel BTI breakup, 2007 was anything but calm waters for the four largest global players.

Top management shakeups, organizational realignments, sales claims by Carlson Wagonlit Travel that it had overtaken American Express Business Travel as the largest TMC and furtive investments by BCD travel founder and activist shareholder John Fentener van Vlissingen into rival Hogg Robinson Group created more ripples in the industry, which faces an economic slowdown, rising prices and decelerated corporate travel demand growth spurred by record-high fuel prices and corporate cost-cutting initiatives.

As the year came to a close, privately held Carlson Wagonlit Travel said it had surpassed American Express as the world's largest travel management company in terms of sales by claiming it processed $21.3 billion in sales from the fourth quarter of 2006 through the third quarter of 2007. For full-year 2007, CWT claimed its business travel sales increased to $24.5 billion excluding joint ventures.

Amex officials refuted CWT's claims, but former CWT president and CEO Hubert Joly said prior to the release of Amex's annual earnings report, "This is not a goal in and of itself, but it does confirm the very strong momentum that CWT has accomplished over the last several years, so we are indeed the largest travel management company in the world."

Last year marked the first time Amex publicly reported its corporate travel sales separate from international consumer sales, beginning the practice in the third quarter of 2007. For the full year, it reported $20.5 billion in global corporate travel sales, up 11 percent from $18.5 billion in 2006.

CWT at the very least shortened the distance between itself and Amex following the completion of the 2006 Navigant International acquisition, which at the time was Amex's closest North American competitor. In 2007, CWT processed 11 million ARC transactions worth $7.1 billion. Business Travel News estimates that Amex processed 15.3 million ARC transactions, a 2 percent increase compared with last year accounting for $9.4 billion in sales.

Meanwhile, CWT revised its accounting processes and in doing so was more accurate in excluding non-U.S. hotel, car and rail sales from net worldwide sales figures. As a result, it provided $12 billion as its 2007 net worldwide air sales not reported to ARC and recalculated its 2006 number as $10.6 billion.

In December, BCD's van Vlissingen through Beverweerd Investments, a Netherlands-based subsidiary of his Boron Management private investment firm, purchased a 4.3 percent stake in former partner Hogg Robinson, in which it shared a seven-year relationship in the previous WorldTravel BTI joint venture. In April, another share purchase increased his stake to 13.14 percent, making van Vlissingen the largest single shareholder in Hogg Robinson. As of May 28, Beverweerd owned 16.15 percent. BCD officials have reiterated that the buys are long-term investments and are not a takeover augur.

Though the waters surrounding van Vlissingen's intent are still publicly murky, he carried out a similar industry investment strategy before. In 2003, van Vlissingen disclosed a 6 percent ownership share in Navigant International and later upped his stake to 11.6 percent before it was acquired by CWT, reaping a significant return on investment for the BCD owner.

HRG currently is faced with the impact of a slumping share price, a weary investment community, senior management changes and softening U.S. corporate travel demand.

In November, amid these conditions, HRG began reviewing its North American operations to ensure its alignment within the global model and later added former WorldTravel BTI executive Jim Pagano as HRG North America COO and Lee Fimmen as executive vice president of business management in charge of client retention and strategic development to replace former HRG Canada COO Richard Butterworth and Jeany Zuhde, president of global strategic client management for North America, who had both left the company.

In November, BCD Travel announced that BCD Travel president and COO of the Americas John Snyder would become president and global COO and that BCD Holdings CEO Joop Drechsel would replace Mike Buckman as CEO following his shift to president of Asia/Pacific in January 2008. Buckman plans to retire from the company this year, following the delivery of his strategic plan for the region to the board of directors. In December, former WorldTravel BTI president of the Americas Danny Hood returned to fill Snyder's Americas role.

On March 1, CWT president and CEO Hubert Joly became president and CEO of majority shareholder Carlson Cos., replacing chairman and CEO Marilyn Carlson Nelson and becoming the first non-family member to hold that position in the company's 70-year history. In April, executive vice president and CFO Doug Anderson was named as Joly's successor.

Amex made a series of global executive management responsibility changes and internal shifts in April 2008, including naming COO Priyan Fernando president of the travel management company's customer group, which includes client management and consulting.

The company also named Andy McGraw to the newly created role of senior vice president and general manager of worldwide sales. McGraw previously headed North American sales and client management. Senior vice president and general manager Julie Bottner, formerly charged with Americas operations, became head of global operations.