<B> Amex Taps Maritz</B>
<I>Outsourcing Large Co. Mtgs. Is Only The Beginning</I>
By Chris Davis
In a move that will soon affect some of the largest corporations in the country, American Express will outsource its large-market group and meetings travel services to St. Louis-based Maritz Travel Co. In return, Maritz will market the American Express Card as a "best-of-breed option" to its customers, two-thirds of whom already are Amex cardholders.
This isn't a joint venture and there is no equity involved, "we just want to tap into Maritz's core competency and they want to tap into ours and add value to our customers," said American Express Corporate Services president Ed Gilligan at the National Business Travel Association conference in Minneapolis last month.
Small-market group and meeting travel operations, defined by American Express as smaller than $10 million of total annual travel volume, will continue to be handled by American Express One, formed in March when the company acquired Mt. Laurel, N.J.-based TravelOne and merged it with its own small-market group services operation (Meetings Today, April 26).
Amex, however, will continue to handle ticketing and booking for large group and meetings accounts that require air-only arrangements. It will handle those accounts at its Norcross, Ga., group travel desk or at a client's onsite facility. American Express vice president of customer solutions for business travel customer service Carole Fletcher-Fitchko said the company has the purchasing power to remain strong in this area, plus their agents are familiar with American Express' booking technology.
While the move is official, Fletcher-Fitchko said the transition of group travel accounts from American Express to Maritz would occur through December, after officials from both agencies personally meet with clients. After the meeting, American Express clients will negotiate directly with Maritz. Though they will be apprised of developments in negotiations, American Express will not act as a middleman between their clients and Maritz, she said.
"We were never quite good at handling the land side," Gilligan confessed. Many of their corporate travel or corporate card clients, Fletcher-Fitchko said, already have insourced or chosen another agency for their group travel services.
"We have not solicited the group travel land operations of our existing client base," Fletcher-Fitchko said. "It's important for each client to get someone who specializes in and focuses on their area of need. We have made a business decision not to invest heavily in group travel services. We focus on corporate travel and purchasing products."
Maritz president Mike Boland said the agency would target the largest clients first and roll it out in an organized way, and by year-end, "will have a significant number of clients, not just a handful, but we don't want to just open it up to all American Express clients."
"Right now," Gilligan said, "we are comparing customer lists and some American Express clients will be introduced to Maritz in the very near future. And we think that there is more that we can do in developing Internet applications and meeting cards, so we think this is going to lead to future development and innovations by working together."
Boland and Gilligan identified Dearborn, Mich.-based Ford Motor Co. and Chrysler as two large accounts that they already share in common. Another is Redmond, Wash.-based Microsoft, where corporate travel manager Zoe-Ann Bartlett said there was no dissatisfaction with American Express' performance.
"Actually, American Express went above and beyond their position within this environment, since they handle the full meeting planning function," Bartlett said. "But it's not where their forté lies. This is a very positive development, and we're anxiously waiting to see the game plan for the transition. We don't really have too much more information yet, and we're getting more research together."
American Express customer John Asselta, director of meeting and travel services for KPMG in Montvale, N.J., who is responsible for 150 meetings a year, said that "this can only help. We are anxious to see how this will improve our meetings business as this is something we were looking for from Amex."
The negotiations with Maritz, which formally began at the beginning of the year, were smoothed by the fact that the companies had launched a joint venture in 1997 to introduce a stored-amount debit card for corporate incentive programs (Meetings Today, Jan. 26, 1998). That program, dubbed American Express Incentive Services, has reaped hundreds of millions of dollars worth of sales, and is growing by about 20 percent a year, Amex said.
"We know what they're like as a partner," said Ellen Mughal, Maritz director of marketing. Fletcher-Fitchko acknowledged American Express considered other agencies besides Maritz, but wouldn't say which those were.
The move didn't exactly send aftershocks through the meetings industry, as Amex had long been rumored to be seeking a partner for its group travel function.
Rigsby Barnes, general manager of the meetings and incentives division of Atlanta-based WorldTravel Partners-BTI Americas said his agency was not interested in partnering with American Express. "All we've had time for is merging BTI Americas into our framework," Barnes said about the October merger (<I>BTN,</I> Oct. 26). "I'm not surprised by it, and I think it's smart because they do not emphasize that business segment."
Barnes said he does not see the deal affecting WTP-BTI Americas. "There will be competitive bids from time to time, but this won't impact us. We look at group and meeting travel as a core offering and a differentiation," he said.
Mughal said about 65 percent of Maritz's clients already use the American Express card. "We don't always endorse one product, like an online booking service or, before this, a corporate card," she said. "Now, we consider the American Express card best of breed.