One-on-One: Amex Intl. Head Eyes Europe

<I>Gatwick, U.K.</I> - As American Express' international division prepares to launch its first co-branded corporate card with a non-U.S. bank, it is focusing on a broader strategy: meeting the needs of the maturing European travel market.

In a recent interview, American Express Travel Services Group international president Charles Petruccelli told BTN about Amex's plans and also quashed persistent rumors that Amex is considering selling its business travel division.

Although Amex is enjoying double-digit growth for its corporate card outside the United States, it has ventured into co-branding to tap previously inaccessible markets, said Petruccelli, who is responsible for all Amex corporate card, business travel and leisure travel activity outside the United States. "We are targeting multinationals, large local integrated companies [such as businesses that consolidate the expense management of all their subsidiaries] and some midsize businesses with large T&E spends," he said. "There are other midsize companies and large non-integrated businesses which we thought could be targeted through a partner with better access to their markets."

The Credit Lyonnais American Express Corporate Card, to be launched before the end of this quarter, will carry the French bank's name and logo plus the familiar Amex blue box symbol. The co-branding has no connection with Amex's joint venture in business travel with French agency Havas Voyages.

Charge card companies such as Amex and Diners Club sell a high-value proposition because their data operates in a closed loop: It is captured, managed and supplied by one organization rather than an assortment of banks and is therefore theoretically more accurate. But Petruccelli said that partnering with another bank would not open the loop and thus diminish the integrity of the Amex name.

"Data will be in the same loop as before; there will be the same content as the Amex corporate card," he said. Furthermore, he added, the Amex name will be enhanced by association because it will co-brand only with high-quality companies.

Although the co-branding is Amex's first with a bank outside the United States, it is not its first overall. It inked a deal in Australia last year, and the company is just as likely to undertake future card ventures with other travel industry players as with banks, Petruccelli said. He said more deals could be expected soon, although he would not say where or with whom.

The co-branding is developing as Petruccelli seeks more ways of integrating Amex's card and business travel operations. He firmly nixed suggestions making the rounds in Europe that Amex is looking to divest its business travel operation. The strategic reason for selling, the rumors go, is that the business travel divisions exists mainly to provide more clients for the card business. Because the synergies between the two operations are not as strong as they might be and the card can be used easily in conjunction with any travel agency, there is little logic in retaining business travel.

Petruccelli denied this suggestion point blank and contradicted a few other long-standing rumors. "There is no question of selling travel," he said. "The balance sheets of the card and business travel have always been kept separate, so that we don't have one subsidizing the other or business travel subordinate to the card."

He sees two major trends emerging in the international arena. "Corporations want to integrate their T&E management, and they are moving away from buying toward reengineering and optimizing expenses," he said. "What is important is not to renegotiate volume but to say, 'this is my spend. How much can you help me save?' "

The recent deregulation of the European aviation market has helped accelerate the reengineering process, Petruccelli believes. With more need for high-quality fare reseach and route opportunities, travel management has become "more complex and difficult to understand," he said.

Amex is evolving as a consultant to meet those changing needs, and that is one of the reasons for Rome, its automated end-to-end technology collaboration with Microsoft, to be launched later this year in Europe, shortly after debuting in the United States in May or June. Petruccelli said it is vital for global clients that Rome should launch promptly in the international market because it is intended to be a global product.

There is a clear demand from certain segments of the international Amex customer base for a product such as Rome, he said. He estimated that anywhere between 15 and 30 percent of the overall business travel market would be interested in the product, but added that he would not target only those sectors.

"It depends on the complexity of the structures of the company, not on the sector they are in," he said. "The more complex their structures and processes, the more they will want integrated T&E management. In Japan, they pay more attention to process management and service delivery. In the U.K., the entire process is in demand because companies there are maturing very quickly."

Germany also is moving fast toward integrated solutions, according to Petruccelli, and demand for cards is rising rapidly in France, where only three years ago travel managers saw little use for them because they thought they would not be able to control their travelers.

Petruccelli believes this evolution toward sophisticated T&E management is a combination of both increased client demand and of successful client education. "First, we try to listen to customer needs; then we start to develop the thinking process together," he said. "And I think it is going to move much faster. Unless you optimize your expenses, you cannot have world-class economics. CFOs and CEOs are beginning to understand that."

It is partly for this reason that these days Amex is finding itself addressing a wider constituency within the corporation than just the travel purchasing manager. However, Petruccelli stressed, "We have not eliminated our former interlocutors." Instead, travel managers are becoming more involved in reprocessing, as are CFOs and finance departments, which in turn gets the financial managers more involved in travel management. Consequently, Petruccelli believes, the travel manager will increasingly have wider responsibility.

"My advice for travel managers is to have a good understanding of purchasing and processes," Petruccelli said. "Travel managers and Amex are two sides of a coin, playing the same role, which is to optimize expenses. They do it internally, and we do it for them externally.