Amex Builds On 2001 Groundwork

Executive vice president and general manager of American Express Corporate Travel Pam Arway recently spoke with Business Travel News editors David Meyer and Ben Chapman about how the company has dealt with adversity, how she plans to roll out new tech tools without stepping up investment and why the world's largest travel management company may not be bringing back many of the employees it furloughed in 2001.



BTN: What were Amex's biggest accomplishments in the past year?

Pam Arway: It was clearly one of the most difficult years in our history. We had to say goodbye to a number of our staff. That was hugely difficult and very trying. But we kept an eye on delivering value to our clients and we made real progress in the amount of value we delivered to our clients.

BTN: How so?

Arway: We used 2001 to do a lot of investment in our business. Probably more than we have in our most recent years. We built a new sales force and they're really paying dividends for us. We invested a lot in technology, specifically TravelBahn, our communications network, which will be finished fairly shortly in the U.S. and then will be rolled out around the world. TravelBahn has really given us the ability to control our future, to provide better information to our clients and to really get a lot of efficiencies out of our network.

It was a year to reengineer our business from a cost standpoint, and our customers have seen the benefits of this. Many clients decided that having a lot of onsites spread across the country was not such a good idea. So we've seen a lot of consolidation of operations, which really gives you a more efficient and streamlined organization. Coming out of 2001, moving into 2002, we're in very good shape. And we're cautiously optimistic.

BTN: What does TravelBahn offer?

Arway: TravelBahn is the foundation of our network. It's our communications link to all of our offices. Previously, we used the communications network of the GDSs; now we've taken control of that. We own our network and we manage it ourselves. Being the backbone, TravelBahn is not all that visible to clients. We're really excited about the things we can do with TravelBahn, like putting fences around the data to create a super PNR, meaning the PNR is held only by Amex. With a super PNR, only the data that absolutely needs to be shared with the GDS is allowed outside of the network.

The information we are able to collect and store for clients is much richer. We're doing a lot of investment in providing detailed data to our clients. Particularly pre-trip, on the Web, via e-mail and so on. Our data is going to get better and better and faster and faster, which is what our clients are looking for.

Plus, the network allows us to access fares of all kinds: Not just GDS fares, but Internet fares, direct connections and so on. So it gives us a lot of flexibility in that area, which is something our clients are very interested in. It allows us to really revamp our point of sales, what the counselors really look at when they're making reservations and makes it much faster and more efficient. TravelBahn is the backbone of what our network is going to look like in 2002 and beyond.

BTN: Is TravelBahn completed?

Arway: I think we're about 80 percent of the way through in North America. Work has already started in Europe and it's going market by market.

BTN: Will you need to invest as much in technology in 2002 as you did in 2001?

Arway: Maybe not quite as much, but 2002 is the year when we'll really get the payback from the TravelBahn network we built in 2001, because we'll be able to build things on top of it. I guess you could say 2001 was the year we built the engine, and 2002 is the year we're rolling out the special options, the things that make the car go faster.

BTN: Will products coming out in 2002 take advantage of TravelBahn?

Arway: Yes. Especially Customer Information Gateway, or CIG, products where travelers go online and adjust their profiles, retrieve their itineraries on the fly—that kind of thing. We feel we have to add value for the client every day because the marketplace is changing rapidly.

BTN: Did online adoption come a long way in the past year?

Arway: We made great progress in interactive bookings in 2001—we definitely broke through some barriers. We now have customers that are close to 90 percent adoption. Probably the most important thing we did in for online adoption in 2001 was the growth and development of our e-fulfillment center. We're taking online bookings out of our standard business travel operations and moving them to a dedicated center that has interactive expertise. This alone has really helped drive usage through the roof for clients and reduce cost.

With interactive bookings, the client actually can see the reduction in cost. And the minute they see the reduction in costs, it's amazing what happens: Travel buyers become really motivated to make adoption happen, and the travelers start to change their behavior, and you really get a huge ramp-up. Our interactive volume in 2001 was up 500 percent year over year, and we're expecting it to go another 400 percent in 2002.

BTN: What does that total up to?

Arway: By 2003, we're expecting a quarter of all of our reservations to be online. We've grown from a decimal point two years ago to around 6 percent and next year we're hoping to track around 15 percent.

BTN: Will the tight economy boost interactive adoption this year?

Arway: It's interesting, because in 2001, we didn't skip a beat in our rollout of interactive solutions. Our regional volume dropped, but our interactive volume held and grew. And that shows that our interactive volume is growing really fast. The tight economy really drives the march to interactive because everybody is looking for savings. With interactive travel management, the savings are very visible, and the experience with it is very positive. It's a home run.

BTN: Another relatively new product of yours, Fee Allocator, also seems to have gained some popularity.

Arway: Yes. The adoption of Fee Allocator is really growing by leaps and bounds. It's a billing product, but really what it does is drive behavior. For example, they can charge nothing for an interactive transaction, and charge a fairly high price for a traditional transaction, if they're trying to drive the employees to use interactive tools. Same with preferred carriers.

Fee Allocator encourages travelers to stay in policy and exhibit the behaviors that the travel manager and the company wants them to exhibit. Most of our clients just pick up Fee Allocator automatically, and we also sell it to other agencies.

BTN: What is your prediction of how business travel volume will fare in 2002?

Arway: Well, I can tell you what we've seen in the past months: We're almost back to pre-Sept. 11 levels. We're just a few points off right now. That's the good news. The bad news is that pre-Sept. 11 levels weren't great, because the economy was very soft in 2001, and travel is always a leading indicator so companies cut back their budgets quickly.

So I'm very hopeful that in 2002 we'll level out to where were in 2001. I hope we don't see another decline. I don't see us getting back to year 2000 levels, where we had record travel volume. I don't see us getting back to those levels until 2003, which I think is pretty consistent with what the airlines are predicting.

BTN: With flat travel volumes will you be able to bring back any furloughed employees?

Arway: I think selectively in certain geographic areas we may be able to bring some furloughed employees back, depending on where the business is coming from. Remember, though, that we're moving to an interactive environment, and with interactive you are able to do a lot more transactions with fewer people. Interactive is a more efficient business model. I don't think we'll have the demand for huge numbers of people that we've had in the past.

BTN: How did 9/11 affect the corporate culture at American Express?

Arway: On the business travel side, our operations are pretty spread out across the country, so we did not have major operations on the travel side that were affected. However there was the exception of our one office in the World Trade Center, and that was a huge tragedy for us. For me personally, for the travel division and for corporate services, the loss of eleven employees was devastating. I don't think any of us have ever encountered anything like that in our lives and we hope to never again. It was very difficult for our whole organization. But most of our operating centers are located outside of lower Manhattan, so we did not really skip a beat, in terms of the operation of our travel services.

From an overall corporate standpoint, clearly it was a big upheaval because lower Manhattan is where our corporate headquarters is located, so immediately we had to find space for 4,000 people. Fortunately, our real estate division found space for us very quickly, and we're all located now in a ring around Manhattan. The Corporate Services business is based in Parsippany, N.J.

Recently, we've gotten the word that our building in lower Manhattan is safe and is structurally sound, and so everybody is very anxious to move back there, beginning in April.

BTN: Has American Express' new CEO Ken Chenault changed the culture of the travel division?

Arway: Ken has worked for American Express for over 20 years so he knows the company extremely well, and Harvey Golub, our former chairman, announced Ken's new role a couple of years before he actually assumed his new position. So we did not see huge changes in direction. In fact, it's been a very smooth transition. Ken is a huge supporter of the travel business.

One of the things that is a slight change for us in the travel division is that we are globalizing our corporate service business. Actually, we've been global for some time, but now we're formalizing things through our new organizational structure. It's a real indication that American Express strongly believes in globalization.