Ron DiLeo
The Transnationalthis week met at the National Business Travel Association convention in Chicago with Ron DiLeo, American Express Business Travel senior vice president and head of corporate travel in Europe, the Middle East and Africa, for a discussion about competitive dynamics in the global travel management company sector, new approaches to call center consolidation and his views on multinational vendor contracting.
How is American Express approaching call center consolidation?
We're taking a virtual call center approach. As online booking continues to accelerate, it creates capacity in call centers. In order for the online environment to work for us, we have to be able to manage capacity really well, otherwise we would lose money on every one of those electronic transactions. We wanted to create an environment so that as capacity is created in any part of Europe, we can sell right into it. When you're able to manage capacity like that, every new piece of business becomes incremental revenue on an existing cost base, and that's a really good place to be. So we're about two-thirds of the way through the implementation. It involves installing workforce management software that enables us to see, in one place, all activity in all the centers we have throughout Europe and gives us predictability on where capacity needs to be created, based on client trends. It also requires the implementation of a telecommunications network that has intelligent call routing, which is sensitive to language skills and allows us to create a client-dedicated environment even if it's in two or three different centers. As we implement new phone systems and so forth, we're doing it very methodically so we don't jeopardize a good service profile just for the sake of a new configuration. It makes it so we probably don't need a new call center any time in the foreseeable future (which can require two or three years before you get full productivity). We have identified the call centers that may or may not be part of the long-term plan, so if sales exceeds capacity, we're hiring in the centers that are part of the long-term plan. The hard work is putting the network together, but we expect to have these capabilities in Europe in the first half of next year.
It seems like the key multinational suppliers for transnational companies are airlines and travel management companies. Are there other key players, such as technology providers?
I think the industry is growing into the technology as opposed to the technology needing to adapt to the industry. I think the reason you're going to have mainly airlines and TMCs in your headlines is a result of their influence on the business. Because of their sheer volume, one small change by the airlines [can have a large impact]. Besides all the TMC [consolidation] activity, we're the ones who grab all these tools and bring them together, which is part of the reason I don't think TMCs would be "disintermediated." GDSs also are influencers, and lodging is a comparatively fragmented part of the business, but they affect things in a different way because of the big value they have in terms of the economies of the [local] markets that they are in.
What's going on in the hotel world that's interesting from a global perspective?
One of the things we have asked our European customers to consider, as part of identifying a hotel as a preferred supplier of theirs, is to require them to be in the global distribution systems. We all do workarounds, but ideally everyone would be in the GDSs. There's got to be a way to make that happen, and it did happen in the U.S. That initiative drove a lot of hotels there who hadn't been there before.
Is there a conventional wisdom in Europe about what airline alliances bring to managed travel?
Even though they have been around for a long time, I think it's still early days. The alliances are doing a much better job of trying to create a single face, which goes beyond how you paint aircraft. It's how you behave and your willingness to do deals and share technology. My first reaction to alliances was that it would cost travelers more money, and I wasn't sure there would be value, but I haven't seen anything that devalues it at all--being able to use a single club program or frequent flyer benefits. I don't know what the long-term effects will be. I think they still have to prove their relevance for the long haul, but I don't think they're going away either. Corporations are still dealing with airlines market by market, whether they are in the same alliance or not, and I don't think alliances sway buying decisions. You could be a big Star Alliance user in five markets, and a big Oneworld user in another five, and they don't compete and everyone's happy. It all comes down to the value you can trade for a discount.
What is driving growth at American Express this year?
A few things, but one of them is the fact that there's so much confusion in the marketplace with all the acquisitions, etc. I thought when that happened, on the first day of business in January, it would be a windfall for us, but what it did was paralyze the market for a few months before we started to gather momentum. So, people needed to see the settling process, and while they were waiting, they noticed travel demand continuing to escalate. So, a couple months of "Let me wait and see," was replaced with "Let me just get on with someone."