Andrew Winterton
American Express Business Travel identified Latin America and the Caribbean as one of its fastest-growing regions with total sales growth of 20 percent in 2006. The company appointed Juan de Lapuerta to the role of vice president and general manager for business travel in that region, reporting to senior vice president Andrew Winterton. The Transnationalspoke with Winterton this month in Miami about his oversight in Latin America as well as other topics regarding global supplier relations.
It sounds like your role is changing a little bit, vis-à-vis Latin America. Can you explain those changes?
My background has been traditional supplier relations, which we globalized about 3 1/2 years ago. About 2 1/2 years ago, I took on our Travel Services Network International (TSNI) business, which is a business we have had for a long period of time. Its background has predominantly been about servicing all Amex customers when they are out of their domestic market. Over the years, that has also evolved into business travel servicing. Latin America and the Caribbean is the final region in which we separated the responsibility for corporate card and business travel. It is a region that is growing very strongly. And it is one where we had been working seamlessly with our partner network (which is a subset of the TSNI business) that we use to service our business travel customers. We work with our partners in Mexico and Argentina, where we have a very large proprietary business, to help meet our customer service needs, as well as in other markets where we serve our customers through our partners. We only own businesses in Mexico and Argentina, where we have our own corporate structure in business travel.
What value are corporations seeing from airline alliance contracting?
When you look at the global alliances, there is obviously a lot of marketing and positioning. The real challenge is in the execution, and there are huge variances--by alliance, by region, by market--on either their ability or infrastructure to do that, and on the service delivery side, to deliver that to customers or individual travelers. In the evolution of these alliances, if you benchmark where they were 10 or 15 years ago, and where they are today, regarding the value proposition, it is fair to say it has improved. But it is an individual decision, either for the individual corporation or the individual traveler, about whether the benefits are being received. Our view, very simply, is that you really want to contract with the person delivering the product and service to you. If something goes wrong, you need to look at the person who is responsible. We see changes, but they have to be very carefully evaluated on the value they are actually creating. The suppliers have a very tough business model to try to make money on, as well as the customers, who have very tough requirements. Corporate travelers are very demanding.
Given the regulatory requirements and the amount of time needed to work through alliance bids, how can you help clients understand the potential merits of an alliance contract before you commit several months to the process?
We have been through the process many times with our customers. In our advisory group, one of the fundamental roles it plays is to help clients understand if it is worth the investment to go through the process. It is a question of very simple math. If one side is coming to you with 2+2=3 and the other side is expecting 2+2 to equal 5, however hard you work, there is not commonality. Understand what it is you are looking for and ask if it is in direct conflict to what the others are looking to get out of it. If so, it probably is not a good investment to go forward. However, given the nature of your commercial footprint as a company, sometimes it makes sense to have a more complex relationship with airlines. There is all sorts of documentation involved when you get into it, so you have to be fairly clear that there will be a return on the process. And that is where it comes down to the details, and not just the positioning.
Regarding lodging, some customers that have built, or are building, long-term relationships with hoteliers are frustrated by rate increases, which in some cases have been significant, especially in emerging markets where supply is tight. What recourse do they have?
It is the standard economics of supply and demand. The hotel industry is fascinating for its fragmentation. We have invested significantly in a product we call hotel hub, where we are looking to bring content to corporations in a much more effective manner--not so much here in the domestic U.S. market, where it already is very effective, but internationally where we can bring far more content together. We are doing it in France first, because it is a market that has all sorts of different products there, which are not automated. Rather than announce a global product and have it in every market, we have a product in one market and are looking to globalize. It is basically technology that will allow us to aggregate all the appropriate, relevant content for a customer, whether it is a two-bedroom bed and breakfast in a provincial town near to a customer's factory all the way to some major chains who do not participate in any automation on an international scale. We seamlessly bring that into our system process--data collection, the way we present it, etc.--and that allows us to get common content to the display that is relevant to the customer. That helps with the supply and demand. In terms of long-term relationships, every industry operates within supply and demand. For your shareholders, you have to responsibly use that dynamic. Shareholders would not be happy if you discounted your product when you did not need to but they also would not be happy if you lose 50 percent of your customers by next year. So there is that balance. Where we are involved, through our advisory services, that is what we try to encourage. There are those who over-leverage their position. It is important that when the tables change, that is acknowledged by the partners. If somebody has really pushed you one year, you have an opportunity the next year to make sure there is that mutual respect and understanding.
High-speed rail is gaining even more traction in Europe, but there seem to be some challenges in aggregating that content. What is American Express doing on that front?
In the large markets, we have very good relationships with the rail providers. There is a drive for better automation. There has been a huge technology upgrade. All the way down the chain, there is work to be done, and we are pushing very hard on behalf of our customers to make sure that everyone in that chain steps up to the line at the appropriate time. There is a lot of work in France, a lot of work in Germany ... Eurostar is probably different than most of the rail companies in that they participate in the global distribution systems and have been upgrading their technology to go through all of that. Within all of the domestic markets, we are fairly well integrated--I say fairly well, because there could always be a rub--with the rail providers, both online and in traditional channels. As time goes by, that position may change, but I would think for the better. As people are looking to grow and there are more competitors coming in, it makes sense to exploit the corporate market as best you can. It is an interesting time because rail is looking very much to compete with air in appropriate markets. It is an interesting paradigm when you see that Germany's Deutsche Bahn has principal competitors that are domestic German airlines.