It is commonly thought that mergers and acquisitions activity among multinational travel management companies and networks in recent years has limited choice for global companies. At this point, the key players are generally listed as American Express, BCD Travel, Carlson Wagonlit Travel and Hogg Robinson Group.
Yet, there is another set of organizations that lately has been making moves which position its members to better compete with the aforementioned parties. At the same time, some of those parties' traditional arguments about the value of owning their operations have broken down--largely because not one of them owns every office that services its transnational clients.
In one development, Radius won the multinational business of BlackRock Inc., after its acquisition of Radius client Merrill Lynch Investment Managers, which closed last month. Meanwhile, the $730 million ($1 billion AUD) Australian leisure travel giant Flight Centre continues to build its FCm corporate travel networkand GlobalStar Travel Management seems to add new members on a monthly basis.
According to TCG Consulting's Albert Taras, Radius is "looking more like a TMC than they did a year ago. They have stepped up and won some business that is clearly multinational." Investment management firm BlackRock operates in 18 nations, has 4,500 employees and manages assets of more than $1 trillion.
Noting that FCm is "functionally different from Radius," partly in that it owns operations in nine of its 50 nations, Taras said the Australian firm "just won a global bid for a customer of ours out of the Middle East. They are unique because now you have holes in Asia from the BTI split, and FCm tends to be in countries like Cambodia, Vietnam, etc." FCm announced in August its Cambodia and Vietnam partnership, with East Sea Travel & Air Service, completing what it called "the consolidation of [its] core Asian network."
Another difference for FCm is its ownership structure, which may change this month if a proposed buyout offer is accepted. Majority owners of FCm's parent company, Flight Centre, are seeking to take the company off the public market in Australia partly to emphasize the sort of long-term planning that fickle investors do not appreciate.
FCm itself represents a major part of the long-term plan, as Flight Centre recently described the corporate-travel division as offering "considerable scope for further development … good profit growth and significant expansion in just its second full year." Noting that it expects FCm to deliver "at least half" of Flight Centre's overall profit within five years, the company said, "We are now more than just an Australian leisure-travel specialist."
"These are the alternatives to the big guys," said Taras. "The big guys dismiss them, but the challenge is we're down now to three or four suppliers, and that may not be enough for clients looking to have their particular markets covered."
"We have been involved in requests for proposals that originated overseas," said David LeCompte, president of founding GlobalStar member Short's Travel Management. "In the global marketplace, a lot of companies are headquartered in the U.S. and there's more pushing business out to our partners. The megas say, 'They can't control everything,' but we actually can. With technology and everything else, it's about getting data."
LeCompte said one advantage is that some local divisions of multinational firms appreciate being serviced by locally owned agencies rather than units of larger TMCs. "With a mega, you may have a corporate guy there who is working up to be the VP of that region--as opposed to an owner. Most GlobalStar partners are in the top one or two in their markets, outside the megas."