American Express' recent card volume trends paint a far different picture of recovery than past economic downturns, as consumer spending leads the rebound while corporate and especially T&E spending lags behind, Amex vice chairman Ed Gilligan said this morning at the opening session of the second day of the
Business Travel News/National Business Travel Association Strategic Travel Symposium in New York.
In December, which was the biggest billing month in Amex's history, the number of global commercial card airline transactions increased 4 percent and lodging transactions increased 13 percent year over year. Yet, depressed prices in the corporate travel market reduced airline transaction sizes 1 percent and lodging transaction sizes 11 percent. Meanwhile, consumer travel card air transactions increased 7 percent and 3 percent for lodging. Consumer air transaction size increased 3 percent and lodging transaction size decreased just 1 percent.
Gilligan, who left oversight of Amex's commercial segment in October
(BTNonline, Oct. 5, 2009), said non-T&E components are leading the corporate expenditure recovery. "It's a lot different than it was in previous downturns where things bounced back faster, particularly in the U.S. and T&E led the way out," he said. "That is not necessarily what is happening today."
In June, Amex corporate client spending hit the bottom and started to increase each month, showing a "classic V-shape recession and recovery," a view not seen from the consumer side.
"Coming out of this recession now, it is looking more like a consumer-led recovery on a number of fronts, which is very different than what we've seen before," he said. "In previous downturns, it was business spending that led into the decline and business."
Pent-up travel demand is returning, albeit at a much slower rate than the industry had banked on, according to a "bullish" Gilligan.
"I don't see it coming back in robust ways that we can hope for," he said. "I don't think we should plan on robust recovery. We can be hopeful for it, so we have to plan on more sluggish growth."
He added, "In a sluggish economy, all the companies that we work for are going to be working incredibly hard to grow the top line. They've been able to manage the bottom line to some extent by cost cutting, but that's not sustainable over time. There is only so much cost you can cut out of the business and the process. You continue to reengineer, but it has to be about growing the top line, and critical to growing the top line is the role that business travel plays. It's hard to imagine a successful large company that doesn't invest in travel to grow the top line."