Editorial: Multinational Deals Are Sprouting

Corporate travel buyers and vendors are implementing automation and consolidation like never before, yielding better travel spending data for many business travel programs who are wielding that data to drive globalization.

While the number of multinational air and hotel deals still can be measured by the dozen, the acceleration of these key business travel trends signals that those deals will soon be counted by the hundreds.

Consolidation of suppliers, particularly airlines and agencies, into fewer larger entities can help corporations seeking to leverage travel expenditures by making better data more readily available. However, the reduction in competitors almost always means that buyers will pay more.

Buyers and suppliers are beginning to deploy automation that cuts costs, speeds processes, boosts traveler productivity and eases data gathering. End-to-end travel booking, data management and expense processing products are finally being made ready for rollout. Meanwhile, the rush is on to put up travel sites on corporate intranets.

Aided by new information and communications tools and a more open geopolitical environment, corporations are beginning to see themselves as global entities, and they are looking for suppliers who can work with them on that basis. Acting globally does not mean making decisions centrally, just gathering the data centrally and using it to leverage the company's strength.

Globalization of suppliers is particularly evident when looking at the air carriers, which are virtually melding into four global carriers. United and Lufthansa, along with SAS, have a head start in combining the efforts of their sales forces to go after corporate accounts. Delta is looking to play catch-up in its alliance with Sabena, Swissair and Austrian Air. American and British Airways are raring to get into the game. KLM and Northwest are continuing to work at their frictional relationship.

While the small number of multinational air deals has not substantially increased from last year, events are transpiring that should soon spur a dramatic rise. These include the approach of at least de facto liberalization of airline regulations in Europe next month and the recent move by the International Air Transport Association to allow cross-border ticketing.

The world's largest travel agencies are moving aggressively to court multinational business: Carlson and Wagonlit have merged, American Express has absorbed Thomas Cook, and Rosenbluth and Hogg Robinson of BTI are increasing ownership of international locations. Many second-tier agencies are seeking to compete through alliances like Super Regional Group International.

Pan-European arrangements between businesses and travel agencies are increasing dramatically, from a handful to hundreds, and the fuel that adds to the airline negotiating fire through the leveraging of travel spend data should prove substantial in the next year. U.S. and European multinational firms also are working to manage their Asian and Latin American travel.

Truly global travel supplier contracts do not yet really exist, but many multinational air, hotel, card and agency contracts may soon bloom in profusion. Companies that can track and shift travel spending between vendors in several countries should prepare for a growing opportunity.