Monolith mergers: Is there an alternative to the global megas of corporate travel?

The ongoing investigation by the UK Competition and Markets Authority (CMA) into American Express Global Business Travel’s (Amex GBT) acquisition of CWT raises important questions about competition in the global corporate travel industry.

Specifically, will this merger give Amex GBT an unfair advantage, resulting in a substantial lessening of competition?

Having experienced a similar scenario during my time in leisure travel, when the Competition Commission investigated the 2011 merger of Thomas Cook and The Co-operative Travel, I’ve seen firsthand how these situations unfold. I was part of a team that manage the Co-operative Travel’s submissions to the process, working with legal teams and economists as well as subject matter experts across the business to convince the authority that the deal was good for the customer and wasn’t to the detriment of the market.

At the time, that deal was projected to save the combined business over £35 million each year and create the UK’s largest high-street travel retailer. In a similar way to today there were concerns of creating an unassailable giant, and with it, unfair advantage and reduced market competition. But history tells us that rather than creating unfair advantage, the 2011 deal was ultimately a factor in the demise of the Thomas Cook Group in 2019.

Competition in the travel industry: Then and now

If there’s one thing I learned from that experience, it’s that the travel industry is fiercely competitive and highly innovative. New players enter the market almost daily, challenging the status quo. Barriers to entry are low, making it possible for ambitious entrepreneurs to launch new ventures with the help of excellent consortia and independent counsellor options, where they are given the tools and licenses necessary to display their skill and expertise.

Owning content has always been a factor in the leisure space and the vertically integrated Tour Operators of the 80s, 90s and 00s certainly ruled the roost. But, more recently, dynamic packaging agents and online travel agencies (OTAs) have run rings around them. Meanwhile, niche businesses specialising in luxury travel and off-the-beaten-path destinations have thrived. The UK leisure market has as healthy and competitive as ever, so the concerns about the Thomas Cook merger never materialised. The same might hold true with the Amex GBT/CWT deal but I feel obligated to reflect on the aspect of competition in this deal.

Competing in a global market: Is one size ever enough?

Even traditional ‘megas’ don’t own everything in every market. Solutions vary depending on the region’s needs, and reflects the need to be different in different markets, so offering a ‘one size fits all’ solution just isn’t practical. Each market demands a different approach, much like how legal systems vary worldwide, which is why you won’t find one solution for all, it doesn’t exist. In the same way that the law is different the world over.

At Clarity, we’re a founding member of OneGlobal, a community of travel management companies (TMCs) around the world. Our local market experts know everything there is to know about their territory and are equipped with the people and technology to serve those markets in the very best way. What they don’t know about their region isn’t worth knowing! Together, we ensure the right solutions are provided for each local market.

It might appear more complicated than going with a single global player, we do everything you’d expect from a global data and account management perspective, with all the right people in the right places. But in the same way you wouldn’t want to find yourself on the wrong side of the law in an unfamiliar country without local expertise, you don’t want to get your travel arrangements wrong either. By providing access to local expertise globally, you show your employees that you care about them and their travel experience, which helps to drive compliance and engagement.

While it’s not always the obvious alternative to the global ‘megas’, the broad local expertise and multinational coverage certainly offers a competitive solution.