American Express this month announced progress toward a proposed business travel joint venture expected to close in the second quarter. Amex would hold half and, in exchange for $900 million, an investor group led by Certares would hold the other half. That group also includes Qatar Investment Authority (through wholly owned subsidiary Qatar Holding LLC) and funds managed by BlackRock and Macquarie Capital. Certares founder Greg O'Hara will serve as chairman of the JV while Amex's Bill Glenn will be president and CEO.
Amex in January had named Glenn to lead the Global Business Travel operation. During the preceding two years, Glenn oversaw business travel and corporate payments as head of the company's Global Commercial Services, a division that won't officially exist once the JV is finalized. Prior to his role at GCS, Glenn led Amex Global Merchant Services. He spoke last week with The Beat's David Jonas about the JV's development, priorities and his "cautious optimism" on business travel demand trends. Excerpts follow.
Jonas: Ahead of the actual closing of this deal, what are your current priorities?
Glenn: The same that we had in place since we announced last September__our strategic planning process for 2014. The change has been that obviously we want to stand up on day one with flawless execution and make sure that all the internal basics are covered__which they are__and continue our momentum that we have in the marketplace and customer service to our existing customers.
Jonas: Once the deal closes, what's the first order of business?
Glenn: I hope nothing changes because it'll be a flawless execution between the day before closing and the day after closing. That's critically important. Number two, the organization should stay focused on what we are doing in 2014. We have pretty good traction, we're winning business, we want to keep our customers happy with great levels of service. And third, we continue planning what "Newco" represents and the growth opportunities we have.
Jonas: Have you started putting together a senior leadership team?
Glenn: We have a very senior and capable team. Kim [Goodman, former American Express Global Business Travel president] has been the only departure from the core management team that has been in place. In addition to that, we need a CFO, a chief legal officer and chief administrative officer.
Jonas: The announcement claimed the JV represents the largest investment ever in a travel management company. What are you going to do with this cash?
Glenn: There are three or four main buckets of capital that we're thinking about. First is investing in technology. That would be to have functional, flexible and disruptive technology because the space is evolving. Second would be in information management and insight, which has been a combination of proprietary data that we have as well as big data. We've been developing some products and services that are in the pipeline that use our information and utilize big data and decision scientists. Third is international expansion. We say we are the largest corporate travel management company by sales. We have a global footprint, and we're going to continue to solidify that and also follow the footprint of corporate customers. The fourth opportunity is in partnerships moving forward.
Jonas: On technology, anything more specific you can say about what's in development?
Glenn: I won't get into the specific products, but there's a pipeline against mobile and mobile applications. We look at our customers in a variety of ways: by geography, by size, by industry__both customers and prospects. In addition to that, we look inside our customers, and there are generally three constituents: there's the corporation/decisionmaker, there is the program administrator and there is the traveler. It is critically important that we have a value proposition for those constituents, and that value proposition is evolving to be more digital.
The other phenomenon ... if you look at consulting companies, the average age of their employees is 27.5 years old. They want to adapt in their business life what they are adopting and adapting in their personal life. We want to give to employees the tools, capabilities and applications they are adopting in their personal life but also to make it as valuable to them as it is the corporation. I think about this as end-to-end solutions with a digital transformation, digital platforms that provide value across the constituents within a company.
Jonas: You mentioned international expansion. What else is required to make the network, including partners, sufficiently global?
Glenn: There's more work to do there. Every company, if it is being candid, would say that. It stems from a couple of factors: Companies are more global, they're expanding, and they are getting more sophisticated because they have to be. We're in a pretty good position today, competitively differentiated, but there's a lot more work going forward. We're going to have to make sure our partners in those markets where clients are traveling have the same kinds of tools.
Jonas: That sounds like it includes standardizing technology infrastructure.
Glenn: Standardizing, and innovating as well. The digital transformation that I mentioned before is going to be across the globe. That's critically important for our partners as well.
Jonas: Whether in international markets or domestically, how much of the work that needs to be done will involve acquisitions?
Glenn: Partnerships and acquisitions are something we are going to evaluate very carefully.
Jonas: As far as the size of the organization, the last number publicized was 14,000 employees. Do you think that's optimal?
Glenn: I feel very good about the organization's size today. You always want to have an enabling structure, and technology__as it has__will bring changes. As it moves online, there are and have been__as we talked about a couple of years ago when we restructured__changes. Growth also brings changes the other way; as you expand your footprint you may need more feet on the street. The organization is stable right now, but that should change over time, both up and down some, depending on business conditions. A big driver over the past few years has been online migration.
Jonas: What's your view on how the consulting organization should evolve?
Glenn: As mentioned, a key area of focus is information management and insight. That comes from a position of strength. It starts with a closed loop that American Express has. That information exists on the business travel side and the corporate payment side. The ability to use that information and provide insights to corporations is very important to our core value proposition and also our consulting practice.
Jonas: Regarding corporate payments, it seems as if the relationship between business travel and the card business within Amex has oscillated a bit over the years. Can the linkage between the two be as strong as before, given that business travel now officially is being decoupled?
Glenn: I actually think it's stronger. It was December 2011 when I took responsibility for both businesses. I started working on what the synergies between the two businesses would be and found them in the areas of lead generation, information management and insights, and around that, product development. We have worked over the past several months to preserve a lot of those and memorialize lots of those. It's strengthened because if you look at the past 10 years or so, maybe it has vacillated some, but we do have a pipeline of products that we have co-developed and preserved and will be in the marketplace. We're mindful of what the information and insights could mean to both of the businesses. All that was taken into consideration in terms of the operating agreements between the two companies. Importantly, it carries the brand name: American Express Global Business Travel, and American Express has a 50 percent interest in it, so in terms of going to market and making it work for our customers and prospects, I feel very good.
Jonas: American Express has investments in both Concur and Rearden. Do those become part of the JV or stay with Amex proper?
Glenn: Stay with American Express.
Jonas: Who has been appointed to the JV's board?
Glenn: It hasn't been finalized.
Jonas: Does the JV have a particular term?
Glenn: The short answer is long-term. One of the things I am particularly excited about is the investor base. They are high-quality, long-term investors looking at this as a long-term investment and as an affiliation with the brand, our business model and our people.
Jonas: Is it fair to ask whether a 50/50 JV structure__in this case with various ownership interests__impedes the ability to make business decisions quickly?
Glenn: The board is going to govern the company like other boards do, which is typically not being involved in the operations of the business but helping with long-term strategic decisions, large capital investments and protection of shareholders and investors. Regardless of the representation structure or ownership structure, those are the critical, principal responsibilities of board members. It's a fair question, but I don't see it as anything but helping us speed up the JV structure, speed up decisionmaking and have some very talented people weigh in on the long-term strategic decisions that boards should be responsible for.