CWT Blames U.S. Sequester For 2013 Sales, Transaction Dip

Sales volume at Carlson Wagonlit Travel in 2013 fell 2.7 percent year over year to $26.9 billion, the travel management company announced Wednesday, and global transactions declined 2.3 percent to 60.3 million. CWT said sales and transaction figures would have grown__thanks in part to new business sales of $1.9 billion and a claimed client retention rate of 98 percent__had it not been for the federal budget sequestration in the United States.

"The impact on U.S. military and government spend was in the range of [a spend reduction of] 25-26 percent," said CWT president and CEO Doug Anderson. "U.S. government and military accounts for 8 percent of our total business globally and 15-20 percent in the U.S."

Anderson said the sales hit was unconnected to the new iteration of the U.S. General Services Administration's E-Gov Travel Service travel management program, in which CWT's CWTSato division must compete with Concur for civilian government business. "Seven or eight civilian agencies have re-signed agreements with us," he said, referring to extensions under the first-generation ETS program. "We haven't lost any ETS-related business at this stage," he said.

Asked if CWT is too heavily exposed in the U.S. public sector, Anderson replied: "No, we're not overexposed to that business. It's great business for us, and we're delighted to have it."

Stripping out U.S. military and government travel from its results, CWT's 2013 global sales volume rose 0.3 percent year over year and transactions were up 0.4 percent, which CWT attributed to the mixed economic climate. North American transactions, excluding military and government travel, increased 0.9 percent. Once again, the star performer was the Asia/Pacific region, up 4.5 percent, with China up 9 percent and Hong Kong 23 percent. However, transactions in 2013 dropped 0.2 percent in the Europe, the Middle East and Africa region, while Latin America was down 2.2 percent.

Better news for CWT is that the annualized figures disguise an improvement in recent months. Anderson said bookings increased significantly in the fourth quarter of 2013, an upturn that has continued into the first six weeks of 2014. "We're where I thought we might be a year ago," he said. "At the end of 2012 we expected growth. Now we're actually seeing it." Europe, the United Kingdom and Germany are leading the way, but Anderson said even Spain and Italy have stabilized.

Specialized businesses within CWT in 2013 experienced mixed fortunes. Its Energy, Resources & Marine division upped revenue by 9 percent year over year, and revenue for consulting arm CWT Solutions Group rose 4 percent, but revenue for CWT Meetings & Events dropped slightly less than 1 percent, which Anderson attributed to clients traveling nearer to home.

CWT does not reveal its profits, citing confidentiality as a privately owned business, but Anderson said: "The shareholders are very satisfied with our performance."