Consolidation in Business Travel: What’s Next?
For the past several years, there has been a significant number of consolidations throughout every segment of the travel industry. With mergers and acquisitions of some of the best-known brands in the air travel, lodging and ground transport sectors continuing at a rapid pace, GBTA Convention 2016 featured a Center Stage panel discussion on the topic of consolidation with some of the most well-known experts in the field.
Moderated by Guy Langford, Vice Chairman, U.S. Leader of the Travel, Hospitality & Leisure (“THL”), Deloitte & Touche LLP, the panel consisted of Reggie Aggarwal, CEO and Founder, Cvent; Dara Khosrowshahi President and CEO, Expedia, Inc., and; Kevin Frid, COO of Accor Hotels. The panel brought unique perspectives to an extremely timely and relevant discussion. Cvent is currently being acquired, Expedia has become one of the largest travel companies in the world through acquisitions, and Accor Hotels recently completed an acquisition. Given these backgrounds across travel industries, the conversation provided much needed clarity and insight into one of the biggest drivers shaping today’s travel industry.
There was agreement that having an effective strategy in place must drive the process of successful mergers or acquisitions. If the consolidation is not strategic, it may be unsuccessful. Said Accor’s Kevin Frid, “strategy, when done well, doesn’t change much, but may be tweaked. Economic conditions are always changing.”
Expedia’s President and CEO Dara Khosrowshahi highlighted the unique borrowing landscape that currently exists – stating that, “at this time, central banks lowering the cost of borrowing to such an extent that now a bird in hand is worth a bird in the bush and people are diving into the bush to collect birds.”
From the perspective of a company that is being acquired, Cvent’s Reggie Aggarwal said that, “if you’re the acquiring company, strategy is the most important thing, but if you’re being acquired, the driving factor is price.”
The conversation shifted to the hot-button topics of scalability, technology and if it is still possible to “own the customer.” With respect to scalability, Accor’s Frid sees scalability as intrinsically linked to strategy. Saying of the recent merger, “we wanted a bigger footprint in the luxury space and in the U.S. markets, but the reality is that brands can’t scale to determine a price. Brands can only provide a value proposition for its customers.”
While the three panelists had unique perspectives of the current landscape of consolidation, they were in agreement that it is no longer possible to, “own the customer” as today’s young, savvy traveler is resistant to such notions. It is possible, according to Khosrowshahi and Aggarawl, to rely on technology to interact with the customer and alleviate any pain points.
The panel agreed such uses of technology will continue to drive mergers and acquisitions in the travel industry for the foreseeable future. Said Aggarawl, “There is so much cool tech coming out of the travel industry now, and many travel companies now see themselves as tech companies.”
With a healthy and robust reliance on technology, as well as the continued environment of low borrowing and easy access to capital, consolidation will continue to be one of – if not the – biggest drivers shaping the business travel landscape for years to come.