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The changing face of business travel: Tech and market disruptors are responsible

Chief executive Doug Anderson of American Express Global Business Travel notes that economic downturns always result in a stronger rebound in travel and increasingly, business travel will be across digital platforms.

Doug Anderson, chief executive of American Express Global Business Travel (Amex GBT), knows a thing or two about disruption.

As a teenager in 1970, he watched his father give up his 405ha farm in Nebraska, United States, because automation had made “smaller” holdings unviable. The typical farm size was a lot bigger.

Farming in the Midwest of the United States is done on an industrial scale. A single man in a combine harvester manages hundreds of acres in a day. Weed control? No problem, a machine does the work for you. Its sensors can tell wild plants from good plants. When a weed is detected, the machine drops more chemicals on the spot and moves on. Meanwhile, global positioning system satellites aid variable-rate seeding and fertilising.

And it just gets worse, or better – depending on which way you look at it – every week. When you have such levels of automation, you need scale. Or you get left behind.

All male kids in Anderson’s growing-up years were expected to help out on the farm and seeing his father leave the land to take up a construction foreman’s job in Brownville was a lesson that struck home deeper than he probably realised at the time. Like many Nebraskans, Anderson’s aspiration was to go to the University of Nebraska in state capital Lincoln, famous for its athletes labelled Cornhuskers. This he did, emerging with a business administration degree.

During winter breaks, says Anderson, he interned with United Parcel Service (UPS), the logistics firm famous for requiring its executives to drive delivery trucks for six months, so they know the business from the ground up. Later, he would join UPS full-time, serving for more than a quarter-century in places as varied as Seattle, Hong Kong, Brussels and Atlanta – valuable exposure to the world. These days, he is watching UPS drivers facing disruption as America marches swiftly towards driverless vehicles, threatening the livelihood of more than two million truckers.

After a stint as chief financial officer for Sita Group, the information technology and telecommunications provider for the air transport industry, he moved to Eastman Kodak as a director of finance and business transformation for consumer digital and film products.

The company could use his help. Kodak had suffered tremendously because of a reluctance to change with the times – it had digital technology early but was slow to introduce it to its product line because legacy systems were hugely profitable. Then came the shock when prices of photographic film fell catastrophically as digital raced ahead.

These surely are the factors that play in his mind as he settles into the job of CEO at Amex GBT which he took last August, moving over from rival company Carlson Wagonlit Travel (CWT) where he had held a similar position for eight years.

“As I thought about it and faced challenges of disruptors coming into the market, it became evident that significant investment in technology was necessary for any business to thrive,” Anderson tells me in a recent interview in Singapore, explaining his decision to leave a company where many thought he was a “lifer”. “The thing that attracted me to the company was its status as a spin-off and the capital that came with being GBT.”

Amex GBT was spun off as a standalone joint-venture company from American Express in 2014, when half its stock was acquired by a private equity group. It had billings of US$30 billion (S$42 billion) in 2015, the latest available figure, and 12,000 employees in 120 countries.

Last year, when it made the surprise announcement that it had hired Anderson from CWT, chairman Greg O’Hara said the appointment came as Amex GBT was poised to make “sweeping technology investments”.

It is a wise move for the new company. Technology is changing travel – and travel planning – in unprecedented ways. Today’s customer is massively empowered, from being able to pick the most convenient flights to the cheapest ones, and travel firms need to find innovative ways to stay relevant.

That puts a massive squeeze on earnings. Anderson often needs to address three constituencies simultaneously – the traveller, the travel managers of his traveller’s firm and the vendors that Amex GBT uses. An additional complication is that, often, it is not the end consumer but his manager who has the final call on the travel arrangements.

Meanwhile, half of Amex GBT’s travel counsellors operate from home, thanks to advances in communications. Anderson, married to an Englishwoman, has based himself in London although the company headquarters is in New York. His top managers are scattered around the globe.

“My perspective is, and has been, quite global,” he says. “So the executive team is quite diverse. Our president is French and he grew up working for a Spanish company. Our diverse backgrounds help.”

Are companies like Amex GBT relevant in the age of the sharing economy? Mr Anderson chuckles at the question – “Do you expect me to say no?”

But he concedes that his firm works with portals such as Airbnb – there simply is no way around it. Some clients have Airbnb in their travel programmes and, often, companies have to put down entire teams in one location for weeks on end and want them to have the comforts of a hotel while staying in a home. Amex GBT has a distribution arrangement with the Internet company and is currently negotiating one with Uber. The objective, he says, is to be able to distribute through the Amex GBT platform everything a business traveller is looking to accomplish on a trip.

This is why he would like the firm to have a comprehensive travel app that will provide solutions not only on the front end where a traveller searches, compares, books or declines, but also send more alerts and real-time information of what may impact the trip.

“Technology has become the platform for much of business travel,” he says. “Today, it is the platform for initiating transactions for half of travel around the world, and half of the bookings we handle is on some sort of digital platform.”

And that begets his vision for the company – to compete in a way that Amex GBT is able to provide a comprehensive suite of services based on a digital ecosystem.

Getting technology right will be imperative for the firm to extend its dominance in the marketplace because the huge growth markets of the world are in Asia now and Asian customers are early adopters.

China is emerging as the largest business travel market in the world and Amex GBT’s strategy is to aggressively grow in other key markets of the region, including Australia, India, Hong Kong, Singapore, Japan and South Korea.

“Younger travellers here are moving much more rapidly towards the digital model,” he says. “They also demand much more information about communications and shopping, and have huge expectations of service features, including high-level concierge service.”

Artificial intelligence (AI), too, is poised to affect the industry in significant ways. Amex GBT is currently looking at an AI-added solution to help travellers on the road solve most problems that typically arise during travel.

“We have launched a pilot version of Chat on our mobile device. It is not revolutionary except that in our space it is new,” he says.

Anderson does not expect AI to impact jobs, although he concedes that the pace of hiring may slow. The real opportunity is to be able to serve more clients without raising headcount.

Don’t advances in technology affect travel? After all, when video conferences and holograms are commonplace, won’t the need to travel for meetings decrease?

And was Singapore being a bit over-optimistic about travel demand when it built its Terminal 4 at Changi Airport, with plans for a massive Terminal 5?

Anderson has little doubt that air travel will only grow. Just look at the aircraft being added to the world’s fleets, he says. Besides, from the US to Britain and everywhere else, infrastructure is being upgraded. The middle class is growing, too, and that will trigger fresh demand, especially from China and India.

Indeed, he notes, every time there has been an economic slowdown, business travel has rebounded at an even faster pace. It grew at 11/2 times the pace of gross domestic product growth for three decades. Latterly though, he notes, the correlation is closer, especially after the global financial crisis when companies cut down on internal travel.

The 62-year-old is himself on the road a lot of the time, shuttling to his US office for a week once a month, and travelling the globe to meet clients and partners. At CWT, he used to operate from Paris and went home to London for the weekend to be with his lawyer wife and three children, all educated in expensive British public schools.

“I am not sure I would have picked the English system if I did not have an English spouse,” he says. “But I have learnt that the system can be very good if you take advantage of all the opportunities that kids have available to them.”

This story is adapted from The Straits Times.