Business travel is back in a big way, which is good news for travel platforms.
This, as American Express Global Business Travel (Amex GBT) leaders told company investors on Thursday’s (March 9) fourth-quarter 2022 earnings call that they expect total business travel spending to grow by 24% in 2023 to reach over a trillion dollars.
“You’ve got five and a half percent increase in North America, six point one in Europe, and then forty-eight percent growth in capacity in AsiaPac Pacific, largely driven by the opening [of] China,” said Amex GBT Chief Executive Officer Paul Abbott.
Abbott highlighted that Amex GBT, which had its IPO last May, retained 95% of its business customer base in its first year as a public company.
“Record new wins, high customer retention and strong momentum in the SME [small and medium enterprise] segment delivered results ahead of our guidance for the year,” the CEO added.
Abbott repeatedly underscored that Amex GBT is strongly positioned for continued growth as business travel recovers from pandemic lockdowns around the globe and virtual events start to take the back seat to in-person gatherings.
Compared to the pandemic dampened environment of 2021, Amex GBT’s revenue increased 143% for the 2022 financial year.
Within this, travel revenue increased $998 million, or 224%, “driven by the continued recovery in business travel,” Chief Financial Officer Martine Gerow said.
PYMNTS has previously reported on an ongoing changing of the CFO guard at a variety of companies, and Amex GBT is joining this cohort as well — announcing that Gerow will be stepping down and Karen Williams, who joined Amex GBT as deputy CFO in May of last year, will take over effective July 1.
Amex GBT continues to take a “measured view of the macro environment” Gerow told investors, noting that distributed teams and hybrid work models are creating new demand for business travel, meetings, and events; and that global travel spend is expected to grow as capacity increases and existing restrictions in various regions are softened or lifted.
“Air recovery was stable in the fourth quarter at 66%,” she said, “and now that the travel restrictions have been certainly either relaxed or removed in China and Hong Kong and Singapore, it provides additional opportunity for growth and recovery in Asia in 2023.”
Still, as PYMNTS previously reported, at least one industry won’t be returning en masse to the skies — the currently embattled tech sector, which eliminated more than 153,000 jobs this past calendar year.
Read more: Small Businesses Outpace Corporates in Return to Traveling
As B2B travel platforms turn their focus from the FAANGs of the world to small and medium-sized businesses (SMBs), Amex GBT’s Abbott says his company is well equipped to take advantage of the competitive opportunity.
“Yes, there are new entrants and increased competitive activity,” he told investors, “but very few have gained any significant share or scale. Looking at our pipeline for the year ahead, I think we’ll set a new [win/loss rate] record.”
The activity is not impacting Amex GBT’s ability to aggressively grow in the small business segment, he added.
“I think one of the major advantages [Amex GBT] has is the range of solutions we offer — it’s not one single segment with one homogenous set of needs. If a customer’s looking for like a high-touch white glove service that includes both business travel and access to premium leisure, we have a fantastic solution for them; if they want a turnkey solution with intuitive customer service, we have that and more,” Abbott said. “I think we’re uniquely positioned with the solutions that we have … we benefit from offering a choice of market-leading solutions in what is a very large and unconsolidated segment.”
Amex GBT signed “2.1 billion of SME new wins value” in 2022, with a quarter of that value coming from businesses whose travel programs were previously unmanaged or handled in-house.
“This demonstrates we are gaining more and more traction, converting this unmanaged customer travel spend into managed spend,” said Abbott. “We are already the number one player in managed travel for SME customers, but only 30% of [the $950 billion total travel market] is actually managed, providing us with a significant future growth opportunity.”
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