1 August 2003
Corporate travel management companies are watching
cautiously from the sidelines the recent acquisition of
Rosenbluth International by American Express, paving the
way for Amex to further consolidate its position as the
world's largest corporate travel management company.
Rosenbluth, a privately held company, owns and/or
manages corporate travel operations in 15 countries, posted
business travel expenditure of more than US$3 billion last
American Express booked global travel volume of US$15.5
billion last year. The new AMEX is estimated to handle
about US$20 billion in worldwide T&E expenditure.
American Express is the largest agency in the US while
Rosenbluth is the fifth biggest. A mega-merger of this sort
would surely send shivers, especially coming at a time when
the economy is recovering from a slowdown that began three
Industry watchers are acknowledging that consolidation
in the industry is not far away. Most corporate travel
industry players preferred to reserve comments.
The companies did not disclose terms of the deal, which
could be completed within a few months, pending regulatory
Under the agreement, Amex is buying all of the
Philadelphia-based company's shares, but Rosenbluth will
maintain control of UpStream, an outsourced call centre
that provides support for its clients. The Rosenbluth name
will eventually disappear.
Amex said the deal will help them negotiate better terms
for their corporate clients.
"In a tough economy, travel management services have
been in great demand, as companies of all sizes have
focused on reducing travel expenses by lowering both the
cost of the travel process and the cost of travel itself,"
"In this environment, the most successful travel
management firms require both size and scope. They also are
able to negotiate effectively for savings from suppliers
and have the resources and scale to invest in the latest
Having a global presence would give Amex the edge in
winning global accounts from MNCs. Rosenbluth is not seen
as a major player in Asia. Observers said Rosenbluth had
lost its competitiveness and being a family-owned business
didn't make things easier.
Synergi vice president, Asia/Pacific Steve Lovato
(above), who headed Rosenbluth's Asia/Pacific division from
1994-1997, said the writing was on the wall.
"Amex had long pursued Rosenbluth so my conclusion is
that the Rosenbluth family just got tired of the problems
and gave in to the offer to buy."
In Asia, Rosenbluth's disappearance isn't expected to
reduce the choice of travel management companies for
corporate clients. Players like BTI, Synergi, Carlson
Wagonlit have a presence here as well as newer regional
entrants like TQ3 and Navigant.
Of course, Amex is already a major player in this
One of the casualties of the merger is the joint
ventures that Rosenbluth has with its partners in China,
Hong Kong and Taiwan. Understandably, all existing
agreements will be cancelled when the Rosenbluth brand
ceases to exist in markets in this region.
Last year, Rosenbluth and China Comfort, one of China's
top travel agencies, had set up a joint venture to exploit
the booming Chinese business. It was one of the first
business travel joint ventures in China. Sources said that
the Hong Kong and Taiwan deals with Swire are being wound
up and all joint bids will cease.