Singapore - The sale of Rosenbluth International to American Express (Amex) has raised the question whether traditional, privately-owned travel management companies (TMCs) can still survive, and where small players stand today in the global food chain of corporate travel business.

To be sure, mergers and acquisitions in the industry are nothing new. In recent years, more and more TMCs have opted to join, or been acquired by, larger global companies or networks. Rosenbluth's sale, however, shows even the not-so-small are being swallowed, and this further begs the question whether the industry will be left with only a handful of giants.

Among the global corporate travel companies and networks in the game today are Business Travel International, Radius - The Global Travel Company, Carlson Wagonlit, GlobalStar Travel Management, Navigant and, the largest of them all - Amex.

Explaining its purchase, which is still subject to regulatory approval, Amex said it was attracted to Rosenbluth's “history of excellent customer service and innovation, its customer base, its corporate culture and its products and services (and) the two organisations will be able to blend very smoothly, resulting in a high client retention rate”.

A spokesman said: “The travel industry is currently undergoing continued turbulence, and we believe that through growth, American Express will be better positioned to effect positive change for both our customers and the suppliers who recognise our importance as an efficient distribution channel to the corporate customer segment.

“We intend to become the most efficient channel of distribution for suppliers, and the most effective way for corporate clients to manage and optimise their travel investments.”

The small players only have to differentiate themselves in order to stay in the game. GlobalStar president & managing director, Mr Martin Metzler, said: “It shows, in my opinion, that you either have to be a deep-pocket player with alternative business interests to continue to play in the mega-league, or you have to be part of a cost-effective, streamlined network with a joint-venture-like approach and a clear differentiation from the mega concept.

“You also have to decide which market segment you realistically can be a player in. Not every company is made for every client. But with the right business vision and the appropriate international support infrastructure, family-owned companies can also be players.

“In fact, many GlobalStar partner companies are privately-owned businesses and are very successful.”

Agreeing, RADIUS senior vice-president Asia-Pacific, Mr Stuart Wines, said: “Large corporations tend to like to deal with large corporations. So the mega-players in travel management inevitably work with large corporate clients. (But), there are many small- and medium-sized corporate clients out there who continue to prefer to deal with smaller, more personalised agencies or networks. The important thing is the smaller players strive not only to offer great service, but to remain competitive in terms of technology and pricing.”

Small players should be able to offer superior personal service, over mega networks, as they do not have as many clients to take care of, or so the argument goes.

“Don't overestimate mega networks or underestimate small players”

GlobalStar's Mr Metzler said the capabilities of the massive mega-networks were probably overrated. “There is always someone who has to pay for the perception, the huge marketing efforts and the central overheads, and this someone is in most cases the client.

“The bigger and more centralised those organisations get, the more the customer and service orientation gets lost.

“How can you keep an entrepreneurial spirit throughout the ranks of a gigantic organisation with layers and layers of reporting lines and administration?

“The client deserves better than to become a small number in a huge portfolio. Some clients with big travel budgets might be more comfortable to go with a big name in the travel management field. But big is not always better.

“The question remains - are clients really getting the mega benefit out of this relationship?”

Mr Wines added: “Inevitably a super-sized TMC can bring economies of scale to the table.

“But there is an equal danger that they seek to adopt a one-size-fits-all solution towards their clients. Service may suffer, and clients perceive that they are just one of many.” At the end of the day, being part of a network that allows small players to hold on to their core service values and traditions and maintain their independence, while being able to tap into a larger pool of resources that their businesses and clients can benefit from, seems the way to go for small agencies.

Mr Metzler observed the ongoing consolidation in the industry might cause independent TMCs to re-evaluate their international affiliations and look for better value propositions.

“With more and more clients looking into international consolidation as a tool to control and lower their worldwide travel expenses, TMCs need a functioning and transparent client service organisation, not just a marketing tool,” he said.