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Hogg Robinson bought by AMEX business travel arm
American Express Global Business Travel (GBT), the corporate travel arm of American Express, purchased Hogg Robinson Group plc (HRG), a global B2B travel management company, for roughly £400 million (US$554.77 million). Expected to close in Q2 2018, the cash transaction is conditioned on receipt of antitrust, shareholder and other regulatory approvals. This comes on the heels of GBT's 35% equity share purchase from former American Express GBT Spain minority shareholder Barceló. The HRG purchase was endorsed by the GBT board of directors, according to its chairman Greg O’Hara. "I am excited at the prospect of creating a truly world-class travel management company using the best available talent from both HRG and GBT," he shared. "This will enable the combined group to focus on additional value creation for customers and the marketplace, while generating new efficiency and growth opportunities for the business. Customers and travellers will benefit from the combined group’s complementary geographical footprint and technology offering," O'Hara added. Both companies were known for recent investments in people and technology even as the corporate travel sector is still recovering from challenges such as the evolution of existing systems/roles, and decline in support from related industries, among others. The resulting merger would offer clients and travellers a more comprehensive range of travel management products and services. In GBT's own words, it is expected to: · Accelerate growth by utilising complementary footprints and solutions to provide additional benefits to clients · Create the ability to combine two advanced travel tech and development platforms to create better products and services to serve clients and travellers · Deliver synergies through cost savings and scale benefits; and · Leverage each company’s existing infrastructure and technology capabilities to maximise efficiencies across the business "The complementary geographical footprints of each company will improve the global scale and reach of our business, enabling us to achieve efficiencies across a best-in-class platform and accelerate growth," said Doug Anderson, GBT CEO. "The technology roadmaps of each business provide a powerful platform from which to drive future innovation. We will deliver a superior client and traveller experience through fully-integrated travel management solutions, including booking and expense management products." David Radcliffe, HRG CEO replied, "I am particularly excited and heartened by GBT’s reassurance that it will be utilising the best talent and technology from within both organisations to create a truly world-class, leading-edge organisation, which will bring benefits to our clients, colleagues and supplier partners alike.” A GBT representative added that while the resulting brand identity is still up for review as part of the integration process, "the acquisition is about combining the best of GBT and HRG products and services for the benefit of our customers." HRG also announced separately that it sold Fraedom, its payments and expenses technology arm, to Visa to the tune of £141.75 million (around US$196.58 million). Although subject to shareholder approval with a positive or negative post-closing adjustment for cash, debt and working capital (in the case of working capital, limited to up to £4 million in aggregate), the sale is set for completion by March 2018. "Today's deal is attractive for HRG shareholders and an exciting next step for Fraedom," said William Brindle, HRG COO. "This combination will mean that Fraedom's employees and their clients will benefit from Visa's reach and deep knowledge of the digital payments industry." GBT is a joint venture between American Express and an investor consortium formed by Certares, Macquarie Capital, Qatar Investment Authority and BlackRock which handles fund management. HRG, its erstwhile rival, began as City of London insurance firm in 1845 but is now consulted by corporations across 120 countries for its expertise and brand equity in travel, meetings, payments and expense management.
Delta brings its A game in luxury flying and reaps the rewards
What do Delta Air Lines Inc. and House of Versace have in common? They both prove that it pays off to pursue luxury. As flying gets cheaper in the recent years, Delta is beating other U.S. airlines by coming after business travellers who are not shy to spend more for quality and comfortability. Delta’s business class fares started at US$521, which suffered a 12% drop from 2014. However, the airline did better than its competition as United Continental Holdings Inc.’s fares and American Airlines Group Inc. dropped by 16% and 21%, respectively. “Since Delta controls more business revenue than American or United, that gives them fewer seats that face really low-cost competition and their fares are diluted less than American or United,” said Ben Baldanza, former chief executive of Spirit Airlines Inc. Airfares have become more affordable due to the increasing number of discount carriers hogging most budget travellers. Delta stays afloat financially and its operating profit margin was half as much again as that of United and American last year. The secret behind this is the fact that Delta also controls 70% or more of the market at hubs in Atlanta, Detroit, Minneapolis and Salt Lake City, according to Morgan Stanley research. Therefore, it controls the lucrative business travel at its hubs than its rivals. In order to provide the best service to premium passengers, Delta is not holding back in lavishing its perks. Delta equipped its new Airbus SE A350 international planes with private suites in the business class cabin to provide passengers with utmost privacy. Each cabin has a sliding door, flat-bed seats with Westin Heavenly bedding, fine dining with wines paired by Master Sommelier Andrea Robinson, and a host of other luxury offerings. Delta also boasts that premium flying experience starts at the airport wherein Delta One passengers enjoy airport club access, Sky Priority check-in, security, baggage handling, and premium boarding. This year, the Atlanta-based airline expanded its Delta One service to flights between Boston and Los Angeles as well as flights between New York and West Coast destinations such as San Diego and Seattle and New York and Las Vegas. The expansion proved that airline's investment in upgraded amenities was worth it and that its customers are willing to spend money on a truly premium product. In addition to route expansion, Delta also made its frequent flyers with Medallion status eligible for free upgrades to Delta One for the first time. "I know that more and more of our customers are locking in their preferred experience by purchasing Delta One. But we also know how important complementary upgrades are for our Medallion members," said Sandeep Dube, Delta's vice president of customer engagement and loyalty, in an interview. "We also know Delta One is our best product, so offering Delta One domestically to our most loyal customers is just another way to further distance Skymiles from our competitors," he added.
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