Technological and Political Factors Influencing the Landscape of Travel Deals

The proposed $570 million acquisition of CWT by American Express Global Business Travel (Amex GBT) is facing regulatory hurdles due to concerns about stifling competition, reduced customer choice, and potential dominance in technology platforms.

In recent years, technology and politics have significantly influenced the landscape of travel deals. A prominent example of this influence is the proposed acquisition of CWT by American Express Global Business Travel (Amex GBT), a deal worth $570 million. The proposed acquisition, announced almost a year ago, faces opposition from regulatory authorities on both sides of the Atlantic.

The arguments against the acquisition center around concerns that a larger, merged entity could potentially stifle competition, reduce customer choice and quality, and increase prices. The United States Justice Department (DOJ) and the United Kingdom’s Competition and Markets Authority (CMA) have both sought to block the deal, citing these concerns.

Beyond the traditional concerns of competition and customer choice, the Amex GBT and CWT deal is also under scrutiny due to fears of technology platform dominance. In the current merger and acquisition (M&A) landscape, technology and political issues play a significant role in the decisions made by authorities.

The impact of these factors is expected to intensify with the rapid evolution of artificial intelligence (AI) and a new wave of protectionism. Technology and politics’ influence is not limited to this deal alone; it is part of a broader trend observed in the industry.

A notable trend in the M&A landscape is the consolidation among travel management companies. This is driven primarily by mid-tier companies’ struggles to keep pace with the rapid technological advancements. These companies also face competition from suppliers, increasingly becoming their partners.

However, this does not mean that all M&A activity will face the same hurdles. The regulatory environment varies across regions, and some deals, such as the $1.7 billion Despegar-Prosus deal, have successfully navigated these challenges.

The influence of politics is also evident in the shifting views on M&A under different administrations. The previous administration in the United States was perceived as more conservative in its outlook on M&A, focusing on implications for competition. However, this viewpoint is expected to shift under the current administration, potentially unlocking significant capital in pending deals.

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