Amex GBT Acquisition of KDS Impact

JS_8780_RTBy Julie Simpson, Senior Consultant

The announcement in late August that American Express GBT had reached an agreement to purchase KDS caught many by surprise, although there was no secret about their desire to have their own online booking tool.  The Amex/Microsoft partnership to co-develop a tool was one of the earliest efforts and there was the later partnership with Rearden. It looks like the third time will be the charm.

Why KDS and why now?
KDS has been around since the 90’s offering a solid product.  The Neo technology moves to the next level of door-to-door trip management.  While KDS has been a strong player in Europe, they have not been able to grab share in the U.S.  Amex GBT can to change this.  With Amex GBT’s global reach, the acquisition presents the opportunity to develop a truly global product.  Anticipate product enhancements and pricing that will provide incentives for Amex GBT corporate customers.

Ownership of KDS provides Amex GBT with the control that they have wanted to drive future development.  TMC’s have failed at OBT development because they have been travel companies – not technology companies.  KDS is a technology company and if allowed to continue to operate as one, may provide interesting products. The delicate balance will be proving that they can continue to support the well-entrenched OBTs while developing their own.

It is no surprise that the best way to penetrate the travel market is online.  Look at the Travel Weekly PowerList of the top travel agencies. Amex comes in a distant third to Expedia and Priceline.  Perhaps this is the end of the traditional TMC vs. the Online Travel Company discussion.  As the OBTs have become closer to traditional when serving the corporate market, the traditional companies have become more like online companies with the penetration of online booking.

It also gives Amex GBT the ability to capture the biggest market out there: the small and medium-sized enterprise (SME) market – companies with too few travelers to qualify for a managed program.  Is this another shift in dichotomy?  If the tools and products available to one-off travelers are niftier than those used by the corporate giants, the corporate giants will look to adopt.

We at GoldSpring look forward to watching what happens and wish Amex GBT success.

This article originally appeared in the January 2017 edition of GoldSpring Insights, the official email newsletter of GoldSpring Consulting. To sign up for our mailing list, please click here.

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