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Business travel: spac for flight booker coincides awkwardly with Omicron


Irrepressible optimism is required to invest in corporate travel businesses these days. Executives were dusting off their suitcases and passports to hit the roads again. Now the highly transmissible Omicron variant is threatening to stall the recovery.

American Express Global Business Travel has therefore chosen an awkward time to announce a listing. The business, which books travel for corporates, is going public through a blank-cheque company backed by private equity group Apollo. American Express spun out GBT, as it is called, into a joint venture in 2014, retaining a 50 per cent stake.

The deal values GBT at about $5bn, including debt. At about 9.5 times 2023 adjusted ebitda, that multiple is on par with pre-pandemic levels. It is also around the same forward ratio as Expedia — which has more exposure to the marginally healthier leisure travel sector.

That is not too shabby considering how GBT is doing. Business trips fell by nearly two-thirds last year, according to GlobalData. GBT’s transaction value is only a fifth of 2019 levels. Pro forma revenue, which factors in recent acquisitions, is projected to fall 20 per cent this year following a 64 per cent drop last year.

GBT and the Apollo Spac believe road warriors will eventually return. They expect corporate travel spending will recover to about 70 per cent of pre-pandemic levels by 2023. The Global Business Travel Association is not forecasting a full recovery until 2024 the earliest — and that was before Omicron.

GBT’s biggest advantage will be its size. With $39bn of travel sales pre-pandemic, it is the biggest corporate travel specialist. A series of acquisitions this year has helped it bulk up. The collapse in demand in business travel will continue to drive a shakeout. Consolidation is the best survival strategy.

That said, a projected addressable market worth of $1.4tn overall may be a stretch. Company bosses such as Jamie Dimon are eager to resume their globe trotting. But many staff lower down the management tree would happily skip overseas trips to avoid nose swabs and quarantine.

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