American Express, responding to the growing acceptance among business travelers of arranging trips online, is laying off thousands of employees as travel planning shifts to the digital world. The 5,400 job cuts announced Jan. 10 will fall heavily on the bank’s travel services division, which caters predominantly to companies that contract with American Express (AXP) to arrange their employees’ business trips. The company will take a $ 400 million charge for the cuts, which will be completed this year.
“The economics, particularly the business travel business, have changed more dramatically over the years than any part of our business,” American Express Chief Executive Kenneth Chenault said on a conference call Thursday night. “We have moved more things online, and that will continue.” The migration of travel planning online will also help the company “serve a growing customer base with lower staffing level,” he said.
One major reason for the shift from the age of telephone bookings to a Web future is the greater control companies can gain in managing—er, reducing—the amount they spend when workers hit the road. Sixty percent of some 1,500 corporate travel planners said new online tools gave them more control over travel policy than in the past, according to a July 2012 survey (PDF) by the Global Business Travel Association Foundation and Egencia, the corporate travel unit of Expedia (EXPE). The same survey found that three-quarters of travelers use online-booking tools as part of their work travel.
Most of the industry’s new online travel offerings can be customized to a client’s travel policies, including preset limits on spending for certain categories, while integrating expense reporting. The new digital products also let travelers book and change flights and hotels from their mobile devices while en route. That business has expanded rapidly in recent years for traditional travel agents and corporate travel departments as well as online players such as Priceline (PCLN), Sabre Holdings, Expedia, and upstarts like Concur Technologies (CNQR). (American Express owns nearly 14 percent of Concur.)
American Express is responding to those same kinds of trends, says spokeswoman Diana Postemsky. “We’re trying to advance these product and service offerings in a way that is aligned to the way our customers want to interact with us,” she says.
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