American Express sees opportunity to capitalize on competitors potentially backing away from the corporate card business.
When it comes to business travel, “CFOs and CEOs are not rushing to get back any time soon,” said Amex chairman and CEO Steve Squeri during a Bernstein conference on Thursday morning. “There will be a fundamental shift over time. There are lot of things you have done in person that you realized you can do via video once you established that relationship. Corporate travel has changed maybe forever.”
While non-T&E spending on Amex cards is running at a low-teens percentage decline versus last year, T&E spending remains 90 percent lower.
That’s why Squeri no longer sees corporate as a growth driver for Amex. “Consumers have very short memories and want to spend money,” he said. “Corporations, though, develop different muscles. It is not a high-growth area.”
Corporate “was probably one of the biggest moats we had,” Squeri added. Now, though, “coming through this crisis, small business will be our shining star.”
Even so, Amex expects to maintain its dominant position among larger corporates. “This market is not as fruitful as it once was,” Squeri said. “You may see others exit the market as they did a number of years ago. There are not a lot of players in the global corporate card market, which is why we have over 60 percent [market share].”
Asked about the competition, Squeri said no one was aggressively advertising or pursuing new business in the current environment. “There is not a lot of switching going on at this point in time,” he said.
Overall, Amex’s corporate card business, which normally accounts for 9 percent of its total volume, currently is down about 50 percent.
Airlines and cruise lines are “down beyond” the 90 percent T&E decline, according to Squeri, with lodging down around 85 percent to 90 percent. Restaurant spending, which had been down as much as 80 percent year over year, was running about 70 percent down.
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