Specialist
Former VP at Travelport Worldwide Ltd
Agenda
- Outlook for volume recovery across home- vs away-market bookings, OTAs (online travel agencies), TMCs (travel management companies) and offline agencies
- Agent incentive levels including OTAs and TMCs, noting implications for GDSs (global distribution systems) COGS and margin profile
- Potential for NDC (New Distribution Capability) to introduce new competitors to travel distribution triopoly
- Competitive dynamics across Amadeus (MAD: AMS), Sabre (NASDAQ: SABR) and Travelport
Questions
1.
Given how important segment volumes are, at least for the distribution side of Sabre, Travelport and Amadeus’s businesses, how far along are we in terms of recovery in those volumes? Do you anticipate a scenario where we don’t return to 2019 or pre-pandemic levels, particularly as it relates to corporate travel segments?
2.
How is the additional spend generally processed? Is it deductible from the pay cheque and integrated? How would that happen in practical terms? Presumably that would be a big hurdle to adoption of blended travel.
3.
Do you think the blending of business leisure is actually driving incremental growth in total segments and total bookings for TMCs [travel management companies] or just helping to get back to the 2019 level? Where do you see that shaking out?
4.
What’s your estimate for how many corporate bookings now incorporate some element of leisure, whether an extended stay over the weekend or something more?
5.
Taken in isolation, if you’re seeing a decline in weekday travel, is that typically bringing down the total spend? A traveller usually only requires two flights – one outbound, one return. Does that mean the corporate is spending less if the traveller or employee travels back on a weekend? Is the weekday flight specifically more expensive?
6.
Do you have a feel for the accommodation attach rate and average number of nights?
7.
You mentioned a 60-70% attach rate for accommodation, but do you have a feel for how much T&E [travel and expense] doesn’t go through the programme of a typical corporate spend? Or maybe just the T vs the E?
8.
As far as agents are concerned, how does consolidation among TMCs impact the GDSs [global distribution systems]? We had Amex GBT [Global Business Travel] acquiring Egencia in 2021, it is now clearly the largest global TMC. That tail is getting consolidated over time or, frankly, they’re leaving the market. If we take segment pricing dynamics for the time being without going onto a percentage of revenue, how do you see that impacting revenue per segment or per booking dynamics over the near and medium term?
9.
How durable are away-market bookings in the context of greater NDC [New Distribution Capability] adoption and carriers being able to distribute via more standardised APIs [application programming interfaces]? Do you think it makes it easier for local travel-sellers to access that content directly from carriers or another aggregator that isn’t a GDS, such as Travelfusion, etc?
10.
How do the synergies play out across the airline, IT, PSS [passenger service system] and the distribution side? Could you see Amadeus doing a bundled price, for example, the price per passenger is lower or includes something if the ticket is retailed through it? How does that play out?
11.
What’s the typical segment pricing when you are talking about international or rack rates?
12.
What was the typical pre-pandemic mix between international and domestic for the GDSs?
13.
Are airlines willing to shift to a value-based model for the fare itself? Presumably they don’t want to start giving away even more on international flights than they already do. It’s logical if you’re doing a percentage of revenue above the base fare.
14.
How easy is it to shift TMCs over to a new commercial model in practice, especially when so much of the competitive tension with GDSs relies on the generosity of said incentives, to a degree?
15.
If online bookings continue to take share in the corporate travel space, which has been the case YoY, does the switching consideration become less important for TMCs? At least you don’t have to retrain as many agents as before, because few actually require the agent to do anything – it’s just through the OBT [online booking tool] that the corporate uses.
16.
What happens in an NDC context for online bookings or newer platforms coming to the space where it is easier, or it becomes easier, to self-serve?
17.
If Amex is investing in its own OBT, how do you think that impacts the positioning of GetThere or Cytric? I appreciate that the distribution or aggregation might still be via GDS, but if you’re not using the OBT, does it impact the relationship with the agent from a contract value or client stickiness standpoint?
18.
What are your thoughts more generally around Travelport’s acquisition of Deem in March 2023? What are the implications? Clearly it’s more agent-led, whereas you can argue that Sabre and Amadeus have more exposure to carriers, to a degree, and probably have deeper relationships there. How game-changing do you think that acquisition is?
19.
In a broader context, what’s your expectation for the level of incentives that TMCs will negotiate pending any shift towards more of a value-based model? Will those continue to rise as renewals come through, or are they getting more disciplined around putting some kind of a cap on those incentives – like the GDSs? It seems incentives have been increasingly soaring, almost as a percentage of the available revenue as well.
20.
How do you see Sabre pushing back on Amadeus’s lead, given how well that business seems to be performing? Amadeus has increased scale now, it’s winning in the western hemisphere which was typically Sabre’s stomping ground from an airline and distribution standpoint. What do you think the playbook or strategy needs to be to roll back some of those gains?
21.
What do you think is the likelihood of Sabre gaining market share back from Amadeus in the near-to-medium term? Conversely, do you think Amadeus could increase and consolidate? Is this a longer-term shift or something that can be implemented more quickly?
