Amadeus, Travelport: Weathering The Global Slowdown

The GDS industry experienced a second-quarter slowdown in all regions of the world, particularly in the U.S. and Western Europe. But Amadeus and Travelport are weathering the slump, their chief executives say.

Amadeus said its adjusted profit for the second quarter of 2012 was €164.6 million (about US$202.4 million), up 30.3%.

Gains agency market share
Amadeus also increased its worldwide share of travel agency air bookings by 1.2 percentage points, to 38.3%.

Chief executive Luis Maroto credited Amadeus’ successes in signing full-content agreements with airlines and its investments in travel agency booking platforms for the increase in market share. Its travel agency air bookings increased 2.9% in the second quarter.

Amadeus achieved increased volumes in all regions except Western Europe, which showed a modest decline.

Distribution revenue for the quarter was €559.9 million (US $688.6 million), up 6.4%, and IT solutions revenue was €184.9 million ($227.4 million), up 16.6%.

Maroto warned that the global economic outlook remains uncertain, and both air traffic and GDS volumes have shown weakness in recent months. But he also noted that Amadeus’ business model has shown resilience in difficult times.

UAL migration hits Travelport
Travelport reported a loss of $20 million, but the company took a $22 million hit from the migration of United Airlines off Travelport’s Apollo system to HP’s SHARES, the passenger services system used by its merger partner, Continental Airlines.

Chief executive Gordon Wilson said Travelport is executing well on its revenue diversification strategy.

Airline segment fees remain the primary source of revenue, but the company also is looking to “significantly enhanced” hotel content and to its eNett payments business for new sources.

Added independent hotels
The company more than tripled the number of hotels available in Travelport Rooms and More since July 2011, moving beyond the chain properties that typically participate in GDSs to include a large number of independent properties.

Wilson said some of that content is coming from Booking.com and the Expedia Affiliate Network, two companies that have amassed huge inventories of unique hotels that operate outside the GDS channels.

Travelport’s hotel sector goals
He said the revenue potential in that area is huge, both for Travelport and for its subscriber travel agents, who “can make more money selling hotels. They need to deliver as much choice in hotels as they do in air.”

He noted that “the global spend on hotels is bigger than air,” and Travelport’s goal is to boost its hotel business to generate revenue on “the same scale” as its air revenue.

Success with desktops
Another high point in Travelport’s diversified revenue strategy is the increased adoption of its new point-of-sale technologies, such as the Universal Desktop and the Agencia II desktop for Canadian agents.

The company intends to remain competitive in terms of agency incentives, Wilson said, but “we’re choosing to compete on the basis of product and service. We think the market is better served by that.”

Sabre Travel Network, a privately held company, does not report its earnings.