Travelport Turns a Profit After Going Public
by Michele McDonald /Travelport turned a profit in the third quarter and said it will pay shareholders a dividend.
The $0.075 per-share dividend, announced as Travelport reported its first quarterly earnings since its initial public offering, is the first of many to come, according to CEO Gordon Wilson. The company is targeting an annualized payout of $0.30 per share.
That Travelport would make such a commitment “shows the confidence we have in our business,” Wilson said.
Travelport reported net income of $155 million, compared with a net loss of $27 million in the third quarter of 2013.
Orbitz sale
The sale of its stake in Orbitz and its September IPO, which raised $445 million, has helped reduce Travelport’s debt while the refinancing of its debt has lowered its interest payments substantially.
Net revenue increased 3%, to $529 million. Revenue from booked airline segments increased by $4 million; reported segments grew 3% in the U.S. and 2% in the rest of the world.
Overall, Travelport reported 88 million booked segments for the quarter.
Winning strategy
But the real momentum came from Travelport’s Beyond Air strategy which generated a $15 million increase in revenue.
Its eNett International subsidiary, which replaces cash payments and other older payment methods for non-air travel purchases with Virtual Account Numbers (VANs), experienced revenue growth of 45% in the third quarter.
“It’s real earnings,” Wilson said. “It’s actually making money” by “tackling unmet needs.”
Brisbane, Australia-based Flight Centre, one of the largest travel companies in the world, has signed an agreement to use eNett’s VANs, beginning in Australia and New Zealand and rolling it out gradually to other regions.
Success with hotels
On the hospitality front, Travelport increased its hotel attachment rate – the number of hotel bookings per 100 air bookings made – to 45, up from 42 in third quarter 2013.
Hotelzon, the U.K.-based booking platform for corporate travelers that Travelport acquired in June, got a new user interface last month and expanded to France and Poland.
European business travelers are far more likely to book independent properties – hotel chains rule that roost in the U.S. – and Wilson sees a wealth of opportunities for Hotelzon throughout Europe.
Wilson said he is “absolutely excited” about the recent launch of Rich Content and Branding, the third component of the Travelport Merchandising Platform. It has gone live for users of Smartpoint, the agency desktop aimed at travel management companies.
More than 75 airlines, including some of the world’s largest, have signed up to use the new functionality to enhance the marketing of their ancillary products and other merchandising efforts.