Amadeus Sees ‘Accelerating Growth’ In Ancillary Sales

The growth of ancillary sales in the travel agency channel was “quite large” in 2016 and is accelerating, Amadeus said.  

In a conference call with analysts to discuss full-year and fourth quarter earnings, chief executive officer Luis Maroto said the “solid performance” of the company’s distribution segment was supported by new contracts of Amadeus’ merchandising solutions. 

“At the end of last year, 66% of the global bookings made through the Amadeus system were eligible to carry a merchandising item,” Maroto said.

More than 120 airlines had contracts for Amadeus Airlines Ancillary Services by the end 2016, of which more than 90 had implemented the solutions by the end of the year. 

Amadeus Fare Families Solutions also continued to expand in 2016. 

At the end of the year, 52 airline customers had contracted the merchandising solution.  

Of these, 33 had implemented the solution, which allows airlines worldwide to distribute branded fares to travelers.

Maroto said the growth of merchandising and retailing through the travel agency channel could spur an evolution of airline contracts.

Currently, the full-content agreement is the norm, but as airlines adopt a wide array of strategies, GDS companies will have to keep up with their needs, he said. 

He cautioned, however, that “direct connect” should not be the go-to strategy for airlines or agencies. 

“Direct connect would be a good solution in some specific markets or specific relationships of our live travel agencies, but we don’t see that as an industry solution,” Maroto said.

“I’ve always expressed my view that I don’t think this is the solution, but it could be one specific customer or one specific part of the business. But at the end, you need to have an overall aggregation of all this content. That needs to happen to really have a seamless and optimal way of managing the content.”

Amadeus reported adjusted profit of €911 million for the full year of 2016, which represents growth of 21.2% compared to 2015. Revenues grew 14.3%, to €4.47 billion.

Travel agency market share was 43.2%, a 0.8 percentage point improvement.