‘s recently appointed president and CEO, Sean Menke, has shared with analysts his vision for the business, and there are some subtle (and not so subtle) changes ahead.
, having been promoted from president of Sabre Travel Network.
Talking through Sabre’s Q4 and 2016 full year results, Menke said:
“Changes we will make going forward are centered on enhancing value to customers through accelerating products and capabilities into the marketplace. We will focus on increasing the clock-speed of innovation….”
Its airline IT and hospitality solutions business units are in line for “increased investment in areas of greatest opportunity and decreasing investment – or exiting areas – that are not providing sufficient returns.”
Hospitality will become a “much bigger business” for Sabre, he said, with investment earmarked for its property management system services in particular. During 2016 it continued to bring Wyndham and Ramada properties onto the platform and last week.
The situation at airline IT solutions is more complicated. Menke acknowledged that, while the unit was helping airlines move off legacy platforms, “some of that same historical complexity has crept into our own product sets to some degree.”
A review of the portfolio is now under way with, again, the future investment focus on “the greatest customer needs and highest returns for Sabre”.
In the Q&A Menke, confirming that it was an issue with a pricing engine. This incident kickstarted the re-evaluation of its investments.
Menke talked up the value of the GDS as a distribution channel for airlines, based on his experience in the airline industry and his having sat “on the other side of the equation” during negotiations.
He hinted that its GDS and PSS units would work more closely together, marrying PNR, shopping and ticketing.
“Our position as both a GDS and as a provider of PSS and retailing technologies enables us to work with our customers to optimize distribution in ways other competitors cannot.”
The unspoken reference to Travelport, whose airline IT/PSS operations are significantly smaller than Sabre’s (and Amadeus’), is one to watch.
Ancillary revenues continue to be a dominant topic in the airline distribution conversations. Menke was bullish about the potential for Sabre to facilitate the sale of airline ancillaries through the indirect channel, “untapping the billions of dollars that are being sold in ancillary and branded fares through airline direct.”
Meanwhile, the theory and practice of its Travel Network unit is also being reassessed under Menke’s overall leadership, with his noting a difference in not only what the GDS needs to supply to its OTA, TMC and traditional bricks-and-mortar customers but also the commercial arrangements.
In terms of the earnings, Sabre has generally had a strong year, although some metrics in the final quarter have fallen short.
Looking at 2016 as a whole, revenues are up 14% at $3.373 billion, while an 11% year-on-year increase saw adjusted EBITDA break the billion dollar barrier.
Its overall market share of GDS air bookings for the year was up slightly at 37.1%.
Cfrom where the earning release, presentation and a recording of the earnings call can be accessed.