Travelport cites tech and content upgrades for increased appeal to OTAs

Firm is ‘onboarding’ new clients at a record pace, says chief executive Gordon Wilson Continue reading →

Travelport says work to expand its airline content and on the speed and accuracy of results is helping win more OTA customers.

Speaking as the GDS and tech provider announced better than expected first quarter trading Gordon Wilson, president and chief executive, said the firm is ‘onboarding’ new clients at a record pace.

He said this was particularly true among OTAs in Europe and Asia where it has seen success in winning new business. Recently acquired clients in Asia include TravelOKA and MakeMyTrip and in Europe GTravel and Travelgenio.

Wilson said these agents are starting to value to breadth of content and access to branded and family fares available in Travelport’s Travel Commerce Platform.

“We now have 260 airlines, five time more than our nearest competitor,” said Wilson.  “It’s taken longer than we thought for the OTAs to really embrace this. But we are now seeing a step change in that they now want this content.

“They have worked out that their customers want it and the airlines are saying to the OTAs if you cannot show me you can trade customers up we don’t really want you as a distributor.”

Wilson added he believed the speed of responses Travelport can now achieve is “second to none” and this is a key factor for OTAs operating in a highly competitive market.

“Go back a few years and we were deficient in this area. But we have invested in Artificial Intelligence and machine learning in our algorithms and migrating content to the cloud.

“Our customers are now telling is this is where we are ahead. People are increasingly on mobile devices and no one uses a slow app.

“I feel very good at where we are but we are not finished yet. We have invested in the last few years in our technology teams and people who can work with OTAs day in day out to optimise how they use our systems and that is beginning to pay off.”

Wilson indicated Travelport will aggressively target winning share in the US from market leader Sabre having appointed Simon Ferguson, head of northern Europe, as managing director agency commerce for the Americas.

“It’s a case of local boy done good,” said Wilson. “He has done a great job in northern Europe and built a great team behind him and now he moves on to his next challenge to do the same in the Americas. We are putting our talent in the biggest market in the world.”

New EMEA managing director Damian Hickey is “creative and adroit”, added Wilson, and moves from Asia where “we have been growing like a weed”.

In its first quarter update Travelport brushed off the impact of the loss of major Asia Pacific partner Flight Centre to record better than expected results.

Net revenue for the three months was up 4% to $678 million although adjusted EBITDA was down 9% to £154,177.

Wilson said the loss of Flight Centre, worth $85 million in revenue, to rivals Amadeus and Sabre, had caused a period of “introspection” at the company.

But he said underlying results for the quarter showed the business as growing well in Asia as well as in Europe, which saw a 21% increase in revenues in Travelport’s Travel Commerce Platform to $244 million.

The firm was also boosted by continued growth of its eNett payments solutions arm despite unfavourable foreign exchange movements, which Wilson said reflected a general shift to virtual payments in travel.

“To be ahead 4% even with the loss of Flight Centre indicates an underlying growth rate of 9%. EBITDA was down but if you strip out Flight Centre we are basically flat. This indicates we are on track to achieve our full year numbers.

“Losing Flight Centre caused a lot of introspection on our part and we looked at what differences we could make to our business and there was a lot, there’s no doubt about that.

“Our agent platform Smartpoint is now on iteration eight which is a way better product and we have changed our account manager and regional manager team in APAC.

“One of the reasons we lost Flight Centre was financial, I would be lying to you if I were to say that was not the case. We obviously got that wrong in terms of our investment. There’s no doubt we had some deficiencies on our side which I’m in no doubt we have fixed.”

Wilson said volumes in APAC were down 16% and revenues down 6%, but if just the figures for Asia were stripped out Travelport was up 25% in volumes on the back of 13% segment growth.

And he said in the win/loss leger for clients Travelport was currently in the positive as it wins new business, particularly among OTAs in Europe and Asia.

“We are onboarding a lot of new business at the moment,” said Wilson. “We needed to address the loss of Flight Centre and our order book is at an all time high so we are implementing new customers which costs more money.”

As a result the first quarter saw Travelport’s operating income a $14 million hit due to increased “selling, general and administrative expenses” due to an increase in workforce expense.

It also saw $40 million increase in “cost of revenue” incurred in its payments solutions division eNett and an increase in travel distribution cost per segment, driven by pricing, mix and unfavourable foreign exchange movements.

Travel agent commissions paid by Travelport were up 16% in the quarter to £315 million, nine percentage points was down to increased payments volumes through eNett and the remainder its GDS business.

ENett revenues increased 81% to $74 million while Travelport’s “Beyond Air” revenue was up 22% to $180 million, 28% of the firm’s total Travel Commerce Platform revenue of $653 million.

Technology Services revenue was down 12% to $25 million largely due to the sale of IGT Solutions Private in April 2017.