Martin Cowley, Sabre senior vice president for Europe, Middle East and Africa, spoke with BTN editor-in-chief David Meyer at October's Association of Corporate Travel Executives global conference in Rome about Sabre's prospects for growth in Europe. Cowley took on his current role about one year ago, after a career that includes nearly 20 years at Cathay Pacific.BTN: What is your outlook on market conditions in Europe?
Martin Cowley: In September, it seemed that all around the world, with the exception of places like the Middle East, it got very tough all of a sudden.
BTN: We were hearing even in May from a lot of larger buyers who were starting to implement cuts of 20 percent to 30 percent.
Cowley: That must have been in the U.S. specifically, because there wasn't a lot of evidence of that in Europe then. One thing we do well at Sabre is the way that we work with midmarket corporate agencies, and we have our strong global relationships with agencies like Carlson Wagonlit, Amex, BCD and HRG. I personally know our top 10 or 15 agencies, and back in July one had lost Bear Stearns, but that seemed like a one-off, and the rest said things were going really well. It's a shifting game, and it would be wrong to be overly pessimistic or to be overly optimistic. A lot of people resort to pessimism in that kind of environment. We are where we are.
I was on a call with Sabre CEO Sam Gilliland a couple of months ago, and I used a quote from the governor of the Bank of England: "In times like these, it is always important to remember that there will always be times like these." It drives interesting behaviors. It drives consolidation and new kinds of partnership structures, and investment in technology often is accelerated in a down cycle, because you need to do more and more quickly.
BTN: Sabre has a very different market position in Europe than it does in the United States.
Cowley: This business does polarize around big players in geographic regions, and Amadeus has the strength and the size in Europe that Sabre enjoys in North and Latin America, so that drives a different kind of strategy.
Amadeus does have such a dominant marketshare that people are always looking for an alternative solution. We can be the challenger brand. I see our opportunities a little like Emirates' opportunity when they fly into Heathrow. They provide a limo for every business class passenger. British Airways can't offer the same thing—they have too many business class customers to do that. We have to find our limo equivalent. We need a point of difference to break down that massive hold that Amadeus has on the European market, so you'll see us do a lot of those tactical things.
The strategy that underpins just about everything we do is to take Sabre's underlying global strength, whether in the corporate or online marketplace, and bring those strengths to bear in this region. That's something that I don't think we've done successfully before and, indeed, I think in the past we spent too much time worrying about the differences between Europe and the United States and not enough time thinking about the similarities.
Where we have some competitive advantage, whether through the corporate market or elsewhere, is where we'll focus. That's not to forget our really important supplier relationships.
BTN: Are you on a growth path in Europe?
Cowley: We absolutely are. We have plans to grow over the next 12 to 18 months in Europe in the corporate sector and the online sector. The game in the independent agency sector is a pretty rugged retention/acquisition game. The constant challenge is differentiation, which is why we bring out new products around our core offering.
Since the industry evolved from an any-color-as-long-as-it-is-black business to being a business with totally different financial and commercial models, we've all had to decide how to touch our customers in different ways because we need more stickiness with customers. We've spent a lot of time investing in what were previously non-core technologies. Now they are becoming core technologies. It used to be that we would only operate at the front of the house—we were the booking system and that was it. Now we're going further into the back office with different solutions. In Sydney, for example, we were very involved with multiple faring and pricing and fare filing. We filed fares for airlines and agents with ATPCo and were the only global distribution system accredited with ATPCo.
Our strategies for growth can be characterized in four different ways. We've talked about global and corporate opportunities. There will be significant opportunities there in the next 12 to 18 months. Those are execution opportunities. We don't sell and market that stuff, but we build the relationships with the customers and we execute when we get the opportunity.
In terms of online, we own Travelocity and Lastminute and have a strong global relationship with Expedia, and we're looking at bringing all three into Europe over the next couple of years. That will give us a degree of credibility with independent agency owners, which in Germany and the Nordic countries are quite substantial at 1.5 million to 2 million bookings on their own, and the content involved when we bring in all of that helps with our supplier proposition.
Then there is the potential acquisition of independent agencies. We have to keep retention levels in the high 90 percent range for this business to be successful.
The fourth one, which is interesting to me, is the opportunity to play a substantial role in growing markets. For example, take the deal we've just done with Emirates in the Middle East as well as markets like Kenya and South Africa
(BTNonline, Sept. 9), where Sabre doesn't have any presence at all. These economies can be much more resilient than traditional economies, so it gives us the diversity you need to be a strong business in this part of the world. It's a combination of local strengths and global strengths executed locally.