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Sabre is homing in on solving content fragmentation and "system sprawl" as the company faces a pivotal moment in its transformation away from the traditional global distribution model.
The travel technology company this summer published a study detailing growing challenges for agencies around content fragmentation, based on a survey of 499 global agency respondents conducted by Qualtrics in April and May and supplemented by additional interviews with its agency customers. That research showed that 91 percent of agents operated with four or more booking systems, 50 percent were operating with at least seven booking systems and one in 10 agencies were using 10 or more booking systems.
Expansion of that fragmentation, not consolidation, is the prevailing trend, with 70 percent of agencies saying their system count has increased over the past three years, according to Sabre's study.
That shouldn't be surprising considering wider industry trends over the past several years, with airlines pulling some content from the traditional EDIFACT global distribution systems as they expand New Distribution Capability content, in addition to low-cost carrier content that typically has never been available in GDS channels. For more than half of the agencies in Sabre's study, this has meant higher tech costs, less consistent customer experience, slower agent onboarding and lower agent retention levels.
Lily Agonoy, managing director of Hong Kong-based Jebsen Travel Group, said in the study that "content fragmentation has stretched our resources, with agents spending 20 percent more time navigating systems."
Speaking at a media roundtable during the Global Business Travel Association convention in July, Sabre SVP of production management Kathy Morgan said that is an issue Sabre is "uniquely positioned to solve," via its newly launched SabreMosaic Travel Marketplace. "In the TMC space, there is just the need to be able to say, 'I can confidently tell my corporate buyers that I have access to the greatest breadth of content,' " she said.
Among the content Sabre reports available in Mosaic is 38 NDC airlines, 150 low-cost carriers, more than 70 car and rail providers and a massive lodging content available through a single connection. Sabre SVP of global agency sales and delivery Andy Finkelstein during the roundtable said that would appeal even to those TMCs that have already put in the work of establishing other means of accessing the content.
"Even though customers at one point established connections with third parties and direct connects, they're having the conversation, 'Why would I want to continue to maintain that?' " Finkelstein said. "If you can solve this for me at scale, [I] should think about redirecting my capital to things that are changing customer experience, let you handle connectivity."
As it moves in that direction, Sabre is looking to "ditch the moniker" of GDS, which he said the industry automatically equates with EDIFACT and is not representative of the company's mix of direct connections and partnerships along with its migration to and partnership with Google Cloud as the basis for its technology platform.
"We're in a much more agile framework to manage this wide range of connections through ... modern technology, including if [the] agency has own content, it can plug into our platform," according to Finkelstein. "Modularity puts us in a different position than we were several years ago."
Financial Challenges
As it continues this transformation, however, Sabre is facing some near-term financial challenges. In its second-quarter earnings released in August, Sabre reported results below its previous expectations with a 1 percent year-over-year decline in air bookings. Subsequently, the company saw a steep drop in its share value, losing about 40 percent of its market value. While competitor Amadeus reported slowing growth in air bookings for the second quarter, it still saw growth year over year. In the earnings call, Sabre CEO Kurt Ekert said the decline was not "structural" and the disparity stemmed in part from markets where Sabre had a disproportionate share of business having a worse quarter than other markets where it has a disproportionately low share of business.
Even so, Sabre's market and debt—proceeds from its Hospitality Solutions sale earlier this year were primarily used to pay down debt, and the company reported a net debt of $4.7 billion at the end of the second quarter—woes have spurred speculation among industry analysts, with chatter on LinkedIn about turnaround solutions including a merger with competitor Travelport—which is private and does not report quarterly earnings—or even acquisition by an airline or a large TMC. That's all speculation, of course, with varying levels of feasibility. At BTN's recent Tech Talk event in Montreal, industry veteran and CorpTravelTech CEO Steve Reynolds pointed out that a merger with another GDS would face intense regulatory scrutiny, for example, and a merger with a large TMC would make it difficult to do business with other TMCs.
This month, global travel strategist Mike McCormick in his "Travel Again" newsletter noted the importance of Sabre—and the GDS more broadly—in the marketplace, saying frustration with the pace of innovation is understandable but that the challenge of widespread implantation without disruption is high.
"All the 'dinosaur' references about the GDS players that have been around for years are cynical, but hardly accurate," McCormick wrote." It is just a very convenient way of criticizing the technology platforms that has acted not only as a critical travel industry backbone, but very effectively served as a collective bargaining forum for travel agencies on behalf of their customers. In short, what would the cost of travel for customers be today without the GDS?"
Ekert, in his second-quarter results commentary, said business travel trends—particularly government and military travel—would continue to be a short-term challenge, but he also pointed to business wins and the upcoming launch of a multisource LCC solution as sources of growth.
"We are navigating some near-term challenges that we believe are largely transitory, and we are encouraged with the continued scaling of our new business volumes," Ekert said. "Through the team's continued hard work, Sabre is a stronger, better-positioned company today than it was a year ago."