Sabre Unveils New Pricing Option For GetThere Bookings

Southlake, Tex.-based global distribution system provider Sabre Holdings Corporation today offered corporate users of its GetThere self-booking tool and their designated travel agencies an option for new pricing that cuts by 50 percent the segment fees paid by airlines to Sabre on GetThere bookings. Corporate participants and their agencies would stop receiving booking incentives on GetThere reservations starting Jan. 1.

The move is a preemptive action against "so-called direct connect" initiatives underway in the industry, said William Hannigan, Sabre chairman and CEO, on a conference call with analysts today. Not an indication of weaker pricing power for Sabre, Hannigan said, the program is an attempt to stem the "vicious cycle" of growth in GDS incentive payments to agencies and their clients. Although Hannigan said the program, known as Corporate Connect, also is designed to save the industry on the costs of developing direct connections, officials said GetThere will continue to develop capabilities for non-GDS bookings using its recently introduced multi-source engine technology.

"Corporations have been hearing that suppliers are concerned about booking fees and incentives, and that that's why they are withholding their content," said Hannigan, referring to fares that are available only on the Internet. He said one major airline in recent days has been speaking with Sabre about providing Web-only fares for their corporate clients through the GDS. "I believe this is a rational pricing structure that puts the energy in the right places," Hannigan added.

Sabre officials said the movement should spur dialogue between corporate buyers and both their agency and airline suppliers on new economic models.

"This is about transparency," said Mark Williams, Tampa-based director of Americas travel and meeting management for PricewaterhouseCoopers. "It's a simpler, more straightforward model. It will be interesting to see how the airlines react and whether they will share the savings. I'd expect to get it back, plus some."

"The Corporate Connect program, when implemented, will eliminate the airlines' focus on agency commissions and GDS fees as the source of their profitability problems," claimed Dan Green, CEO of Sea Gate/Advanced Travel Group, in the Sabre statement.

Hannigan told the analysts that the initiative would shave an estimated $23 million, or 1 percent, off Sabre's 2003 revenues, which would largely be offset by the cut in incentive payments. Sabre currently charges suppliers an average of $10 and GetThere users about $5 per corporate booking. The program would cut the supplier payment to $5, but also would eliminate $5 in incentive payment cost borne by Sabre.

Corporate Connect highly resembles Worldspan's Corporate Online Program, introduced in 2000, that charges airlines a lower fee for corporate self-bookings not already associated with an incentive payment. Worldspan officials recently said the program was gaining traction (BTN, April 22). Earlier, Sabre ran a similar program related to its Business Travel Solutions product, but officials said that was discontinued because it failed to boost BTS adoption.

The move comes as all GDSs are looking for new ways to price their products.