Sabre CFO on its crystal clear focus, airline retailing and the hotel space

Sabre says it has a “crystal clear” focus for the company going forward in terms of being at the lead in retailing, distribution and fulfilment for airlines and hotels.

The words came from Rick Simonson, the company’s executive vice president and chief financial officer, who was speaking at the Goldman Sachs Technology and Internet Conference 2018. He went on to  discuss some of the challenges the company has faced recently and opportunities ahead.

The slow evolution of airlines towards more sophisticated retailing models is a driving force for the company. Just as airlines have become more sophisticated in offering a variety of bundled, unbundled options and branded fares through their websites, they want to extend that same shopping flexibility to their GDS channel.      

“We’ve been at the forefront of developing retailing and ancillary development there for them. They’ve retailed their ancillaries, branded fares, we’ve enabled that on the airlines.com channel. Now we’re brining it to the GDS channel. We’re uniquely positioned for that.

“You need to think about distribution from all consumers on airline.com and a high value GDS channel. Bringing that [airline.com] dynamic of how to market the product to the GDS. That’s a combination of changing the commercial model—and airlines need to think about that as well as the GDSs [do]—and the technology model. NDC is the standard that is helping to enable that change.”

Simonson also suggests that converging airline models, with flagships following the retail models of lean LCCs, are reshaping systems design, market opportunities and the relationships between airlines and GDSs.

“There’s an opportunity to grow the whole pie and to grow revenue..the industry was always a zero sum game..but [there’s more awareness that] you can grow the pie.”

Growing the pie involves improving business models to increase revenue while offering airline customers greater control over their purchases—a market that isn’t based on fares competition alone.

The company is focusing technology investments to support the evolution of retailing, and to address customer needs, but not trying to get too far ahead of the market.

“There’s evolution in the model, where all of us are learning how we make it viable for the scale of efficiency of all parties, whether they are agencies, travel manager corporations, Sabre the GDSs, or the airlines, to actually invest for the future, to enable them to grow.

“We’re making sure that we use the time to be doing the right prioritized continued investment on the robustness the capability and the flexibility on our reservation system, which aligns with what customers need and our vision of how [the airline business model is] evolving, so that we’re best positioned for the next 5, 10, 15, 20 years to be the GDS leaders in reservations.”

On the hotel space, Simonson says the reputation built with independent hoteliers has opened up new possibilities to convert enterprise customers. The Wyndham system is proof of that, and is a success on which Sabre plans to build the foundations for further enterprise growth.

“We’re bringing the same expertise, that same kind of team and understanding, to the hotel-side and demonstrating that, on both the central reservation and the property management.”

Simonson sees more opportunities coming in enterprise. Though a few enterprise hoteliers will retain in-house systems, be believes there is a segment of the top 20 who will want to bring in third party solutions. He believes Sabre can build on the positive results with Wyndham to win over some of these parties who are on the fence.

  “We’re going to continue to grow central reservations and transactions; that’s a main part of our business. We have a very focused way of investing in our property management, on the limited service [properties], and we’re not going to build out ahead of that. We’re going to grow into that.”

The full webcast is available here.

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