Amadeus, Sabre and Travelport have all announced their third quarter results in the past week. Balance sheets and P&Ls can look boring but they often tell us where experts are expecting revenue growth.
For the GDSes, there are three trends to look out for
1. Travel agency booking trends in different regions of the world
2. Trends in travel agency growth in segment booking
3. The outlook for sources of revenue
Regions
Figures from the three GDSes are not directly comparable because they differ in what they measure (eg air only or all bookings) and how they measure it (volume or revenue). The trends nevertheless are remarkably similar.
Growth looks the strongest for all three in Asia Pacific and it certainly has the strongest growth in segments. However, Travelport reports the greatest growth in Travel Commerce Platform revenues in Europe. Sabre and Travelport both lump European bookings into one category but Amadeus subdivides the reporting of its air agency bookings between Western Europe (up 2.3% in the first nine months of the year) and Central, Eastern and Southern Europe (down 3.9%). This is more likely to suggest the relative economic health of different parts of Europe than anything to do with user trends.
Segments
Today's GDSes all are outgrowths of the original airline CRSs (computer reservation systems) and as such are the natural destination for most air bookings. But they are all evolving their business models for travel bookings to allow for the development of other sources of revenues both within and in addition to travel agency air bookings.
Both GDSes and TMCs tried to encourage the growth of the one-stop booking shop by developing non-air bookings with varying degrees of success. Amadeus has regularly failed to show growth in this segment to match that of air bookings. In the first nine months of 2016 Amadeus travel agency air bookings grew by 5.2% but non-air bookings fell by 4.3% in the same period.
On the other hand, Travelport's 'Beyond Air' which includes revenue for everything excluding technology services and air bookings has grown 18%. Much of this is attributable to Enett, its virtual payments company, which reported revenue growth of 60% in the third quarter.
Revenue
Without a doubt all the GDSes have their eyes on ancillary fees as a means to increase their own revenues. The Amadeus results commentary emphasises the rosy outlook here:
"As of the end of the third quarter, 64% of the global air bookings processed through the Amadeus system was eligible to carry a merchandising item. Also, 116 airlines had signed up to Amadeus Airline Ancillary Services for the indirect channel, with 90 of them already implemented. And if we include customers who have signed up to Amadeus Airline Ancillary Services for either direct or indirect channel, the number grows to 163, of which 123 have already been implemented."
Travelport has also been aggressively developing its merchandising platform to develop income from ancillaries. Its results say that "Air revenue increased by $9 million, or 2%, mainly due to improved pricing and merchandising."
Air bookings may be the backbone of GDS systems but the future focus is certainly on how to capture more of the spend on those air bookings than the fare, a service for which both suppliers and buyers should be prepared to pay.