Travelport estimates 2013 will see a return to positive numbers in its financial performance, as it looks to offset the loss of a key piece of business with growth in its hotel technology.
Year-on-year declines in key revenue and EBITDA metrics in its Q2 earningsÂ painted a different picture to its rival Amadeus, which announced solid half-year results of its own last week.
Although not exclusively the main reason for the year-on-year decreases in the latest earnings, Travelport pointed to the ending of its hosting services contract with United Airlines at the end of the first quarter this year as a key factor.
The loss contributed to a $22 millionÂ decline in net revenue and $16 million to the fall in operating income, EBITDA and adjusted EBITDA for the second three months of the year compared to the same period in 2011, the company says.
Nevertheless, overall the results were in line with expectations, according to president and CEO Gordon Wilson, “despite theÂ continued macroeconomic uncertainty which resulted in softer Q2 year on year segment volume”, in the USA and Europe, the largest travel markets in which the company operates.
With concerns internally over its debt structure now behind it (temporarily, at least), eyes elsewhere in the industry are now on what Travelport will do to make up the shortfall in its balance sheet from the exit of United and whether it can gain some traction on the introduction of new products it has introduced in the past 12 months or so.
Wilson, speaking after the investor call this week, says he expects Travelport to see positive year-on-year revenue and profit figures Â return to the balance sheet during 2013.
Central to the strategy to get to this point will presumably be continued development and take-up of its hospitality business, an area of the company Wilson says is currently its fastest growing.
Rooms & More is one element of the hospitality division, reaching to what the company claims is a level now where around 700,000 offers are coming in from a string of hotel partners on the platform.
But given that non-air still accounts for only a minority of Travelport’s revenues, other areas of the existing business will have to improve as well, not least in supposedly rapid growth markets such as Brazil where Wilson admits the company has “under-performed”.
Travelportâ€™s Apollo GDS accesses the airline’s content through a new Air Canada API called AC2U (with the help of Farelogix), giving agents access to REAL full content and ancillary services on the carrier.
Wilson estimates the potential market size of carriers capable of replicating the Air Canada model is between 30 and 40 worldwide, although these are mostly large airlines with the technological prowess to implement such a process.
Many airlines “do not have a robust enough set of technologies to put their content into an API”, Wilson says, claiming Air Canada is the most “sophisticated” so far.
- Universal Desktop -Â Travelport is building a “shrink-wrapped” version of Universal Desktop, scheduled for release by the end of year. Why? Wilson admits the original version has faced some difficulties with agents, meaning it is developing a platform that is “easier to install”. He also concedes that the company “over-estimated” how quickly airline ancillary content would be made available through the service.
- Delta Economy ComfortÂ seats – Wilson says agents will not be charged for booking passengers to the premium seats on the carrier (announced in June 2012).
- IPO – The company sees a listing on the public markets as a long-term consideration, but such a move is “not on the near-term horizon”. “Too distracting”, says Wilson. Some analysts have a different view, claiming an IPO for Travelport is “NOT feasible”.
- Universal API – Rooms & More will be included in the API by the end of the summer.