Amadeus diversifies offering

Breaking Travel News caught up with Julia Sattel, Vice President, Markets, Europe, Middle East, Africa and Latin America, Amadeus, to discuss the evolution of the GDS and why Amadeus has repositioned itself as a “technology partner”, by diversifying its product offering.

BTN: Having established a truly global presence, which regions will be a priority for Amadeus in coming months?

SATTEL: We are concentrating our market share growth efforts in Asia Pacific,  Central, Eastern and Southern Europe and the Middle East. As you say, we have established a global presence and this puts Amadeus in a very strong position to work with these growing markets.

In the case of Central and Eastern Europe, 64% of travel agency air bookings are made through Amadeus. Of course we aim to grow this, but also hotel and rail bookings represent huge opportunities for growth in this diverse and interesting region.

BTN: Content is a buzzword for 2007. What solutions will Amadeus be rolling out for the airline and hotel industry? How are you looking to boost content?

SATTEL: The value to travel agencies of Amadeus’ distribution system lies - in part - in the ability to access, from one single system, the content they need to service their customers. Having to search a number of sources to find the content they need, introduces inefficiency into the travel agent’s process of selling travel.

At Amadeus we are very aware of this fact and are dedicated to a number of activities to maintain the highest level of relevant content in our distribution system.

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On the airlines side, we have full content agreements with 67 airlines in Europe.
Amadeus is also developing a unique distribution solution for low-cost carriers which do not use tickets. We will be able to provide real-time links to low-cost carrier inventories and connect them to the global Amadeus travel agency community. The value of this content to travel agencies is unquestionable as the low-cost carrier segment is expected to carry 40% of European traffic by 2010. Already, some 48 low-cost carriers are bookable in Amadeus.

As high-speed rail grows in importance as a viable alternative to air on short routes, and a feeder to longer-haul routes, we are implementing more rail providers on the air display. Currently, Eurostar, Heathrow Express, Arlanda Express and Deutsche Bahn can all be seen alongside air itineraries in Amadeus.

Hotel distribution is a key area for development for Amadeus. Last year, we grew our inventory by 14,000 hotels - from 56,000 at the beginning of the year to 70,000 by December 2006. We have a number of initiatives to achieve this, including signing agreements with hotel aggregators like hotel.de. These agreements allow us to incorporate the two- and three-star properties in secondary cities, and independent leisure hotels which travel agencies need.

BTN:  Where do you see new revenue opportunities?

SATTEL: At Amadeus we see ourselves as a technology partner to the travel industry. What does this mean? It means that we have the expertise and industry know-how to apply technology to the business issues facing the travel industry.

Yes, we provide distribution solutions, but we have also developed the airline industry’s first new generation inventory management system, designed in conjunction with British Airways and Qantas. We provide technology consultancy to travel agents and we are developing a Hotel Distribution Platform which will revolutionise hotel technology. Our e-commerce services power the websites of over sixty airlines and online travel agents around the world, and over three-hundred organisations in twenty countries book business travel use Amadeus’ self-booking tool.

The travel industry is changing so rapidly that the single sure strategy for Amadeus is to develop an ever-wider range of advanced technology to cover all possible outcomes.

BTN: How important is it for Amadeus to have a multi-distribution strategy?

SATTEL: Enabling multi-channel distribution is fundamental to Amadeus’ operations. For example, last year we announced a solution which we developed with Area Travel Agency and Finland Travel Bureau, two of Finland’s three largest travel agencies. The solution provides the agencies with a single search and display interface for all leisure content including multiple tour operator packages, hotels, scheduled carriers, as well as local or private inventory. Crucially, the solution is truly multi-channel and the content is the same for travel agents, call centres and online channels - ensuring a consistent offer across all channels.

BTN: Do the internet and the GDS go hand in hand?

SATTEL: In the case of online travel agencies, most definitely yes. Amadeus is the engine behind Europe’s largest online travel agencies: Expedia, lastminute.com, Opodo and many others all use the Amadeus distribution system.

But as a technology provider, Amadeus also provides technology to support provider websites, metasearch sites and a whole host of other internet travel applications.

BTN: Would you consider selling your stake in Opodo?

SATTEL: Amadeus has a financial interest in Opodo and we are firmly committed to the company’s success. There are no plans to sell.

BTN: What impact has the arrival of “GDS alternatives” had on the GDS sector? Have they posed as any real threat?


SATTEL: We welcome competition into the marketplace as a competitive market is a key driver for creativity and the generation of new and better solutions. However, so far we haven’t seen a significant impact from GDS alternatives. One of the biggest challenges these companies face is how to offer the same volume of content to travel agencies as companies like Amadeus and how to scale up to the booking volume that such a level of content would imply. Amadeus offers travel agencies access to over five hundred airlines, for example, and processes about half a billion bookings each year.

BTN:  What alternative modes of distribution pose the greatest threat to GDSs in coming months?

SATTEL: Actually in the case of search technology, GDSs have a lot to offer. We have just announced the first partner for Amadeus Meta Pricer, a new low-fare search engine designed to help travel search companies to search the content of their airline partners. The solution conducts the search within the Amadeus distribution system, which minimises the cost to airlines of responding to travel search requests. The result is a fast, efficient low-fare search which yields better quality results for the end consumer.

But to answer your question, the shift to direct distribution - especially through provider websites - is a clear trend. However, it is worth putting into context. Travel management companies and corporations see clear value in being able to access the content they need from one single source. The more content is separated into distinct channels, the more fragmented it becomes, the higher the cost to those buying travel, especially corporate travel. Therefore there is even greater need for an intermediary which can aggregate the content into one place where it can be compared and booked. Technology should simplify the lives of travel agents and travel managers - not make it more complex.

Nevertheless, Amadeus’ strategy is to provide the technology to drive the different strategies of our customers, across the travel industry. It is not our place to dictate which channel, or channels, should prevail - that is for the market to decide.

BTN: How are GDSs evolving and what impact will this have on travel providers, agencies and the end user?

SATTEL: Well I can only speak for Amadeus. I have already talked about our role as a technology provider but let’s look at another aspect. The growth of the internet has an interesting implication for travel businesses. Whereas ten years ago, most travel was booked by a highly-trained travel agent, nowadays and increasing amount of travel is booked by consumers on their lunch break, late in the office, or at home in their own time. Consumers are much less efficient bookers of travel. We click on different options, we try things out, we daydream and go on flights of fancy before settling, finally, for the option which suits us best.

The challenge for travel businesses is that all this activity on their website and reservations systems generates a cost. In 1996 Amadeus processed approximately 25 transactions for each booking. Currently we are processing 150 transactions for each booking.

It is the job of the GDS to invest in their technology - as Amadeus is doing, heavily, to work out how to service this demand in the most efficient way.

BTN: How will the merge of Worldspan and Travelport affect the travel distribution landscape? Would Amadeus consider a merge? How long will Amadeus be able to continue meeting the evolving needs of the customers independently? Are we moving towards more consolidation - perhaps one GDS?

SATTEL: Actually, we see the opposite scenario. Investment in research and development is the driver of any technology company. When Amadeus was taken private, we shared our plans for the future and where we intend to invest in great detail with the PE companies which bought us. They share our vision and are bought into our investment plans and have been now for nearly eighteen months.

The other companies in the industry are going through that process now. It remains to be seen if their owners will commit to the level of investment required to stay at the cutting edge of this industry.

When it comes to the question of a merger, the challenge of merging three booking platforms into one is formidable. I wish them the very best of luck with such a challenging transition.
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