Sabre's air bookings fell. Its hotel revenue grew 14%.
In the third quarter Sabre made 1% fewer air bookings and earned 14% more from hotels, and its chief executive says part of that growth comes from OTA and bed bank rates, with leisure travelers next
by Markus Busch
Travel agents made 79.4 million air bookings through Sabre in the third quarter, down 1% on last year and below Sabre's own forecast. Sabre's hotel-related revenue grew 14%. That is faster than the 11% of the second quarter and the 10% of the first.
Driving the news. Sabre reported on November 5, in its 8-K filing and on the earnings call. Total revenue rose 3% to $738.4 million. Total bookings were flat at 95.1 million, and the average fee Sabre earns per booking rose 3% to $6.24. Chief executive Kurt Ekert blamed softer leisure travel in Europe, the Middle East and Asia Pacific, and said corporate travel "remained resilient."
More than 35% of the air bookings made through Sabre now carry a hotel booking too.
A $400 million hotel business. On the call, an analyst asked where the hotel growth comes from. Ekert put the business at about $400 million a year. He gave two reasons for the growth. The first is product work for the travel agents who book through Sabre. The second is more rooms on the screen: negotiated corporate rates, public rates, and inventory from OTAs and bed banks.
That second list matters. In August, the bed bank HBX put 250,000 hotels into Sabre. None of those hotels had to sign anything with Sabre to appear.
Sabre's pitch to hotels. Ekert said Sabre delivers hotels a higher rate than any other channel they have, their own website included. And even with the travel agent's commission, a GDS booking costs a hotel less than an OTA booking.
Leisure is next. Ekert called the hotel business "very corporate-centric" today. Leisure, he said, is "a massive unlock opportunity for us" that Sabre will go after "in the next couple of years."
The catch. That lower cost holds only when the booking comes through the hotel's own GDS connection. A room Sabre sells at an OTA or bed bank rate carries that company's margin, the same as if the guest had booked on the OTA.
The higher-rate claim comes with no figures. Sabre doesn't publish a hotel-only booking count either. Its 8% growth in "lodging and other bookings," to 15.7 million, includes car and rail.
What it means for hotels. Sabre credits the hotel growth to more trips carrying a room and to media, the advertising it sells. With air bookings down, those are more rooms on the same trips.
Sabre already carries OTA and bed bank rates. A hotel that never connected to the GDS can be sold there today, at the rate an OTA or bed bank sells it for, with that company's margin on top. A hotel with its own GDS connection loads its own rate.
Ekert hasn't said how Sabre will go after leisure travelers. The resorts it wants are already on its screen.
Read also: Sabre sold its hotel technology business. Now hotels are its growth story. · HBX put 250,000 hotels into Sabre. It didn't need to ask any of them.
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