Limited Corporate Travel Growth Is Sabre’s Biggest Issue in North America

Sabre Corp. executives reported that corporate travel bookings were essentially flat in the first quarter of 2016, and there’s no evidence yet of stronger growth to come this year.

“The corporate market has been generally flat,” said Sabre CEO Thomas Klein, on the company’s first quarter earnings call. “The leisure market is definitely stronger than corporate, airlines are pricing into that leisure demand… and we see it with their [revenue] results.”

In fact, Klein identified a weakness in corporate demand as the travel technology provider’s biggest problem in the North American market based on its returns in early 2016.

“The biggest issue in North America… is this slow to no growth in corporate travel,” said Klein. “And we haven’t forecasted – we’re not economists – when corporate travel is going to return to growth. We saw a little bit of a pull back early in the first quarter. And if you read sentiment pulls across corporations, CEOs and CFOs there was some conservatism around spend. And maybe that’s what happened in the first quarter with bookings.”

A severe downturn in energy industry travel spending, along with less spending from financial firms, is to blame for lack of increased bookings according to Sabre CFO Rick Simonson. Sabre’s market share continues to grow in North America overall, though, due to increase leisure bookings.

“[Our bookings were stronger on the leisure side than] corporate because energy and financial [companies’] corporate travel and spend was significantly down in the quarter,” said Simonson.