Sabre Looks for Efficiencies With Cloud Migration on Track

Travel technology company Sabre continues to proceed with migrating from software run from its own data centers to cloud-based computing systems that offer greater flexibility and lower costs.

Decades of patches have left the Southlake, Texas-based company with a system that is costly to maintain and prone to outages.

Critics have said that Sabre has underinvested in its data infrastructure for many years relative to its closest peer company, Amadeus, which has migrated almost wholly to the cloud.

In May, Sabre announced it would move several applications to cloud vendors Amazon Web Services and Oracle.

On Tuesday during a call with investors, CEO Sean Menke said that the company’s cloud migration is going according to plan. Menke became CEO in January 2017, and he said if he hadn’t intervened with a new plan last year, the company’s server count would have probably would have jumped about 25 percent by now.

Sabre continues to significantly depend on the performance of information technology services provided by DXC Technology, a company spun off in 2017 from HP’s enterprise business and merged with Computer Services Corp. The service has been blamed for some of Sabre’s business disruptions in recent years.

Menke said Sabre is moving off DXC services. In December, Sabre had two-thirds of its computing going through DXC. In the third quarter, it reduced that flow to 51 percent, and it plans to bring the percentage down “into the low 40s” range in the fourth quarter, Menke said.

Overall, Sabre plans to modestly increase its spending on its tech infrastructure for several years.

In the third quarter, the company’s technology spend increased 5 percent to $254 million, a pace that was a tad slower than revenue growth.

Sabre reported that its third quarter revenue rose 7.7 percent to $970.3 million year over year.

Net income fell 19.8 percent to $73 million. Management blamed that result on an unfavorable comparison to the year-ago quarter, when the company received a one-off $27.5 million payout from its insurance carriers related to litigation it settled with American Airlines in 2012.

Looking ahead, Sabre sounded an optimistic note. It revised its forecasts upwards for several financial metrics for the full year.

Investors reacted positively to that news, with the company’s share price rising about 3 percent in early trading to $23.

Menke credited some of the company’s third quarter revenue gains to having won new customers through the appeal of its products.

In March, Sabre announced that it had enticed travel agency Flight Centre Travel Group as a client away away from smaller rival Travelport. In the third quarter, the early results of the deal began to boost revenue.

In the third quarter, Sabre also began a deeper relationship with corporate travel management company Carlson Wagonlit Travel, it said Tuesday.

Sabre’s hospitality division has signed up InterContinental Hotels Group as a customer of its new software suite for business travel services, a product that consolidates processes that have typically been separate. The software aims to give a more transparent overview of corporate contracting for participating hotel groups to allow for more rationalized rate management.

The deal is of note because rival tech player Amadeus has signed InterContinental Hotels Group as its marquee launch partner its new guest reservation system.

Menke said the deal demonstrates that his company can provide supplementary services to major hotel chains even if a rival provides core technology services to them. Sabre licenses the service rather than charging per transaction.