Travelport sees an opportunity to gain share with mid-market travel management companies in the U.S., which seems plausible. But it will need to keep up its pace of adopting new technologies and policies to pull that off.
Travelport, a UK-based e-commerce platform for distributing the content of airlines, hotels, and other suppliers to agencies and travel management companies, is redoubling its focus in the U.S. and the Americas, the company said.
In October, Travelport became the first of its peers to process a transaction according to new distribution capability (NDC) technical standards that airlines have advocated in recent years.
In February, the company said it planned to release Trip Services, a new application programming interface, or API for short, as a method of delivering its content according to the new standards.
Last year, Travelport appointed Simon Ferguson as managing director of agency commerce for the Americas. To get a sense of the company’s plans, Skift spoke with Ferguson at Travelport’s Atlanta office, the U.S. operational headquarters for the company, and in a follow-up call.
Only 24 percent of Travelport’s distribution revenue in 2018 came from the U.S., and 5 percent from Latin America, underscoring the opportunity that the company sees to build share in those regions.
A Play for the Middle
“We see an opportunity in the U.S. with mid-sized corporate travel management agencies in particular,” Ferguson said. “A couple of very large corporate customers, including a Fortune 500 company, have recently migrated to mid-market U.S. travel management companies that use Travelport.” He said it was too early to name the companies.
“We’re also partnering with new-breed booking tools like WhereTo” to address smaller-to-medium-size businesses, he added.
To appeal to more agencies, Travelport is about to launch an “efficiency software suite,” a set of online-based tools that agencies can use to automate several manual processes, such as pulling together information about a customer into a single display for an agent to see.
Travelport is working with IBM Cloud on a travel agent booking tool that’s powered by artificial intelligence to track, manage, predict, and analyze travel costs and give end-to-end visibility of previously siloed travel spending. It promises to use natural-language understanding to analyze text and uncover insights from structured and unstructured data.
This year Travelport will experiment with applying blockchain technology to commission reconciliation and settlement between hotel suppliers and agencies with the help of IBM. It also hopes to use data science to uncover business intelligence from hotel reservations it processes in a service it could sell.
Travelport also wants to expand its share in Latin America travel. Much domestic airline content from airlines in Brazil and other Latin American countries is booked outside of the global distribution systems, partly because several large airlines have direct connections with agencies.
“We want to partner with some of the innovative third-party technology companies in Latin America to be able to deliver more content,” said Ferguson.
Ferguson said Travelport’s main goal in the U.S. in the near-term is to adopt next-generation ways of helping airlines and travel agencies sell air content in a single workflow combining traditional and new content.
“We are readying our platform, which means connecting airlines in and helping agency partners be ready to deliver on the promise,” said Ferguson. He said his team is talking with the three largest U.S. carriers about upgrading the quality of the connectivity.
By early next year, Travelport plans to move its desktop reservation system for agencies, Smartpoint, to the cloud, which will add speed and portability for agencies.
Not everyone is sanguine. Earlier this month, an executive at the International Air Transport Association claimed that Travelport and its peers, Amadeus and Sabre, had fallen behind on implementing the agreed-upon new technical standards for selling air content. Doug Lavin told the aviation consumer protection advisory committee that without a change of pace, the industry would not reach a goal of 20 percent of content being processed via the new standards by the end of next year.
As noted, in October Travelport had an agency process a ticket by a live transaction according to NDC standards.
However, some critics described it as a “ceremonial” transaction for a seat on an intra-European flight with no upselling. Separately, some critics said Smartpoint is still some ways off from delivering personalized rates and availability, based on the relevance of desired amenities and a traveler’s membership in frequent flyer and loyalty programs.
“Travelport’s NDC efforts and those of Amadeus and Sabre are clearly a positive step, certainly on the technology front,” said Marc Rosenberg, a consultant at Strataconnex. “However, specific to NDC, it would appear the vendors are reluctant to commit to standard commercial terms with the airlines.”
But the money part still needs to be worked out. Travelport, like its peers, has content agreements with most major carriers in the Americas. Some airlines have recently required the company and its rivals to make price concessions.
“My guess is until they get a better understanding of airline NDC distribution strategies, all the vendors will work to minimize any potential revenue loss inclusive of their own revenue generating NDC offers,” said Rosenberg, who has taken part in 63 contract negotiations between the tech vendors and airlines.
Are commercial considerations holding back Travelport’s timeline on the next-gen selling? Ferguson said no.
“What we’re hearing from major airlines is that 2019 is a year of plumbing, so to speak, meaning it’s about laying the infrastructure to make NDC go into production,” said Ferguson. “We’re very committed to NDC at Travelport.”
Good technical work has been done. The company had scaled its next-generation solutions to several corporate and leisure agencies, including Amex GBT and ATPI Group, Ferguson noted.
Airlines are still figuring out their commercial strategies with the new tools, with each one pursuing somewhat different goals. So it’s understandable that some commercial issues still haven’t been settled yet, Ferguson said.
Some technical work still needs doing, too.
“In the U.S., we already can distribute content from the major U.S. airlines via NDC-based APIs,” Ferguson said. “However, we need a more fully rounded approach to handle all the nuanced issues corporate travel agencies must deal with that don’t come up when airlines sell on their websites,” said Ferguson.
He said one tech gap is the need for more post-booking functionality for travel agencies when it comes to back-office servicing issues. For example, it’s not clear yet how an agency could, if necessary when a customer’s travel plans changed, exchange an NDC-based ticket with the same airline for a ticket provided via a fare filed via ATPCO, formerly known as the Airline Tariff Publishing Company.
Travelport is being taken private in a $4.4 billion deal by private equity affiliates of Siris Capital and Elliott Management. The buyers have said they want to unlock value. But investment may be needed to do that. Travelport executives have said they have made strides and that its capital expenditure on the distribution technology underpinning the tool has exceeded its rivals, Amadeus and Sabre, in recent years.
However, it has second and third-place market share in most markets, including the U.S., which constrains some of its ability to invest in tech out of cash flow without outside help. A sale of its payments division eNett might help provide some resources, analysts said.
It’s a tall order for all players. But Travelport, at least, says it’s up to the challenge.
Photo credit: European travel management company BCD uses Travelport to power its TripSource itinerary management app. Travelport, based in the UK, has been expanding its presence in the U.S. BCD Travel