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It’s tough being the CEO of a public company. But holding the top job at a company owned by private equity investors can be tougher. Even harder is being the chief executive under Elliott Management, a firm that earned its rep as an activist investor with unrelenting scrutiny on its companies.
That’s why many eyes are on Greg Webb, who last August became CEO of travel technology company Travelport.
Elliott Management’s private equity arm Evergreen Coast Capital and buyout firm Siris Capital took Travelport private last year in a $4.4 billion deal. It used borrowed funds for part of the transaction and presumably will want to sell the company at a profit several years from now. It’ll expect quick decisions and want tangible results toward a lucrative exit.
Travelport’s private equity owners tapped Webb for the top job, poaching him from Oracle Hospitality, the global market leader in hotel property management systems. At that brand, Webb had led a turnaround effort that may have pulled it out of what was starting to look like a tailspin.
At Travelport, Webb will need to arrest some declines that began accumulating under his predecessor, longtime CEO Gordon Wilson. Analysts at Evercore ISI estimated that Travelport’s share of the global distribution market for air travel fell from about 26 percent in 2014 to about 21 percent late last year. Market share claims by Amadeus and Sabre have painted a similar picture.
Webb can draw on having been chairman of Sabre, Travelport’s larger U.S. rival. He also led Sabre’s distribution unit for many years.
In his first six months, Webb’s team achieved the most-publicized objective of the company’s owners. Elliott had said it wanted to see Travelport sell its stake in eNett, a payments technology company. Last month, Travelport sold its stake in Enett to Wex in a $1.7 billion transaction.
In an interview Wednesday, his first with Skift since becoming CEO, Webb said Travelport’s owners are committed to investing in the company’s growth, including a significant technology overhaul.
Travelport has long maintained three systems — Worldspan, Galileo, and Apollo — for airlines to distribute plane tickets to agencies. They’re hangovers from past acquisitions.
Webb doesn’t plan to maintain all three interfaces. He wants to move to what he calls a single, Travelport platform within about two-and-a-half years.
A single platform might enable the company to recover some of the distance recently lost to rivals Amadeus and Sabre by making software development more efficient. Airlines will only have to file to one system instead of three.
Creating a next-generation platform and migrating agency customers to it would easily cost north of $100 million, whether it would be through software development, acquisitions, or a mix of both, experts said. Webb declined to put a number on the size of the project.
Will agencies face heartache during the migration?
“No, I don’t anticipate much heartache,” Webb said. A lot of back-end and front-end functions across Worldspan, Galileo, and Apollo are already common functions.”
“Much of what travel agencies experience today will have limited changes,” Webb said. “Now, for those who operate on a command-line basis, there will be some formatting changes that will require some retraining. But the differences in format? There’s not that much.”
More Automation for Agencies
Some critics argue that Travelport doesn’t currently meet the requirements of many corporate travel agencies who are looking to move towards automation.
“Travelport, if you look back, was at one point the leader in automation,” Webb said. “For instance, in 2010, they were the first to the table with a tool called ‘rapid reprice,’ and I was at Sabre then, and I remember thinking, ‘Oh, we just lost.’ They had the first refund and exchange method with automated rules, etc.”
“I don’t know why they took their eye off the ball, and they lost that competitive advantage,” Webb said. “But we’re getting back to parity on that front, and within the next six months, I think we’ll be able to show we have an advantage in automation. I feel good about where we’ll be within the next six months.”
In the meantime, Travelport is looking for some quick wins. This week, it announced that it had cut a deal with HelloGbye, an automation solution for travel management companies, where Travelport can generate itinerary recommendations in response to an emailed request “in less than five minutes.”
At the time, Webb joined Travelport, Southwest Airlines decided it wanted to break with decades of tradition and begin working with corporate travel agencies through the global distribution systems.
Webb said he expected the first fruits of Travelport’s collaboration with Southwest to launch by “late spring.” Southwest’s processes differ somewhat from the ones of legacy carriers, so there has been learning on both sides, he said.
“The Southwest partnership lets us show how we can drive volumes to a non-legacy carrier, and it’ll let us show our go-to-market strategy with new players and be a partner of choice for the market,” Webb said.
Travelport points to several drivers of future growth, and its India strategy has been one of the most notable.
This year, the company signed contracts to be the preferred distributor for Air India. (See our story, “How Struggling Air India Is Setting the Stage for a Major Battle Among Distribution Giants.”)
The Air India deal is remarkable because it gives Travelport exclusive access to its domestic content. Up until now, executives at all of the global distribution companies have said they believed that airlines should provide all content to all players.
“Air India decided to move to a single-vendor model, and that was a deal done before I got here,” Webb said. “I’m not sure that’s the right model. It’s certainly not something I’ve advocated in the past. But it’s a dynamic market.”
In the short term, Travelport has superior strength to its rivals in India, one of the world’s fastest-growing markets. In April 2019, Jet Airways also tapped Travelport’s services. Since 2016, Travelport has had an exclusive distribution contract with IndiGo, the country’s biggest domestic airline. The three carriers represent approximately 70 percent of the Indian air market.
But the news isn’t perfect.
“Travelport’s margin – having been fairly resilient for years – has recently weakened considerably,” wrote John King, head of European technology at BofA Merrill Lynch Global Research, in October. “Amidst the loss of offline leisure travel agent Flight Centre to Sabre [in 2018], it has more recently decided to try and gain share in the Asia Pacific OTA [online travel agency] market. While this segment offers good volume growth, it is highly margin dilutive.”
Webb’s Broader Tech Vision
Webb touts that Travelport was first to the party when it comes to “airline retailing” with its rich content and branding product.
“We’ve been doing trials with a couple of U.S. carriers to drive per-unit transactions up a decent amount with our Rich Content and Branding product,” Webb said. “Partly it’s technology, but partly it’s strategic as we try to stay aligned with carriers’ wants and desires.”
Webb said his predecessors at Travelport built the platform as an adjunct to the normal distribution process. Webb’s vision is to make airline retailing just a normal part of the transaction flow, “rather than having a one-off feel to it.”
“What we are at our core is an aggregator,” Webb said. “In the past, we took what you could call ‘traditional content’ and we delivered it in a one-size-fits-all way. Today there are content sources that are non-traditional that we should be able to handle, whether it’s Airbnb’s or Vrbo’s short-term rental content, whether its tours-and-activities content, or whether it’s an upsell capability for the hospitality industry.”
“Being an aggregator is not as simple as pulling something in from a seller and making it available to buyers,” Webb said. “The problem is the buy-sell transaction in travel has maybe 50 steps in it. Do I take a credit card at the reservation or wait until later? Is there a discount associated with it? Do I reconcile this directly or through a clearinghouse? The ambition is to take travel content from anywhere and distribute it anywhere and be able to handle all the complications that can arise throughout the entire lifecycle.”
Not Abandoning Mainframes
When asked, Webb said he intended to leave the company’s mainframes running a transaction processing facility created by IBM at the base of its tech stack that some outsiders criticize as being insufficiently nimble. On Wednesday, Webb’s former employer Sabre said it planned to move wholly off mainframes by 2024. Amadeus almost entirely runs on the cloud.
“Removing TFP would be caring about technology for technology’s sake, which I’m not interested in,” Webb said. He said TPF does “a fantastic job” on processing a whole set of transactions that wouldn’t perform well in a cloud-based system.
Simplification and modernization are watchwords with Webb when tuning up the foundational architecture of the company’s tech stack. He wants to rev up the company’s effort to break up its cloud services into smaller elements, or “microservices,” which developers can access via modern and easy-to-use computing interfaces. Tech giants like Amazon and Netflix pioneered this approach years ago.
Webb said Travelport would store itinerary and traveler profile information in a microservices platform called “TripContainer.”
“Under the old model for distribution companies, when services request information, we return all of the information associated with the passenger name record,” Webb explained. “But sometimes they just need to call for a component, like an address, let’s say. TripContainer will let us return single elements most efficiently.”
Webb said services best run on the cloud would be on a public cloud, likely on a regional basis, such as its desktop reservation system for agents. The company’s flight shopping, pricing, and inventory engines run on the cloud, as well as many back-end connectivity systems, he noted.
Webb thinks one edge it has is that Travelport doesn’t run a business offering airlines operational software known as passenger service systems, or PSSes, as well as the distribution business. That makes it stand out from its rivals, Amadeus and Sabre, who do offer airline IT services.
“I have no desire to get into the PSS business,” Webb said. “It’s an advantage for us that Sabre and Amadeus have to focus on internal res componentry and that for both of them it’s on a continuum of the same system as distribution, which adds complexity.”
Industry eyes will be watching to see if Webb adapts to the high-pressure job of working for private-equity bosses. He seems off to a promising start, but it’ll be an intense ride to continue to satisfy the investors’ series of goals.
Webb’s been pushing hard. Last year, he logged 427,000 miles on flights. “(This year) is looking much the same,” he said.