Amadeus wants to get ahead of the changing travel industry through investments in new technologies like next-generation distribution, payments, and hotel software. Getting back into the black will help.
Amadeus has achieved its first year of profit since the pandemic.
Amadeus generated an adjusted profit of $783 million (€742.2 million) in 2022. That number is a significant improvement from 2021, which saw a loss of $47.2 million (€44.7 million), though it is still 41.2 percent below profit for 2019.
The Spain-based company primarily operates the world’s largest global distribution system, which provides information that travel agents and others use to provide booking services to customers. Amadeus also offers software for travel agents, hotels, airlines, and other travel companies.
Total revenue for the company was $4.7 billion (€4.5 billion), a 68 percent increase from 2021. Most of its revenue comes from flights booked through its distribution system.
As previously announced, Amadeus expects to recommence dividends payments this year.
While bookings are continuing to rise significantly each year, totaling 396.3 million in 2022, they are overall still roughly 30 percent lower than in 2019. The fourth quarter of last year was a bit slower than the previous year, but international bookings are continuing to rise, with the strongest improvement from the Asia Pacific region.
The best performing region in 2022 was North America, which slightly exceeded performance there compared to 2019. North America now represents 30.8 percent of the company’s total bookings.
As Sabre also reported recently, demand has been uneven recently for several reasons. Like Sabre, Russian carriers left the Amadeus platform because of a new law there. Considering all the investments as well as high inflation, the company expects costs to rise this year.
“As you have seen in ’22, significant progress was made towards recovery. However, we are still at a point where we see degrees of uncertainty in the very immediate term making it difficult to narrowly forecast our evolution for ’23,” said Luis Maroto, president and CEO of Amadeus.
Amadeus said it signed a total of 65 new air distribution contracts and renewals in 2022. That includes 16 that were signed in the fourth quarter, including one with Ryanair.
Many of the partnerships Amadeus has made involve subscribing to its growing new distribution capability (NDC) services, a next-generation distribution system that’s meant to enhance communications between airlines and travel agents without the traditional global distribution system intermediary.
“With regards to NDC overall, it is a strategic priority for us. We have invested, we are in the process of implementing that. We have implemented already airlines and travel agencies, but this is a continuous process. In 2022, it was a very small percentage of our bookings. We expect that to increase,” Maroto said.
“This is an ongoing project that will take years, and we’ll work with our partners to really be part of what is needed to really push for NDC.”
That includes partnerships with Aeroméxico, All Nippon Airways, and Finnair. Amadeus said it recently expanded multi-year partnerships with American Express Global Business Travel, BCD Travel, and Fareportal to include the integration of NDC offers.
Other Tech Investments
In addition to NDC investment, Amadeus is continuing to invest in other technologies.
The company is working to strengthen its offerings in the area of hospitality software and add and expand partnerships, including contracts with Netherlands-based Van der Valk Hotels & Restaurants as well as Fontainebleau Las Vegas, IHG Hotels & Resorts, and Hilton.
Revenue for that segment of the business reached $815.5 million (€772.7 million) in 2022, a 43.5 percent increase from 2021 and 4.2 less than in 2019. That segment of the business is the closest to being fully recovered and is continuing to grow
“In hospitality and other solutions, our revenue will grow on the back of volume growth and new customer additions across our portfolio,” said Till Streichert, chief financial officer for Amadeus.
The Amadeus payments services are also growing quickly, Streichert said, even faster than the hospitality software business.
Amadeus is still working on a multi-year plan to transfer to the cloud in partnership with Microsoft. Despite high upfront costs, the migration is expected to lead to computing savings when the project is finished in 2025 or 2026.
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Tags: amadeus, earnings, global distribution systems, hotel technology, new distribution capability, online travel agencies, recovery
Photo credit: Van der Valk Hotel Apeldoorn (pictured) belongs to a company that is a client of Amadeus. Wikimedia Commons / Wikimedia Commons