An alert reader, Brett Owens, pointed out that I had compared Sabre and Travelport (two of the three major GDSs in the world) but failed to compare them to Amadeus, which is the largest of the three and is already public in the UK!
I’m rectifying the situation with this post. Here’s a comparison on several of the key metrics:
| Metric | Sabre | Travelport | Amadeus |
| 2012 Revenue | $3 Billion | $2 Billion | $3.9 Billion |
| Travel Spend Processed | $100 Billion | $85 Billion | Undisclosed |
| Gross Yield | 3% | 2.4% | Not Avail |
| Billable Transactions | 465 Million | 347 Million | 477 million |
| Spend/Transaction | $215 | $244 | Not Avail |
| Rev/Transaction | $6.45 | $5.76 | $5.33 |
| Adj. EBITDA % | 26.70% | 24.70% | 38.10% |
Sabre and Travelport’s Revenue per Transaction are overstated relative to Amadeus’s, because I had to imput them, whereas Amadeus breaks this number out exactly. Amadeus also has an IT business for airlines that has 70% contribution margins which pumps up its EBITDA margin, but the others dabble in these businesses as well.
Bottom line: Amadeus is the big daddy of the three. And I was really impressed with the clarity of their investor presentation and charts like this:
Amadeus makes the case that it is gaining share against the competition, investing more in R&D, paying off debt, and better positioned in emerging markets. It all sounds pretty impressive. I also love companies that understand their KPIs well and publish them fearlessly, which Amadeus does.
The doubters will say that online and offline travel agencies are being disintermediated by Google and direct bookings by consumers on every travel provider’s website. As an avid Google Flight user, who does not use online or offline agencies, I certainly understand this trend. Still this stock pays a 2% dividend (40-50% payout ratio) and there is good growth left in international travel. Finally, their competition has been PE-backed and debt-laden. I’m guessing the competition will have scrimped on R&D. Besides maybe Amazon or Google tries to buy them!
I might have dabble in this one. It’s usually good to own the biggest network/platform in a huge market–VISA, Verizon, Google, Facebook, Alibaba, etc. Their demise is often predicted prematurely. I may need to add Amadeus to the list–even though I hate the underlying airline industry. Amadeus understands this sentiment among potential investors and includes this chart in their investor presentation to differentiate their results from those of the airline industry:
Thanks Brett for the tip. It’s good to take the US-based company blinders off now and again!
Amadeus is listed in Madrid, Spain, not the UK. FYI… Keep up the good work on the analysis, very interesting.