SABR
#Thanks, <UNK>.
Yes, <UNK>, it's <UNK>, thanks.
You've got it right, we will have a stronger growth there.
And as I mentioned, more so even in Q4 than Q3 just on quarterly seasonality.
And we still expect the 17% growth for the year, so all the numbers are intact.
Again, it's really just a good visibility on what we have, particularly in hospitality as that becomes a bigger portion of our business.
And in airline, of course, we have across really three suites of product, our SabreSonic reservations suite, our RF Centre and AirVision.
So it's really a combination of those, if you look at those three.
And then in hospitality, it's really much more balanced across those than, say, two years ago where we were a little bit more reliant on airline reservations, the SabreSonic suite.
So given that, all of those have attributes of where we have strong predictable sales pipeline, implementation pipeline, that we had a history with, reliable.
Airlines have some adjustments to that, we move somebody up, we move somebody back.
So we feel pretty good about it.
No different now than what we felt in terms of the visibility, predictability that's since we came public, other than we're a little bit more balanced in those four suite of products.
The three across airlines and then the hospitality in totality.
(multiple speakers)
<UNK> and I both liked your question.
(laughter)
<UNK>, take it away.
I'll take a stab at it.
There's always a little bit of ---+ when we see that kind of gain, a 4% gain, there's definitely some mix shift in there.
As we said, we had a strong Asia-Pac growth quarter versus rest of world.
We saw a return of growth to Latin America.
We saw a little bit of growth in Latin America where booking fees are a little higher than North America.
And as we said all along, we expect as we renew contracts with our supplier base, that we should see moderate price increases.
We've talked about it at about the rate of inflation.
And that's what we're seeing.
So the combination mix and a little bit of renewal uplift is what's driving that.
We haven't kicked that forward too far, <UNK>, but we did see a good quarter from an average price perspective.
Hi, <UNK>, this is <UNK>.
Just a reminder, in travel network we said for our medium-term guidance that it's around 40%, not 42%.
We moved the 42% down to 40% with the full integration and acquisition of Abacus was the primary driver for that.
What I pointed out in Q2 and for the rest of the year is we are actually doing a little bit better this year than what we expected, so we are in between that 40% and 42%.
But again, we expect it to be closer in the medium term to 40% than 42%.
That allows us to have the right kind of [flexibility] to invest for total revenue growth, total margin growth and total free cash flow that maximizes the business.
I think we're demonstrating we're playing that well.
We'll be in between those ranges a little bit here this year and next, but that's just a reiteration of what we look a little bit further out.
Real happy with the performance of travel network in the first and second quarter to date.
On the solutions side, again, as we've talked about this year, in the high 30%s.
We are tracking to that quarterly.
You have some variation here as we've seen in Q1 and Q2, then we pick up a bit.
And then moving forward, we had said previously that 2017 would be at the very high end of the 30%s.
That wasn't a limit.
We talked at our Investor Day where we updated our medium-term outlook and expectations.
And say we have visibility from there into the low 40%s margin on the solution business.
And again, I believe we remain intact for meeting those expectations.
We said that we can consistently grow share.
We haven't forecasted out where share will land but we've said we'll be a consistent grower and we still believe that.
So we'll stand with that we think we can take share everywhere in the world.
Yes, there are some quarterly ups and downs, but we expect overall that our trend line will go up.
<UNK>, the new wins will lag a bit so it doesn't have a big impact on our expectations this year.
This year remains intact with or without those, and then just another thing, as I say, cements the foundation going forward, as I mentioned in terms of our proof points around the sustainability of incremental, sustainable, profitable market share growth.
I think we've commented as much as we ought to.
We said we had a window here that we feel comfortable with and we're working through that process.
We've broken out those in our K and you can see those and do the ---+ we have got the math of what last year was.
Again, as we said, in overall solutions growth, we expect hospitality to be growing faster than the average of those two and that's the case.
So everything intact on there, nothing to add from what we talked about before, <UNK>.
Appreciate it
The answer is yes, we see more of a softness on the business travel side.
And I think it's been there's been softness in segment-specific areas.
You certainly have seen now a multi-year softness in the energy sector where I would say trips went away, not looking for cheaper fares.
Companies always look for the best available fares on the trip that's needed.
And in our world, it doesn't matter whether they ---+ in fact, we want to help them find the best available fare for the trip.
So we're not sensitive to those price fluctuations on the airline side, we get paid on a per-booking basis.
But energy sector trips went away.
In the financial sector, trips have also gone away.
So in the year there's been a lot of cost cutting as banks, and banks in particular, have had earnings shortfalls and they've cut costs.
And travel is one of those expenses that is early in the queue when broad cost-cutting is going on.
That's primarily the big sectors that we've seen.
But in the US it's been soft now for quite a while on the business travel side.
I think that flows into the big corporate markets around the world, as well.
Not anything new there.
I think the new thing around the macro is, as <UNK> mentioned, a pullback in capacity.
capacity will still grow but we see airlines pulling back some of that capacity growth that they forecasted coming into the year.
<UNK>, this is <UNK>.
On the leisure side, yes, there is good growth.
In particularly the North American market we've seen the dynamic that we talk about in the businesses.
Airlines are using price selectively on markets to keep their planes very full.
So you see the load factors continue to be very high.
They use the price, particularly primarily on the leisure to stimulate that demand.
Again, that doesn't flow through to us because we get paid on a per-booking fee and that's the beauty of this model.
We're seeing that work and we pick that up through our great position, for instance, like Expedia, the biggest air travel booker in North America.
They pick up leisure and they also have a business side in Egencia, so we see it both ways there.
Thanks, <UNK>, this is <UNK>.
The operational integration is largely complete.
We have some continued things that we have to do, but for the most part I think the big chunks are complete.
We've been extremely pleased with the go-to-market side and our ability to manage customers and sell in the market.
We saw share gains in the first quarter.
We've held steady here and we believe that we will see future share gains there.
I'd like to have the same steady growth in market share in Asia-Pac as we have had in EMEA.
That should be our expectation over time.
And I think we have ---+ our view has been that we have even more opportunity there because we knew that the joint venture had some weaknesses in how it went to market and the consistency of how they went to market across the geography.
We feel very, very good about our position there.
I mentioned these five customers I mentioned are global customers and we expect in some cases to have the growth be in that Asia-Pac region.
We have a little bit of work to do to get it done but we expect to see the growth there.
Thanks, <UNK>.
Yes, we are already the leader in the space.
I mentioned it's about a $250 million TAM in the crew area.
We've had very good traction.
We have talked before that Singapore Airlines is our launch customer in Asia-Pacific region.
We've had a number of Asia-Pacific deals come in behind that, including Garuda in Indonesia and Lion Air in Indonesia.
We have some other business we will talk about as we get further into this quarter that will close in the Asia-Pac region.
We've had North American business close recently.
From a competitive landscape perspective, there is a lot of legacy crew systems out there.
This is still a solution that in many cases that the biggest airlines in the world is sitting in a very legacy environment.
Airlines don't like to touch the crew system necessarily because there's this issue, as I mentioned, very complex.
It's driven by a variety of work rules that come from governments, global regulators, as well as work rules driven by contracts.
So it's a complicated area and it impacts a big part of your cost base and a big part of your employee base.
So changing it is not simple but, as I said, we're benchmarking in some cases two and three times better than some of the legacy benchmarks out there.
We expect to get big traction here in market.
Competitively we have the best solution in the market, we've validated it over and over again in the sales process.
I'm just very bullish as to why we need it this morning.
As an example, when you're benchmarking two and three times faster than competitors and can save an airline days at an operational recovery, the dollars in that cost justify the purchase of the solution and the cost of the change pretty easily if we do our job in teeing it up with the airlines.
Very bullish on it.
We'll see revenue growth there this year and certainly into next as we announce bigger ---+ not just diversity and regional deals, but I think bigger and bigger carrier deals.
Hey, <UNK>, this is <UNK>.
The answer is yes and yes.
All good.
This is <UNK>.
I mentioned that as we renew these deals we look for opportunities from our customers for growth.
Sometimes that's how we can serve them better or new functionality.
Sometimes it's what we need to do to take them into a new market.
This is a little bit of both of those.
There's some deals where we have very big upsides to move business our way based on some requirements that our customers have talked to us about.
In some cases it's acceleration of road map.
So it's not necessarily new things but things that we're pulling in quicker.
Again, I think (inaudible).
This is <UNK>, Partha.
It will enhance our overall offering, it's not just specific to this new customer win that is driving the acceleration.
It benefits the whole Sabre Red Workspace platform.
I think the industry has a long-term capability to figure out how to fill seats with low prices.
I think in some markets the ebbs and flows of that vary by market.
In some markets airlines have held down the price a little longer than we expected them to.
I thought that was true coming in to the summer.
But we are seeing price stimulate demand in other markets.
Overall, we've talked about a relatively low growth macro and that's what we're seeing.
But I do think as airlines continue to add capacity, which, again, they are doing, just at a slower rate than we expected, they will use price to fill up those seats.
<UNK>, this is <UNK>.
It's working as it should.
They have got the financial strength and flexibility to do it and it's keeping their load factors up.
Yes, it hits the PRASM a little bit, but all good and for our business it's working the way it should and the way we like it and gives us that both growth and stability.
As I said earlier, our share year to date is up almost a full point.
We expect that in the year to grow.
Again, I feel like we can take share globally.
We showed that in the first quarter where we had growth in all four regions of the world.
That's our expectation, is that we're going to have an upward share trend over a long period of time.
There's not really anything new going on there.
We said that we felt like the direct and indirect moderated.
And as I mentioned in my remarks, this notion around where ancillary revenue is coming from, $60 billion of revenue last year, the large majority, and when we say large majority, I mean up in the high 80s, low 90s percentile of revenues on the ancillary side are coming through the direct channel.
Now some of that is sold at the airport and will continue to be sold at the airport.
So things like baggage fees primarily are going to be an airport purchase.
But as the airlines look at what they've done with ancillaries on their direct sites and what they can do next, next it isn't necessarily more products on their direct site.
Next is driving those products through travel agencies, incenting travel agencies to sell them and pushing them through indirect channels.
The technology is there to do that.
There has to be some changes around how the airline airlines think about pushing those ancillaries through.
Because much of the indirect channel business has many of ancillaries bundled in.
You have people buying higher fare classes that already have many of the ancillaries bundled in.
So they have to be more savvy about how they push those offers out.
But we built out that technology to let them do that.
And if they look at where the next chunk of ancillary revenue comes from, in our conversations with them, they believe it's going to be in the indirect channel.
Thank you
I just want to thank everybody again for joining us and wish everybody a good remainder of what's left of the summer.
We appreciate your interest in Sabre and we look forward to seeing you face-to-face or talking to you soon.
Thanks so much.
Have a good afternoon.
