Travelport said it expects mass rollout of its Universal Desktop agent operating system in the UK within 18 months as it promised its customers faster and more agile innovation.
Gordon Wilson, president and chief executive, spoke to Travel Weekly as the GDS revealed the impact of losing a major contract to host United Airlines following its merger with Continental.
The second quarter of this year was the first in which this loss of business has been apparent on Travelport which saw a $120 million or 12% reduction in adjusted EBITDA (a measure of profitability after costs).
However with the impact of United taken out EBITDA was flat, the loss of the contract having cost Travelport $16 million in the three months to June.
Wilson said: “I think we are in relatively great shape. As a company we have no near-term concerns at all.
“At an operating level we are a company that will produce $450 million in EBITDA with fantastic free cashflow and an operating margin of more than 20% – a lot of companies would bite your hand off to have that.
“What we do have is a pretty high debt pile but we can handle that debt in terms of interest payments.”
Wilson ruled out reviving plans for an Initial Public Offering of its shares saying the market and Travelport’s capital structure were not conducive to such a move at the moment.
One figure the GDS seized on to underline the strength of its underlying performance was revenue per available segment (REVPAS), which was up 2% to $5.34.
Wilson said this reflects the diversification of Travelport’s model away from its core airline business to sectors like hotels – its hotel platform Rooms and More has tripled its content since the last first quarter earnings call to 340,000 properties, Wilson pointed out.
Another revenue stream that has helped REVPAS increase is in the controversial area for many travel agents of new subscription fees for using the Travelport system.
The GDS recently introduced ‘Agility’, a package of services for which it charges agents including new mobile services and Smartpoint, its intermediary platform which, like Universal Desktop, is designed move agents away from the old green screens.
Wilson agreed that as it expects agents to pay for more of these sort of innovations Travelport must do a better job of communicating their benefits to the agency community.
“If you pay for something you think about using it more effectively,” he said. “It’s in everyone’s interests that people are using these products and that’s required us to do a lot of retraining of our own account managers.
“We have been investing heavily into training programmes because their role is changing. It’s much more about how we enable our customers to get the full benefits of increased revenue growth through these new products which they are now paying for.
“Some of this stuff sells itself because it is so easy to use but it’s an ongoing process, it’s not just stick it out there and walk away and leave them [agents] to it. We are continually making people aware of the benefits of it.”
Wilson dismissed the often repeated characterisation of GDSs as being large unwieldy organisations as being “unfair”.
This accusation often comes from airlines looking to build an argument to cut the GDSs out of the distribution but he pointed out the work Travelport has done with Air Canada to revolutionise the distribution of its fares as well as all of its ancillaries through the Agencia II launch.
“It’s easy game having a pop at the GDSs when they say our technology is lagging behind the airlines’ – in a lot of cases that’s actually untrue.
“Our biggest challenge in getting what we have done with Air Canada out more widely is the airlines’ readiness to support it with APIs, putting that into the travel agency channel.
“We run these systems 99.9% of the time globally and they are critical to the agency community. If we were not there how would they function?
“I would take issue with anyone who says Travelport is not showing innovation. It’s taken us a while to get going because we have had to make some largescale technology investment but we have done a lot of them now. It’s on going.”
Travelport has developed a universal API allowing third party developers to create technology specifically to configure with its systems.
And Wilson said it was this, as well as strategic partnerships, like the one recently announced in the UK with social media specialist Digital Media which will drive future innovation.
“We are a reasonably sized company and with the best will in the world we cannot be fleet of foot everywhere. Our strategy is to embrace the third party developer community and give the best API with the richest content available and let them at it.”
The most recent example of this was the launch of an iPhone app allowing agents to access the GDS on the move through their smartphones.
This has now had 3,000 downloads having been rolled out across Europe and Wilson said he was very pleased with how that was going.
Travelport has been testing the long-awaited Universal Desktop with a “handful” of UK agents and it is going through the process of honing it for the UK market, Wilson said.
“Once people start seeing what Universal Desktop does it really does speak for itself. It’s not for everyone but mass roll out will take place this year through 2013 and maybe a little into 2014.
“I would be very disappointed if we haven’t rolled it out within 18 months.”