Sabre Plans to Invest Extra $150 Million in Technology This Year

The travel tech company states that unlocking just one more dollar per passenger could be worth $5 billion per year.

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Need to Know

  • Travel technology company Sabre announced plans to boost its annual technology expenditure by $150 million in order to keep its growth on-pace to match and beat the competition.
  • Sabre is the largest global distribution systems provider for air bookings in North America, with close to $4 billion in revenue.
  • CEO Sean Menke says, “We intend to accelerate our road map for new IT capabilities, processes, and intelligence that will allow suppliers to transition from a transactional focus to a more predictive, customer-centric approach with personalized offers,”
  • In October, Sabre acquired passenger service solution Radixx for $110 million.

Analysis

After reporting earnings this week, Sabre CEO Sean Menke said the company is willing to take on heavier costs in order to keep the company moving forward and continually innovating in the travel technology world. In order to facilitate these changes, Sabre said it is boosting its technology spending by $150 million for 2020, which would amount to nearly 4% of the company’s yearly revenue.

Menke said the long-term investments “will lead to a much more profitable company,” despite resulting in short-term dips in profit.

Around the world, more than one billion people have used Sabre’s technology to book travel and arrive at destinations. The technology Sabre builds services over 435,000 travel agents, 40 car rental companies, 16 different cruise lines, and 32,000 hotel properties. Sabre’s travel marketplace transacts over $120 billion in travel spend per year.

in order to keep up with growing demand, Sabre has been steadily investing in technology, even in the last six months. In October, the company acquired low-cost passenger service solution Radixx for $110 million, and last month, Sabre onboarded Google to make the switch to cloud infrastructure.

The $150 million investment will support the integration of Radixx and streamline the move to Google Cloud.

“We intend to accelerate our road map for new IT capabilities, processes, and intelligence that will allow suppliers to transition from a transactional focus to a more predictive, customer-centric approach with personalized offers,” says Menke.

Because Sabre has its hands in every facet of travel, from airlines to cruises and booking to tours, investing in technology to meet customers where they live can result in exponential growth.

“Shopping volumes over the past few years have grown 50% annually, and that is just the tip of the iceberg. As custom offers continue to evolve, we expect that shopping volumes and complexity will continue to grow. We believe that airlines and more specialized technology providers aren’t equipped to manage these volumes and complexity on their own,” says Menke.

“We see multiple ways of increasing the total addressable market and revenues in the future. Unlocking just one more dollar of value per passenger boarded potentially represents a $5 billion opportunity for the global travel industry.”

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