Friday, June 24, 2011

Who is the biggest GDS?

I am now going to shift gears away from online technology and the role that they play in the travel distribution ecosystem to a topic that I have been personally intrigued with since I wrote my first book on Global Distribution in 1999.   That topic is GDS Share.

As background:  Last week, I wrote a blog entitled "Who Has the Power" that made an erroneous statement about Travelport being the biggest in the US.  Rival Sabre quickly corrected me, but would not provide me with statistics to prove their claim.  Notice I say "would not", not "could not".  

Sabre will be happy to know that I have since corrected that article after verifying the information with Travelport, but decided to write a new blog today on the GDS share topic to augment the correction, plus another blog talking about how share has evolved (see the previous blog entry).

When I wrote my last book on the GDS companies in 2002, I got all of the GDS companies to share with me their booking share data by region (based on MIDT - marketing information data tapes) and I forced them to rationalize their differences so that no one would object to what was published.  That was a decade ago and the marketplace (and the owners) are different, and so is the availability of GDS booking share data.

So let me preface my remarks today by saying that in a marketplace where you have a mixture of public and private companies and many new channels that make up the overall travel distribution ecosystem, it is difficult, if not impossible to accurately report booking share.  This is particularly the case when you are looking for a subset of the ecosystem, such as the US GDS-powered agency channel, where the two key players, Travelport and Sabre are both privately held.

When Galileo and Worldspan merged to form Travelport,  the press touted them as becoming the new number one distribution player globally.  This is a position previously held by Amadeus (beginning in 2003) and previously held by Sabre (since the inception of the GDS industry to 2002).  In a December 2006 article in Travel Agent Magazine, the combined Travelport entity was said to have more than 50% share in the US and 40% globally, amongst the GDS companies.   As you will see below, the 40% may have been a stretch globally, so it could also be that the 50% was overstated as well.   

So who is the biggest GDS now?  Well, in the US, thanks to the objection to my blog, we know that the order in the US is #1 Sabre, #2 Travelport's Apollo/Worldspan locations and #3 Amadeus.   What we don't know is how big the spread is and precisely why Sabre took back the #1 US position.  My speculation would include the shift of bookings from Worldspan to Sabre as a part of the Expedia, Priceline expansion of their GDS provider relationships over the last 5 years.

So how about globally?

In its S-1 filings with the SEC and again in its annual report, Amadeus (the only public company in the bunch) published Global Market Share statistics from 2001-2009 and then added in 2010 in their annual report.  Their competitors' names were blinded in their reports, but it doesn't take a rocket scientist to put names next to the share numbers. 

According to the public documents, Amadeus holds the global lead with 37%, followed by Travelport at 30% and Sabre at 28%, with regional player Abacus trailing at 5%.  I would argue that Abacus is an RDS (regional distribution system) player, versus a GDS, but historically they have been included in the global share calculations.

Source:  Amadeus Public Filings

Now, Sabre could argue for combining the market share statistics of Sabre and its joint venture partner Abacus, which would push them into the #2 spot with 33% share.

Amadeus states in its public documents that other than Abacus, other regional distribution companies are excluded from the share information.  So if Sabre adds in Abacus, Amadeus and Travelport would also want to add in their regional partners in Korea, the Middle East, India and Australia/New Zealand and the share numbers might shift slightly.

What is really important for evaluation of the GDS companies is not purely a function of booking share (which is what is reflected here).  It is profitability per booking processed, which won't be available until all 3 GDS companies are public again and posting both their booking activity and their financial results.

Can public offerings be that far off for the US GDS companies?

I would go and dust off my crystal ball to answer that question, but it makes more sense to let the Department of Justice (DOJ) antitrust dust settle first on the GDS investigations.   The outcome of that could have considerable impact on the GDS companies' collective future.

Stay tuned.

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