Sabre: Takeaways From Its Annual Financial Report

25.08.2023 - 14:03 / skift.com / Justin Dawes / Generative Ai

The inner workings of the travel industry are changing as different sectors look for less expensive means of doing business, and much of that change could have a negative impact on the longevity of Sabre and companies like it. 

That issue and others were highlighted in the most recent 10-K annual report filed by Sabre. The Texas-based company provides operational software and distribution services to travel agencies, airlines, and hotels.

Below are several notable takeaways:

An Investment Loss

In May 2022, Sabre invested $80 million for 8 million shares of American Express GBT. By the end of 2022, Sabre continued to hold the shares while recognizing an unrealized investment loss of $26 million, according to the report. 

Mastercard Investment Price Revealed 

Mastercard said in November that it would make a minority investment in Conferma Pay, a fintech company that Sabre acquired earlier in August 2022 for $72.5 million. The size of the Mastercard investment was not disclosed at that time. Sabre finalized the sale of 19 percent of Conferma Pay for $16 million to a third party in Feb. 2023, according to the report, which Sabre confirmed was the Mastercard transaction. 

Travel Buyers Shifting Business

A large portion of Sabre’s business relies on relationships with several large travel buyers, including travel management companies and online travel agencies. Buyers receive incentives for making bookings through Sabre’s global distribution system, and Sabre receives a fee from suppliers when a booking is made through its system. 

The business with large travel buyers is on shakier ground than in previous years because certain travel agencies have adopted a strategy of shifting between global distribution systems, the report said. Some agencies have shifted a “sizeable portion” of their business from the Sabre system to a competitor’s, while other agencies have done the opposite. 

“Our distribution revenue in 2021 and 2022 has been impacted by a certain OTA shifting a significant portion of its North America volumes to a competitor. We began to see the impacts of this shift in the third quarter of 2021, which resulted in a decline in our volumes, partially offset by an increase in our rate,” the report said. (Sabre said in 2021 that Expedia Group would be shifting a significant portion of its business away from the Sabre system.)

Travel buyers may take that action for a number of reasons, including to avoid becoming overly dependent on a single system and increase their bargaining power with the system providers. And buyers have been looking for less expensive options as a result of financial constraints during the pandemic, Sabre said. 

Increasing Travel Agency Incentives

Sabre paid an increase of