Amadeus describes its acquisition of TravelClick, now confirmed, as an important milestone for its hospitality business, enabling it to expand into new product categories and new customer segments, and become a leading hospitality solutions provider.
In a media call yesterday on the US$1.52 billion acquisition, which is expected to close in 4Q2018 subject to regulatory approvals, Francisco Perez-Lazao, Amadeus senior vice president Strategic Growth Businesses, said: “Today we (Amadeus Hospitality) mainly address the top-end of the market with a CRS, PMS (Property Management System), sales & catering solutions, and service optimisation and payments.
“TravelClick is a strong fit. On the one side, it brings a complementary hospitality solutions portfolio, including a CRS and GMS (Guest Management System) for the independent/mid-chain hotel segment, and a leading and modern hotel business intelligence and media solutions platform.
“Very importantly, TravelClick also brings brand recognition, a broad customer base and customer knowledge, and a strong team of experts in the hospitality industry.”
The acquisition builds on Amadeus’ goal to become an “end-to-end IT solutions provider of reference to the hospitality industry”. Since its inception, Amadeus Hospitality has been building up its capability through organic growth and major acquisitions, he said.
Two acquisitions were Itesso and hotelSystemsPro, made in 2015. But Amadeus Hospitality customers are mainly the large chains, its two largest customers being InterContinental Hotels Group and Premier Inn. By last year, it serves 26,000 properties. This year, following the acquisition, the estimated number of properties served will be 53,000, 28,000 by Amadeus Hospitality and 25,000 by TravelClick.
In the company’s official announcement, Peres-Lozao said the mid-chain and independent hotel segment makes up three-quarters of the market. “We can now serve the entire industry with a very broad portfolio of solutions and we are looking for significant growth in the years ahead.”
Last year, TravelClick generated US$373 million in revenue in 2017 and US$86 million in EBIDTA.
Larry Kutscher, CEO of TravelClick, said during the media call: “About a third of TravelClick’s revenues comes from the CRS and guest management solutions business.” Other revenue streams he singled out included the media business, which helps hotels get new demand through data-driven advertising solutions direct to travel agents when they are making their booking and to consumers via online media options, and the business intelligence solutions for hotels.
TravelClick, based in New York with 1,100 employees, will be integrated into Amadeus Hospitality. “TravelClick has a great team, great technology and a broad customer base, and we are looking forward to welcoming such a successful business into Amadeus,” said Luis Maroto, president and CEO of Amadeus, in the official announcement. “Our ambition is to provide the hospitality industry with the tools they need to grow their businesses and deliver a great experience to their guests. The combination of our two portfolios will allow us to provide that to hotels of all shapes and sizes across the world.”
A strengthened Amadeus Hospitality will mean greater competition for rivals Oracle Hospitality, Sabre Hospitality Solutions and other regional players, but may also impact soft brands which offer branding and hospitality solutions to independent hotels.
Asked for her views, Lindsey Ueberroth, CEO, Preferred Hotels & Resorts, said: “All signs show that this will be a smart business decision by Amadeus, and I believe this move demonstrates the continued appetite for consolidations and mergers within the travel and hospitality industries. Whenever there is more competition introduced into the marketplace, the momentum drives greater innovation, so I see this acquisition as a positive for independent hotels because it opens up more options and opportunity.”
Geoff Andrew, CEO of WorldHotels, said: “It’s a interesting deal. Amadeus is already in the CRS business so it doesn’t add anything new to the market in terms of competition. I’m sure TravelClick CRS customers will be hoping that the normal disruption that follows an acquisition does not impact them too much!”
Mark Wong, vice-president Asia-Pacific of Small Luxury Hotels of the World, concurred: “Amadeus’ acquisition of Travelclick means that the company is now more well-equipped to directly compete with Sabre, Oracle and other players in the hotel distribution playing field. The major impact of such acquisitions will be on the single solution technology providers. It will become more cumbersome and expensive for their clients to integrate and synchronize different systems for a single user interface. With Sabre and Amadeus, their fully-integrated systems will be plug-and-play based on the requirements of their clients. How well and quickly Amadeus can integrate TravelClick’s capabilities into its enterprise system will translate into its success in motivating potential clients to make the switch.”