Amadeus Loses Premier Inn Tech Deal But Sees Growth Elsewhere
In November 2017, Amadeus touted its win of a significant contract with Premier Inn. But on Thursday the travel technology giant said the hotel chain had changed its mind.
Premier Inn had tapped Amadeus to provide it with a central reservation system and a property management system. Those systems are the two most critical technology needs for any hotel chain. But Premier Inn, a UK-headquartered chain with about 765 properties, has halted the implementation.
“Stopping the project is in no way related to Amadeus technology,” said Amadeus President and CEO Luis Maroto, during an earnings call Thursday.
Maroto blamed the project loss on a desire by Premier Inn’s parent company Whitbread to focus its resources on the hotel brand’s geographical expansion, particularly in Germany.
Whitbread has been undergoing a broader strategy review. Last year, activist investor Elliott Management became the largest shareholder in Whitbread. Elliott worked with others to get Whitbread to sell its Costa Coffee unit to Coca Cola, for example. Earlier this year, Elliott took Travelport, Amadeus’s smaller tech company rival, private. Elliott has said it wants Premier Inn to sell some of its properties.
Losing Premier Inn is a setback in Amadeus’s much-discussed dream of selling core operational software to large hotel companies in much the same way it sells software to large airlines. Amadeus now only has InterContinental Hotels Group (IHG) as a marquee customer for the Amadeus Hospitality Platform.
Strength at TravelClick
In the three months ending September 30, Amadeus generated revenue of $1,529 million (€1,403 million), a rise of 16.3 percent year-over-year.
In the third quarter, Amadeus generated $619 million (€570.4 million) in earnings before interest, taxes, depreciation, and amortization (EBITDA). That represented an 11.9 percent jump in the measure of profit over the same period a year earlier.
Both financial figures reflect the revenue and earnings Amadeus gained by acquiring TravelClick in a $1.5 billion acquisition that closed in October 2018.
TravelClick, which provides business intelligence to hotels, had double-digit revenue growth in the first nine months of 2019 as a standalone unit, the company said without disclosing more.
Marriott recently recommended TravelClick’s services to its franchisees, which may boost business.
Payments and Elsewhere
Amadeus reported double-digit revenue growth in its payments distribution services, though it didn’t disclose the exact sums involved.
“Payments, our B2B [business-to-business] wallet that we’ve been talking about for some years, has gained considerable traction in 2019 driven basically by new customer deals,” said Ana de Pro, chief financial officer.
Payments tech helps to keep travel agencies happy. Amadeus pays agencies commissions to use its services for accepting and managing payments in foreign currencies, issuing virtual cards, and clamping down on fraudulent transactions.
Amadeus continues to make a majority of its revenue and its profit from its airline distribution and software services businesses. Those units continued to grow during the quarter.
The company’s most prominent recent airline win was Southwest. The airline signed a distribution deal that lets Amadeus-affiliated travel managers and travel management companies book, change, and modify its reservations.
Another notable win: Last month, Japan Airlines made Amadeus its recommended distribution partner. Foreign-based distribution companies have struggled to crack the Japanese airline distribution market.
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