Sabre Signals Corporate Travel May Recover Quicker Than Some Expected

Skift grip

A rebound in business travel is in sight, according to new data from technology company Saber. Bill Gates may have to swallow his words, given his dire 2020 prediction on business travel.

Sean O’Neill

Saber, a travel technology provider with a rare view of business travel trends, said on Tuesday it sees corporate bookings recovering steadily. This news challenged a highly quoted Microsoft founder Bill Gates’ prediction that business travel It could remain down double-digit percentages for years after the start of the pandemic.

“We’re encouraged,” Saber CEO Sean Menke said on a call. “The underlying element is that companies are happy to have their employees back on the road. So unless there’s a hiccup over more covid cases, we’re heading into recovery.

Saber’s report echoed other signals. U.S. carrier Southwest reported last week that March business travel revenue exceeded March 2019 levels, another sign of a nascent recovery.

Saber, based in Southlake, Texas, derives the bulk of its software processing revenue from helping airlines sell airline tickets through travel management companies and leisure agencies and from helping airlines to manage their operations. His services, which also include selling software to hotels, give him insight into the behavior of business travelers.

Saber said it saw “strong improvements in international and corporate travel” in the first quarter.

The wording here is tricky. Between April 1 and April 24, leisure bookings made up only a slight majority of the mix, with bookings made by business travel management companies being only around 7 percentage points lower for non-international travel around the world.

Translation: Companies are booking domestic travel at nearly equal rates at the request of leisure travelers through leisure travel agencies such as Expedia, Saber’s largest leisure agency customer. Normally, Saber would see business travel make up 50-55% of the total bookings it handles.

“We’re also pleased with what we’re seeing in terms of the scale of the business recovery,” Menke said. “From a sector perspective – although still below the full recovery of most other sectors – the finance, consulting and IT sectors, which are historically heavy fliers, have completed the first quarter accelerating faster than at any time since the start of the pandemic.”

Yet the glory days of 2019-level business travel are still out of reach.

In the first quarter, business travel agency bookings were only two-thirds the level of the same pre-pandemic period, and that figure only included non-international travel. International travel was around 58% of 2019 levels, with business travel contributing only marginally.

In Q1, Saber’s average booking fee was $5.28, down from $4.96. This increase partly reflects a shift in mix towards business travel. Saber’s corporate booking fees are typically about 30% higher than leisure. Certainly, it must pay a similar increase in incentive to travel agencies for corporate bookings.

Saber turns to profit

In the first trimester, Saber generated net income of $42 million – a measure of profit – $585 million in revenue. It generated $5 million in adjusted earnings before interest, taxes, depreciation and amortization.

International business travel powers some of Saber’s most profitable business, and ongoing pandemic-related restrictions, such as the US covid test requirement on flyer returns and the Chinese border lockdown, continue. to limit the return of these activities.

Saber’s management expects it to return to its pre-pandemic level of profitability, which depends on high-margin international business travel, by around 2025.

Jed Kelly of investment research firm Oppenheimer wrote in a recent report that Saber management’s 2025 financial targets of a recovery in bookings through 2019 – and the related financial recovery on key business metrics – must be carefully monitored. The last two times management provided medium-term guidance, in March 2018 and May 2016, “the guidance was removed due to cost overruns.”

Bad teams called by Gates?

At the time of Bill Gates’ gloomy November 2020 business travel predictions, Skift suggested readers take his views with “a pinch of salt.”

At the time, Saber’s Menke was also more optimistic.

“I lived through the 9/11 crisis and the global financial crisis and people were saying then that business travel wouldn’t get back to full levels, but in fact it did,” Menke said.

Today, in hindsight, others are less charitable toward Gates.

“Bill Gates was so offbeat and damaging to our industry with his predictions,” said Charles De Gaspe Beaubien, founder and chief account officer at the meetings software provider. GroupGoing through a LinkedIn post.