Morningstar | Sabre's Network, Switching Cost, and Efficient Scale Advantages Intact, Despite Near-term Headwinds.
We expect Sabre's global distribution system, or GDS, booking share among the top three operators to slightly increase over the next five years, but remain in the mid-30% range, aided by expansion into new markets, and improvements in technology. We see Sabre's IT technology solutions share of passenger boardings reaching above 20% in 2028 from 18% in 2018 as platform investments drive new airline and hospitality wins over the next decade.Sabre's GDS enjoys a powerful network advantage. As more supplier content (predominantly airline content) is added, more travel agents use the platform, and as more travel agents use the platform, suppliers offer more content. This network advantage is solidified by technology that integrates GDS content with back-office operations of agents and IT solutions of suppliers, leading to more accurate information that is also easier to book and service the end customer with. Additionally, the company's platform reach should expand as Sabre looks to grow in European and Middle Eastern countries where it previously had only minimal penetration, which are also markets that yield higher than the consolidated North American region.Replicating the company's GDS platform would entail aggregating and connecting content from several hundred airlines to a platform that is also connected to travel agents, which requires significant costs and time. As a result of these barriers, three operators--Sabre, Amadeus, and Travelport--control nearly 100% of the GDS market, and we think they enjoy efficient scale, which is evident in the limited traction that airlines or travel agents have had in bypassing this distribution platform.The main risk to Sabre and the GDS industry is technology advancements that increase the ease of booking travel directly through supplier websites (disintermediation) or through direct connections between suppliers and online travel agent platforms, which bypass traditional travel agents using the GDS platform.Sabre is a technology solutions provider to the travel and tourism industry. The company operates through three business segments: Travel Network, which consists primarily of its global distribution system (GDS) and a range of solutions that integrate with its GDS; Airline Solutions, which provides a portfolio of software technology products and solutions, through software-as-a-service (SaaS) and hosted delivery model, to airlines and other travel suppliers and provides software solutions; and Hospitality Solutions, which provides software and solutions, through SaaS and hosted delivery model, to hoteliers around the world.
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