“Enterprises in need of transformation”

When Kurt Ekert became Saber’s CEO in 2023, he set out to reinvent the business.

Just a week after taking office, he began a reorganization aimed at saving $200 million a year. The company has been investing in new technology for airlines, hotels and travel agencies over the past few years.

Ekert said the changes are necessary for Saber to survive in an industry that is evolving rapidly with technological advancements.

“We’re very proud of Saber’s history, but the business we want to create will be different from the one we inherited,” Eckert said in an interview with Skift.

The Texas-based company’s main business is as the world’s second-largest global distribution system (GDS), which aggregates fares and other information from airlines and shares it with travel sellers.

Ekert joins the company as president in 2022 and subsequently CEO added Will be promoted in 2023. He is the former president and CEO of business travel agency CWT.

Skift spoke with Ekert about the changes Saber is going through and the potential for future growth.

need for change

• “When I joined the company and became CEO, I realized that Saber was a company with a compelling market position and a rich history. But in my mind, that rich history has now become an artifact. This is not us anymore. This is a business that needs to transform.”

• “If we are going to thrive in this new world, it’s going to need to bring incremental and new value to our two-sided markets, and that requires innovation and getting really good at going to market. Over the past few years, we’ve had to learn new muscles memory.”

• “I think we’re trying to solve some of the most complex technical problems or opportunities in the industry. It’s not easy. It requires focus; it requires investment; it requires tremendous intellectual and engineering talent. I think we have the right building blocks , but the proof will be in the pudding as we move forward.”

Reorganization

Despite the financial changes caused by the pandemic, Saber had not undergone a substantial restructuring before Eckert took over, he said.

As part of the restructuring, Saber Fire 15% of employeesabout 1,100 people. While Eckert said it wasn’t an easy decision, he said it was necessary to recalibrate and move the company forward.

• “When you go through something like this, it’s a tumultuous, very challenging experience for the organization and the employees. You lose a lot of people who contribute to the organization, and it’s an intellectual and emotional It’s a hard thing to accept.”
• “My belief is that when an organization goes through a situation like this, you have to operate in a relatively transparent way; you have to be candid; you have to explain the reasons behind what you do. And then you have to talk about going forward and the business will How to operate, what’s popular, what’s out, what’s important.”
• “If I predicted where we are today, we’re delivering products at a pace that people who have been around for 10 years would say is very different than what Saber has done in the past… I think people feel like this is a different company.”
• “Our leadership position in technology and product organizations has been fundamentally improved.”
• “At the beginning of COVID-19, no one on the executive leadership team was sitting at that table. So it’s a whole new team. When you go down a level or two in the organization, there’s a lot of new leadership and new thinking.”

Software service upgrade

Saber has been working on upgrading its central reservation system, which helps hotels manage reservations, inventory and rates. Among other technologies, it sells modern retail systems designed to enable hoteliers to sell services beyond their rooms, as well as ancillary services such as spa treatments and city tours.

The company has also been working on reimagining aviation technology to provide a retail experience more akin to online shopping. Eckert says Some technologies are already gaining traction, but others will take longer to fully adopt. Regardless, that’s where the industry is headed.

• “In terms of modern technology, we’ve made huge strides in the last four or five years… 99 percent of the computing in our business is in the cloud.”
• “As our airline customers and hotel customers think about how to go to market, they need more flexibility. They want to incorporate modern technology and really need to upgrade and differentiate these platforms.”
• “We’re still thriving on these platforms that were built a long time ago. The question is, how do you replace those platforms, or how do you add new value on top of those platforms.”
• “Because many of these investments started a year or two ago, we are early in the revenue curve of these commitments.”

Growth potential of IT services

• “[The hotel tech] Business is absolutely booming. Hospitality technology is a large but highly fragmented industry. We think we’re in a leading position to start growing in this area. ” In 2022, the EBITDA (earnings before interest, taxes, depreciation and amortization) of the hotel business was negative US$30 million, and is expected to be close to US$70 million in 2025, with a turnaround of US$100 million.
• “In airline IT, we are clearly number two and a long way from number one. But one of the things I really ask organizations to do is adopt the mindset of being a challenger in the market. Not only should we not be afraid of disrupting the market; We should be afraid of disturbing ourselves.”
• “We’re going to address this very, very aggressively. So I think the growth prospects – the return on investment prospects for investors if you choose to join Saber – are tremendous. If you do the math and project out a few years from now , I think our stock price will be in a very different position.”

Earnings growth after COVID-19

Saber has been struggling to get back to pre-COVID levels. Revenue in 2023 will be $2.91 billion, accounting for approximately 73% of 2019 revenue.

But “2019 is a product or element of the past,” Eckert said, and he’s focused on what’s next.

Ekert said the company’s EBITDA is expected to more than double from $335 million in 2023 to more than $700 million in 2025.

• “Obviously, when you look at distribution, there’s a small amount of dislocation in the direct connection between the large operators and the large online travel agencies. There may be opportunities for some of those to come back into the channel, but the GDS industry is a little smaller today than it was five years ago.”
• “From a stock perspective, I think 2024 is the biggest win year in the history of our company.”

GetThere for sale

Saber said in October Will sell its business travel booking toolGetThere, for $12 million.

Eckert said he wants to focus on creating the behind-the-scenes systems that power the booking tools, letting customers use the tools that work best for them.

• “We basically want to be the connectivity organization behind all of this. So when we think about GetThere, we think: compelling market position, good assets, but we think our value is probably greater in taking a step back from that ”

Correction: This article has been updated to accurately reflect Saber’s company-wide EBITDA forecast. This article initially conflated company-wide EBITDA with hotel segment EBITDA.