FY presentation

1. Good morning everyone. I am Ana de Pro, CFO at Amadeus. We are
delighted to welcome you to our 2016 Investor Day here in London.
Thank you for joining us.
Throughout the day you’ll be hearing in-depth views on our business
areas from Senior Amadeus executives, as well as from some of our
customers with their own perspectives and testimonials. We hope you
find the agenda varied, informative and productive.
As you will see on your printed agenda, we have assigned specific time
slots for Q&As throughout the day so there will be plenty of
opportunity for interactive discussion. We will have regular breaks for
coffee, with a one-hour lunch at 12.00. We have handed you paper
copies of the slides, which have been posted on our website. We will
complement these with accompanying illustrative speaker notes, which
will be posted on our website at the end of today.
Before kicking off, please note we will be making forward-looking
statements today which may differ materially from actual results.
Please review our legal disclaimer included in all our presentations
carefully.
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2. Today we will discuss our corporate strategy and key areas of focus in
Technology. We will also provide you with an overview of what is
happening in Distribution and Airline IT, as well as an update on our
progress in all of our New Businesses, with particular focus on
Hospitality IT, Airport IT and Payments. I will wrap up the day’s
presentations with a financial review.
However, our primary focus today is on the future. We are and always
have been, an innovation-led, future-focused technology company.
We’re looking forward to setting out the case for Amadeus as a strong
growth investment opportunity for the future.
On that note, I’d like to hand over to Luis Maroto CEO.
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3. Good morning, everyone. As CEO, on behalf of all of my team I’d like
to extend our thanks to you for attending today. We appreciate your
time and we hope that you have a productive and informative day.
I have known many of you for some years, some of you going back to
the time of the Amadeus IPO. During that time, we’ve debated many
times on the Amadeus story, the travel industry and the role of
technology. I’m very conscious that I am talking to a room of ‘experts’.
We feel that these are exciting times for Amadeus. Having been
through a period of robust growth and profitability, we see very
attractive growth opportunities ahead and we are laying the
foundations to become ever more relevant and to continue to extend
our reach throughout the travel ecosystem.
If I may, though, I’d like to start the day by going back to basics.
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We at Amadeus, are convinced we are positioned very strongly to
continue our record of success.
We have, I believe, 4 core strengths:
_ Our deep global footprint. We are the leading travel technology
player with the most extensive local presence. This allows us to
serve our customers more effectively and to anticipate market
trends better. We also have the best talent in the sector, with vast
experience, committed to our vision, as you will be able to see
today. Close to 15,000 Amadeus employees work every day to
make our vision a reality.
_ Innovation and technology. Technology is a means to improve
quality, productivity and profitability, but technology and its root, -
innovation - is worthless without a market to serve. Amadeus has
pioneered many technologies, from early on being the first to offer
neutral flight availability to being the precursor of cloud-based
solutions, but also driving industry trends, such as our value-based
pricing model. Our investment focus has always been and remains
to lead the industry in our ambition to be an “end-to-end” provider

6. of the best travel solutions.
_ Robust commercial relationships. We have long established
lasting commercial relationships with the most relevant global
players in travel, from global operators to niche players. This gives
us unrivalled breadth and depth in our understanding of the world’s
travel industry.
_ Long-term focus and proven executional capability. We have
demonstrated time and time again over three decades, our ability to
deliver on complex needs. These have included some of the most
ambitious technology developments and migrations ever carried
out, while delivering on our commitments to our shareholders,
creating value year-on-year in terms of revenue growth and EPS
enhancement. What has enabled this is our relentless focus on the
long-term.
Let me expand on these topics, as these are strengths that will support
our success in what’s coming next in the industry, which I will cover in
the final part of this presentation.
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7. Ours is a global industry, and we are unrivalled in our regional spread
and penetration. Throughout the day, you will be hearing from my
colleagues about specific developments, so I shall just provide a brief
overview.
In Europe, we have achieved clear market leadership. This is
demonstrated by the key data on the slide. We have developed
strongly in the North American region in recent years. In particular, we
are building significantly in Airport IT and Hospitality IT. Middle East
and Africa are regions offering great long-term opportunities. We enjoy
a comprehensive local presence in all of the key markets and long-
term partnerships with major travel associations.
In Asia Pacific, we have also grown strongly with some of our best
technological innovations happening with local partners. This region is
obviously critical as we look to the future. Recent highlights include
Singapore Airlines contracting for our full suite of Revenue
Management solutions and our provision of meta-booking technology
to Qunar, a Chinese metasearch engine.
We have grown to have an unparalleled local presence with close to
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8. 161 offices spread globally (including more than 70 commercial
offices), enabling us to be close to our customers and provide them
with effective customer support. By doing this, we are able to
understand local market needs. We respond to country level local
requirements, through product adaptation and customisation allowing
us to serve our customers better.
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9. Today we are going to focus on technology. You will see how
everything we do at Amadeus is connected through our vision and
technology.
Emerging technologies can support and help grow new revenue
sources, improve operational efficiency, and enhance customer service
standards.
Our customers want to sell as much as possible, as efficiently as
possible. We are focused on our customers’ needs, which makes us a
B2B company. However, to be successful we must intimately
understand the ‘C’, i.e. our customers’ customer: the traveller. Our
deep and diversified presence across the travel industry enables us to
collect data from multiple sources. With our advanced technology, we
can transform that data into truly actionable insights for our
customers. Insights that will enable them to serve their customers
better, personalise their travel offer and market themselves in more
precise and targeted ways.
Increasing connectivity between people and objects, advances in cloud
computing, big data, the ubiquity of the Internet and social media, all
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10. combine to enable Amadeus to develop new, efficient, affordable, safe,
secure and accessible solutions.
We have invested billions over many years to have a uniquely robust
hardware and software offering. To give you an order of magnitude,
Amadeus has devoted over €4 billion to R&D during the last 12 years.
Having market leading and cutting-edge technology allows us to serve
our customers better, to customise more efficiently and to continue
innovating. Later today, you will hear from our Management Team on
specific developments in technological capabilities and strategy.
In addition to our ongoing tech innovation at Amadeus, we have
successfully created a Venture Capital Fund which we initiated a few
years ago for investing in early stage businesses, to complement our
efforts to drive innovation in the travel industry.
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11. Amadeus serves the largest addressable market for travel technology.
We have created an ecosystem of solid long-term commercial
relationships, with a loyal customer base composed of large and small
players across verticals and geographies. It all enhances our
understanding of the travel space.
With airlines, we have built robust relationships over the years in both
IT Solutions and Distribution, supported by stable contractual
relationships with a very high renewal rates.
In the travel agency segment, we are market leaders and serve all the
different players in the industry. In many regions, we are the preferred
provider for TMCs, we are the leading player globally with Online
Travel Agencies (OTAs), and we have the largest share of the top 100
off-line travel agencies. We are also successfully growing within the
meta-search engine segment, and beyond that, we serve more than
11,000 corporations directly.
Through strategic acquisitions, our customer base in the hospitality
industry includes 16 of the top 20 hotel companies globally, and
roughly 25,000 properties ranging from top chain properties to
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12. independent hotels, as well as relationships with casinos, restaurants,
chains, management companies and properties. As you know, we have
a partnership with IHG to develop the next-generation CRS for the
hotel industry. More on that later.
In the Airport IT market, we expect to be a top 2 Airport IT provider
within the next 5 years, having grown from 1 to 230 customers in the
last 5 years. This has been accomplished through organic growth as
well as acquisitions. Airport IT provides us with enormous potential as a
business in itself, and also through the synergies it creates for the rest
of our business portfolio.
Our Payments business has also delivered significant growth in the last
3 years, and now counts with over 500 customers across 192 countries.
I could continue for some time here if I were to talk about travel
intelligence customers, or corporate customers or customers in car
rental, cruise companies, etc. You can see we are at the heart of the
travel ecosystem. We are a truly global player, with presence in every
vertical, segment and market, across the industry.
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13. Our financial performance has been supported by business success
and our business success is supported by our focus on the long-term.
A few years back we targeted global leadership. We have not only
reinforced our position across our Distribution and IT Solutions
businesses, but we have also launched new business lines - such as
Hospitality IT, Airport IT, Rail IT, Mobile - and revamped others - such
as Hospitality and Rail Distribution, Payments and Travel Intelligence -
what we call NBU (New Businesses), as you know.
In Travel Distribution, we will explain later how what we have achieved
as of today is just the tip of the iceberg. We believe, the future is
going to be much more complex and will require richer technology.
Amadeus will be leading the changes for this to happen and fuelling
growth in the industry.
In Airline IT, we have significantly expanded our Altéa customer base,
expanded our solutions portfolio (through Merchandising, Revenue
Management and Revenue Accounting), and we have recently
expanded into the LCC/Hybrid segment with the acquisition of
Navitaire. We are in a great position to serve airlines’ needs across
segments. As in the Distribution business, many new technologies
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14. enrich the way we serve our customers, and our unique positioning and
the clear strategy and vision we have, will enable us to further grow in
this domain.
I do not want to elaborate too much on our New Businesses now as you
will have several presentations on the topic today. I will just say that
we are very satisfied with how we have kicked things off since 2013,
both organically and inorganically. We can confirm that we are on track
to deliver €1bn in revenues, from our new businesses for 2022, as we
announced to you at our previous Investor Day in June 2013. Ana de
Pro, our CFO will elaborate on the figures at the end of the day.
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15. All of this has allowed us to deliver considerable value creation to our
shareholders, consistently year on year since our IPO. Total
shareholder return since our IPO has averaged 26.3% per year,
outperforming our markets.
What we have achieved in the past is something we all feel proud of,
but now what is relevant is the future. What does the future look like
for Amadeus? How are we going to continue delivering value to our
customers, to the travellers, to the industry, so that it will convert into
shareholder value in the coming years?
Let’s take a look into the future.
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16. All of us travel. For business, for leisure, to see friends and family.
A world on the move presents huge logistical challenges. Travel is
more accessible than ever, but the travel experience can be
frustrating. All of us have had many wonderful experiences travelling,
but also frustrations; delays, bad weather, congestion, poor or no
information. They can all contribute negatively to our trip experience.
The complexity in the travel space is increasing, for many reasons:
increasing number of participants in the industry, both from the supply
and demand channels; higher expectations from travellers demanding
a much more personalised service; a need to increase brand
differentiation and customer satisfaction levels among a wide range of
providers that compete in a global market; while improving business
sustainability and profitability of players.
These challenges will only increase in the coming years: the new
middle classes from countries such as China, senior travellers from the
West, and the millennial generation are increasingly accessing travel
and tourism globally; payment methods will evolve; the Internet of
Things (IoT) and wearables will become more present in our daily
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17. lives; crowd-funded businesses will increasingly emerge.
Technology is the key to resolving many of the issues faced by the
travel industry and travellers.
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18. Travel is one of the world’s largest industries, representing almost 10%
of global GDP. It is also a growing industry, with Euromonitor
predicting 4% growth per year to 2019. We feel that it is a fantastic
industry to be in and Amadeus is at the heart of it.
Travel volumes are massive. IATA has forecast 3.8bn air passengers
for 2016. Market sources estimate over 2.7bn business trips per year
with 14+ million hotel rooms available each day during 2015.
To support higher demand and a greater volume of tourists,
infrastructure investment is required to build more visitor
accommodation, increase airport capacity and expand tourist facilities.
However, IT investment can allow for more efficient processes with a
much lower investment. An example of this is Copenhagen Airport,
which has selected the complete Amadeus suite of Airport IT solutions
to increase its capacity significantly. Technology is the enabler of this
fast underlying growth in travel and we lie at the intersection of both.
We size the overall addressable market of travel technology at
approximately 72 billion euros in 2015. Market sources see the spend
in travel tech growing at close to 4% through to 2019.
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19. As you will see today, we also see strong potential in our approach to
serve an unmatched number of participant segments right across the
travel value chain.
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20. In this fast growing environment, another challenging reality is
connectivity. The world is more connected than ever and it is our
customers -airlines, railways, hotels, ferry, car rental, cruise providers,
OTAs, metasearch engines, etc.- who are enabling that connected
travel. We in turn at Amadeus are their partners in providing the
technology that enables them to connect with, and serve their
customers effectively while at the same time, managing their own
businesses effectively.
Travel is an ecosystem made up of many players. They are all
connected in different ways: travel sellers with buyers directly; with
travel agencies and large scale corporate Travel Management
Companies; airports with airlines and ground handlers; hotels with car
rental provider partners and airport taxi transfer services. The list of
business relationships, partnerships and dependencies, goes on and
on. All players want to establish and grow their own place in the travel
value chain by offering more and better connected services to their
customers.
The way these connections are made is changing every day and will
continue to do so. Today, 8% of total internet users use social media to
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21. research and plan travel, but that number rises to 44% among 16- to
24-year-olds, who focus on social media more than any other age
group. But even that will change as social media also evolves. Three
years ago it was about Facebook, - today it’s Instagram, Snapchat, and
tomorrow it will be something else. And of course there is exponential
growth in mobile adoption. 88% of 16-to-24-year-old internet users
had used a PC or laptop to book travel in the 12 months ending July
2014 — the smallest proportion across all age groups. 35% of
Millennials had used a mobile phone to book travel — the highest
percentage across all age brackets (source: ABTA, Consumer Holiday
Trends Report, September 2014).
This is the territory where Amadeus is playing a vital role; a role that
we believe promises a great future with huge growth opportunities.
Amadeus lays at the heart of travel and thus we are in an unparalleled
position to connect all travel participants, based on our expertise, our
technology, our commitment to innovation, our scale and local
presence, as well as our financial strength.
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22. Our purpose as a company is to ‘shape the future of travel’. Walk into
any Amadeus office in any one of the 195 countries where we are
present, and you will find people who love to travel and people excited
about how the travel experience can be improved through technology.
We believe that there are key trends that will define the future of
travel.
_ Today’s traveller is hyper-connected and informed. They expect a
travel world without barriers. Airlines, airports, railways, ferries,
hotels, as well as many players in the new sharing economy such
as Uber and Airbnb, will need to be joined seamlessly, so that each
journey becomes a single, smooth experience from door to door.
When disruptions occur, the traveller will expect to be well-
informed about the consequences, and for re-scheduling and re-
routing to be as easy as possible. This connectivity is critical for
travellers. It is also vital for travel providers and travel sellers if
they are to truly offer comprehensive services and collaborate
effectively with partners.
_ The travel industry has been very successful in managing
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23. complexity effectively on a massive scale in the past. Millions of
passenger journeys are made every day. It has been about moving
masses. The future however will be about personalisation on an
enormous and unprecedented scale.
_ Today’s demanding travellers expect a better kind of travel
experience, an experience that is unique to them – shaped by
personal preferences and tastes. From the initial moment of
searching for information and seeking inspiration for a trip, right
through to arrival and beyond. Customers want to be able to look
and book on their chosen device. The possibilities are vast;
selecting preferred seats, choosing baggage allocations, setting
preferences such as meals, access to airport lounges, in-flight Wi-Fi,
transfer services to and from the airport, hotel preferences, adding
a spa treatment, museum entry tickets, on-bound train and bus
services. The options are endless, and it all needs to be delivered
with just a swipe on a mobile device.
So we see the travel and technology industries as a space of growth,
complexity and connectivity with the need to better service the
traveller in a far more personalised manner. Our uniquely collaborative
and inclusive development model is ideally suited to capture these
opportunities. Many of our existing solutions – and all of our developing
ones – are designed precisely for delivering this goal, of a more
connected and personalised travel experience.
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