Creating Value Across the Global Travel Ecosystem Annual Report 2015 Travelport Redefining Travel Commerce 03
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Creating value across the global travel ecosystem Annual Report 2015 Travelport Redefining travel commerce 03 Welcome to Travelport We are the world’s only true Travel Commerce Platform, focused on providing distribution, technology, payment, mobile and other solutions for the $8tn global travel and tourism industry. Who we are Our vision With a presence in approximately 180 countries, over 3,700 Our vision is to redefine travel commerce by transforming employees (and an additional 1,200 employees at IGT Solutions the way travel is searched, shared, bought and sold. To do this, Private Ltd. who provide us with application development services) we have developed a Travel Commerce Platform, through and 2015 net revenue of over $2.2bn, Travelport connects the world’s which we are answering the unmet needs of the world’s leading travel providers with online and offline travel buyers in a travel industry, which is undergoing a fundamental shift as proprietary business-to-business (B2B) travel marketplace. technology, consumer behavior and travel options all evolve. Travelport is ahead of the curve thanks to decades of domain We have leadership positions in airline merchandising, hotel content expertise, our leadership in technology and content, and our distribution, B2B payments and mobile travel commerce. unrivaled ability to connect with customers – at any time and any place. We believe that there is no technology or scalable alternative to our Travel Commerce Platform offering the same depth and breadth of Redefining is a powerful word – it is about creating more travel inventory, functionality and global reach. choice, creating value, transforming and reinventing, taking new directions and leading from the front. And that is exactly what we are doing. Our approach and value proposition are unique – and so are the results. www.travelport.com Travelport Redefining travel commerce 01 Airline merchandising See pages 10–11 Hospitality See pages 12–13 2015 Net revenue $2,221m Air International $ m $ m Travel Commerce 1,603 1,482 Platform – 94% 77% 71% $2,095m United States Beyond Air $492m $613m Technology Services – 6% 23% 29% $126m Contents Payments 02 Why travel matters See pages 14–15 04 How the Travelport Platform has evolved from a traditional GDS 06 Integral to the global travel ecosystem 08 Chairman’s statement 09 Q&A with the Chief Executive Mobile commerce 10 Airline merchandising See pages 16–17 12 Hospitality 14 Payments 16 Mobile commerce 18 Financial review and Q&A with the Chief Financial Officer 20 Executive management team 21 Board of Directors www.travelport.com Travelport Redefining travel commerce Creating long-term shareholder value Travelport is a unique business. Our focus on innovations and content leadership we are travel commerce makes us fundamentally continually redefining the way our customers different to our competitors and we offer buy and sell travel. distinct advantages to our various stakeholders. We are, and will continue to be, the Platform that Our competitive strengths set us apart, our is redefining travel commerce for our customers. pillars focus us, and through our technological All of which allows us to create long-term and sustainable value for our shareholders. Strong Differentiated Leading Truly core focus technology global We operate within a strong We have leveraged our Over the last five years we have With a presence in and structurally growing core competencies with invested in and significantly approximately 180 countries, travel and tourism industry. a differentiated ‘platform’ upgraded our technology we have the broadest Our core travel distribution approach to address the platform so that we can international presence in business model is resilient, evolving travel commerce maximize connectivity and our industry, allowing us to recurring and transaction- ecosystem. We are focused on, distribution options for travel leverage the international based with strong and have leadership positions in, content providers, while also focus of our customers. competitive advantages. airline merchandising, hotel and enabling value creation at the other distribution, B2B payments selling end of the Platform and mobile commerce. through our industry-leading point-of-sale solutions. Focused on the Compelling Disciplined capital markets that financials allocation need us We are strongly focused on We have entered into a clear Relative to our peers, corporate and service-premium growth phase with multiple, Travelport is a capital-light travel where choice, flexibility compelling drivers. model with strong free cash and itinerary management are flow generation – with a clear key customer requirements. and disciplined approach to capital allocation. Travelport Redefining travel commerce Highlights 2015 Operational highlights }}Strong underlying performance in Air as our merchandising innovations continued to facilitate commercial success, helping to overcome nearly all of the headwinds from our legacy Orbitz contract }}Competitive advantage in airline merchandising strengthened with over 100 airlines added since start of 2015 }}Continued growth in higher value ‘Away’ bookings for airlines; 65% of Air segment revenue was generated from such bookings in 2015 (up from 62% in 2014) }}Strengthened our leadership position in hotel and car distribution, growing hospitality attachment rates to 47% in 2015 (up from 43% in 2014) }}Strong growth momentum in payments; eNett revenue of $92m in 2015, up 36% }}Strengthened our mobile commerce solutions through acquisition of best-in-class mobile travel app developer Mobile Travel Technologies (MTT) and further investment in the corporate booking platform Locomote See pages 08–09 Financial highlights Net Travel Commerce Platform Adjusted Adjusted revenue 2,221 RevPas 6.13 EBITDA Free Cash Flow 540 $m 2,148 $ $m 535 $m 134 2,076 517 5.70 104 2,002 5.60 494 5.40 20 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 (39) }}Net revenue up 3%, Adjusted EBITDA down 1% and Adjusted Income per Share (diluted) of $1.00, up $1.12 }}RevPas up 8% to $6.13 with growth in every geographic region }}Strong International revenue momentum; double-digit revenue and segment volume growth in Asia Pacific and Latin America & Canada }}Air revenue flat at $1,603m; impact of legacy Orbitz contract largely overcome by volume and rate improvements across International regions }}Beyond Air revenue up 16% to $492m, driven largely by hospitality and payments }}Technology Services revenue up 7%, inclusive of the impact of renegotiated Delta contract }}Adjusted Free Cash Flow generation of $134m, up $173m See pages 18–19 Travelport Redefining travel commerce 02 Why travel matters At the heart of one of the world’s largest industries The Travel & Tourism sector is a critical driver of the global economy 10% 1/11 $1.5tn 6% 30% GDP Jobs Exports of world of services exports exports Source: World Tourism Organization (UNWTO) Passenger journeys reached a record high of around 3bn in 2014… 910m 1,100m Americas 850m Asia Pacific Europe 150m m Middle East 120 Africa ...and is forecast to grow strongly through to 2034 +3.2bn 4% 2.2x Source: Passenger Forecasts – Global Incremental passenger Annual average Passenger journeys Report by IATA journeys by 2034 growth 2014–34 in 2034 compared with 2014 Travelport Redefining travel commerce 03 Air travel is likely to double in the next 20 years Travel and tourism is one of the world’s largest The truly global nature of this expected As the most geographically diverse travel industries and it is rapidly expanding. In 2014, boom in travel will play to our strengths. distribution business, Travelport can deliver international tourism arrivals or overnight Between 2014 and 2034, Asia Pacific alone service and reach virtually anywhere in the visitors hit a record of over 1.1bn worldwide, is expected to see 4.9% annual average world at scale, whether serving our travel 46m more than the previous year and the fifth growth in passenger journeys, equating to content provider customers or our online and consecutive year of growth since the 2009 an incremental 1.75bn passenger journeys. offline travel agencies, travel management financial crisis. Asia Pacific is now the largest travel region in companies (TMCs), corporations or meta- the world and its importance to our industry search customers around the globe. Perhaps more importantly, air travel is will only increase. North American passenger predicted to double in the next 20 years journeys are expected to grow at an average Travelport’s investments in unique airline with growth coming from all regions. Indeed of 3.3% per annum, picking up 650m extra merchandising capabilities, the most diverse in 2016, the International Air Transport passenger journeys. While growth in Europe hotel and car portfolio, innovative mobile and Association (IATA) has forecast that global is expected to be lower at 2.6% through corporate travel technology, and a pioneering air travel will grow by around 7%, a five-year 2034, it still means an extra 580m payments solution position us perfectly to high – which is a welcome trend for Travelport passenger journeys. service this rapidly growing demand with our since we enable airlines to fill planes for routes industry-leading Travel Commerce Platform. and journeys all over the world. Passenger journeys reached a record high of around 3bn in 2014… Consumer spending driving the globalization of travel Middle class consumer spending $ Outer ring: 2030 in $tn (projected) 11.1 Inner ring: 2009 in $tn $ One of the key factors driving the 32.9 ‘globalization’ of travel is the growth in Europe consumer spending. Global middle class spend is expected to grow from around $ $ % $21tn in 2009 to over $55tn in 2030. 5.6 8.1 Moreover, emerging economies around North +571 the world (such as India, China and America Growth Indonesia) are expected to account for around 80% of that growth, compared to $ $ 40% today. With this growing middle class 5.5 4.9 purchase power comes the increased demand for travel noted above.