From a complicated pieced together beginning emerges a surprisingly resilient industry leader. It was 1987 and three European airlines and one airline holding company came together to create a system that would compete with US-based competitor Sabre - a global distribution system that connected travel providers and agencies with pricing, booking and other processing services that could be done in real time.
The first generation was cobbled together from core reservation program code cannibalized from a defunct travel processing platform called System One and jury-rigged to work with a version of Air France’s pricing engine. It was alive and it was a viable competitor. In the beginning, Amadeus’ technology was functionally tied to its airline reservation origins but branched out into hotel, rail, cars, cruises, insurance and other areas as the years progressed.
Originally owned by the European airlines Air France, Iberia, Lufthansa and airline holding company SAS, it was organized as a private partnership but went public in 1999 and listed with the Paris, Frankfurt and Madrid stock exchanges. After a brief six-year stint on the open market, Amadeus’ shares were called home as venture capital firms BC Partners and Cinven took over a majority stake from three of the four owner airlines. That was not the end of Amadeus’ star-crossed story with the stock exchange, however. In 2010, the venture capital Powers-That-Be brought a small stake of Amadeus’ parent company back to the market to be publicly traded.
Like many legacy tech companies that maintained dominance for decades by being a one-trick-pony, Amadeus has invested heavily in broadening out and diversifying their business streams. Most of this has been accomplished through a heavy investment in research & development; an aggressive merger & acquisition strategy; new distribution partnerships and expansion into new markets.
Amadeus is now a major global player that commands a significant share of the travel and tourism market. They organize operations under their global distribution systems and IT solutions business units. With an estimated $5.6 billion in yearly revenue, Amadeus is well positioned to weather the changes brought about by a volatile travel and hospitality sector.
Amadeus’ grand plans for diversified-travel domination has been good to them – they’ve shown positive growth trends despite flagging numbers in segments like travel agency airline bookings. Their 2019 Q2 financials revealed that revenue from their flagship service, distributing airline content to agencies, amounted to 56 percent of their total $1.58 billion in revenue compared to Q2 numbers from two years prior showing that distribution made up 62 percent of Amadeus’ top line.
“The resilience of our businesses has allowed us to maintain a strong growth trend in the first half of the year despite a weaker travel industry,” Luis Maroto, president and CEO of Amadeus, said in a prepared statement
“Amadeus IT solutions and distribution businesses continue to grow, thanks to an expanding customer base. Additionally, we are progressing with our diversification strategy following the acquisition of TravelClick and ICM, thereby enhancing our presence and reach in the hospitality and airport IT segments. With our global presence and our strong focus on investments in technology, we should maintain this positive growth trend.”
