Sabre grows headquarters as it develops new travel technology products

Sabre Labs’ Mark McSpadden and Hannah Howell demonstrate software on virtual reality glasses at Sabre in Southlake on Wednesday, November 9, 2016.
Sabre Labs’ Mark McSpadden and Hannah Howell demonstrate software on virtual reality glasses at Sabre in Southlake on Wednesday, November 9, 2016. kbouaphanh@star-telegram.com

When Sabre Labs director Mark McSpadden takes a business trip and wants to find out his flight status, he asks Logan.

“I can ask Logan things about my trip, like what’s my flight status? What time does it land? Where is my hotel? Does it have a pool?,” McSpadden said, referring to the prototype bot that is embedded in Facebook’s messenger application that is being developed by the Southlake-based travel technology company. “I can ask in a natural language.”

Logan is one of several new initiatives that Sabre Corp. is experimenting with as it grows its travel technology business beyond the traditional computer reservations system that it has sold to airlines and travel agents for decades.

Sabre, which originated as part of American Airlines in the 1960s and spent part of the last decade as a privately held company, has increased its airline and hotel software solutions revenues by double-digits since it rejoined the stock market in 2014. It’s also introduced new, real-time crew management that will be launched by Singapore Airlines next year and developed a new workspace for travel agents called Sabre Red that allows agents to sell airlines’ add-ons such as lounge passes and in-flight Wi-Fi services.

There are still challenges facing the company, which disappointed Wall Street this month as it missed third-quarter profit and revenue estimates. Sabre had two high-profile technical glitches with its computer systems that led to flight delays at multiple airlines in the past month. And the company is also searching for a new chief executive as its current leader, Tom Klein, announced in June that he would be stepping down in December.

But with the new product growth, Sabre has added about 400 employees in North Texas the past two years and recently expanded to a third building at its headquarters campus. The company currently has over 10,000 employees worldwide.

“Because our business is booming, we were approaching full capacity at headquarters. … We are fortunate to have a beautiful campus to expand into so close to our home base,” Bill Robinson, Sabre’s chief human resources officer, told employees at a ribbon-cutting this week at the new building, which houses 395 workers and will eventually hold up to 500 employees.

New travel apps and software

At Sabre Labs division, McSpadden spends his days playing with virtual reality headsets and interactive voice response systems like Amazon Echo.

These gadgets aren’t widespread yet, but Sabre is trying to figure out how airlines, hotels and travel agents may need to use the new technology to interact with travelers.

For example, “Lulu” is a program that Sabre is testing on Amazon Echo’s platform that would help corporate travel agents keep track of their business travelers by using simple voice commands to retrieve travel information like flight status.

“We explore technologies that will impact travel over the next decade,” McSpadden said.

While Sabre Labs looks to the future, the company’s airline and hospitality solutions businesses continue to develop new software programs to help airlines and hotels generate more revenues.

Sabre is currently converting 4,500 Wyndham limited-service hotels to their web-based property management system and will have them all completed by the first quarter of next year. The software upgrade will help the hotels offer guests targeted room upgrades and services.

“We’re taking property management and making it less of a task-oriented utility like check-in or clean room reports and instead we’re putting the guest at the center of the software,” said Alex Alt, president of Sabre Hospitality Solutions.

Last month, the company introduced its new Sabre Red workspace for travel agencies. The user-friendly desktop software allows travel agents to sell customers ancillary products offered by airlines such as extra leg room seats or group 1 boarding.

“The more we can help [airlines] sell their goods and services, the better it is for them and the better it is for the agencies,” said Sean Menke, president of Sabre Travel Network.

Sabre has also invested in upgrading its airline solutions software, including a new revenue optimization program and real-time crew-scheduling software, that will debut with Singapore Airlines early next year. JetBlue Airways and Japan Airlines recently signed deals with Sabre for the crew-scheduling software as well.

Henry Harteveldt, a travel analyst at Atmosphere Research Group, said it was critical for Sabre to diversify its software product offerings as its traditional business of acting as the middleman to sell airline tickets has faced intense competition from airlines’ own websites.

“Sabre, to its credit, recognized that air bookings through travel agencies were diminished so they invested in their hosting capabilities and entering the hotel distribution area,” Harteveldt said. “The hospitality solutions and airline solutions are the two bright stars, and I think those are very exciting businesses for Sabre.”

Still some turbulence

When Sabre announced third-quarter earnings of $40.8 million on revenues of $839 million earlier this month, investors sent the company’s stock down 8 percent in one day.

The carrier’s earnings were hurt by the bankruptcy of online travel agency Unister and lower corporate travel bookings in North America and Europe during the summer. On a conference call with Wall Street analysts, Klein reassured investors that bookings were improving in the fourth quarter and that Sabre was adding new travel agencies to its network in Europe.

“We still find Sabre generally well positioned to take air share, and the company has good ongoing ‘software-as-a-service’ momentum,” Cowen and Co. analyst Matthew Broome told investors after the company’s third-quarter earnings disappointment.

Wall Street remains concerned about Sabre’s largest revenue business, its traditional global distribution system. The company has been involved in several antitrust lawsuits that allege Sabre has monopolized the market. It is currently in the middle of a jury trial against US Airways, which is now owned by American Airlines, and it is unclear if a ruling will be made by the end of the year.

Sabre has also had two high-profile technical problems with its computer systems in the past month that have caused operational disruptions at several airlines. In October, customers couldn’t book tickets on the websites of Southwest Airlines, JetBlue Airways and Virgin America for several hours because of a technical issue. And on Friday, flights were delayed at American, JetBlue and Alaska Airlines as customers were unable to check in for flights and gate agents couldn’t print boarding passes.

Despite the challenges, Sabre executives believe the company is positioned to continue to grow in North Texas and worldwide as more airlines, hotels and travel agencies adopt their new software products.

“Our innovations are focused on the future needs of the airline industry, and our customers are validating that those innovations resonate,” Klein said.

Andrea Ahles: 817-390-7631, @Sky_Talk