The travel industry has gone through a lot since Luis Maroto started working at Amadeus almost 25 years ago.
The growth of the internet fundamentally changed how the industry operates: The largest travel agencies are online, and low-cost airlines are bigger than ever, for example.
Now, there’s another industry-wide technology transformation as travel moves to modernize and adopt AI. That’s means Amadeus needs to adapt once again.
“We will become obsolete in some years from now because technology is evolving all the time, so we need to keep investing. We need to keep being ahead of any other company that can bring innovation,” said Maroto, who became president and CEO of the company in 2011.
Amadeus owns the world’s largest global distribution system (GDS), which aggregates fares and other information from airlines and shares it with travel sellers. The company has also been growing businesses in tech for airlines, hotels, airports, and more.
Skift spoke with Maroto about the future of Amadeus — both the GDS and other areas of the company — and efforts to adapt with the times.
How Do You See the Future of the GDS?
There have been rumblings for years that Amadeus and its competitors will become obsolete in the future as stakeholders look to circumvent the intermediary.
American Airlines is recovering from its failed attempt to cut Amadeus and others out of its distribution strategy. Now Turkish Airlines is trying a similar approach, charging a fee to travel sellers that don’t use the airline’s individual distribution system.
Most recently, the latest advancements in AI have led to predictions that future autonomous digital agents could remove the need for intermediaries.
Despite how the industry changes, Maroto believes there is a clear role for the GDS in the future, even if its future hold is smaller than it is today.
- “When we talk about direct connects, which is the connectivity between the travel agency and an airline, I don’t believe this has a future.”
- “In general, travel agencies want to have alternative content from many airlines around the world. And airlines, they also want to distribute their content as much as they can, and not just create connectivity with specific travel agencies. I don’t think [direct connections are] commercially beneficial for a travel agency, because they will need to aggregate themselves. There will be a lot of costs in doing that.”
- “I think the GDS is not what it used to be many years ago. It has been evolving. They need to evolve into a way that can handle alternative content and alternative technologies.”
Growing Other Business Arms
Amadeus has been investing a lot of money into its secondary businesses over the years. That includes software that it sells to hotels, airlines, and airports.
The company in April acquired Vision Box for $348 million, with plans to expand its biometrics services for airports. And in March, Amadeus acquired payments company Voxel for $123 million with plans to simplify the complicated sector for travel.
- “We feel there is a big potential in tech for travel. Our estimation is around $90 billion … We are a $6 billion company, so there’s a way to go. In some areas, we are more advanced than others. Of course, we are trying to grow and get more into all these areas where we have lower market share.”
- “What we try to do is to expand into more verticals rather than trying to connect these verticals. We feel there is potential, at least for the next years, to really keep growing with more verticals.”
- “Biometrics is one that is clear. Today they are mainly dealing with biometrics in border control in airports. You could imagine this in hotels or in airlines.”
- “I think both hotels and airports are two areas of growth and opportunities for us, and our expectations for the coming years are that these two areas should represent an important growth driver of Amadeus.”
Pandemic Recovery
The investment in these secondary businesses is part of what has led to nearly full revenue recovery for Amadeus after the pandemic. The company has recovered far better than competitors, according to their financial reports.
- “Usually the way we operate, you invest today, and then you get the benefits of that years later. We started our investments in hotels, in airports, in payments, many, many years ago. In my view, this is paying off, and the growth we are having in some of these areas had to do with investment we made pre-pandemic.”
- “It is also true that during the pandemic, of course, we had to adapt ourselves, and we took the tough decision to prioritize our investments. We kept investing in NDC (new distribution capabilities). We kept investing in the cloud. The investment in technology was less, but we decided to keep it. And in my view, that was the right approach.”
Modern Airline Retail
The airline industry is limited today in terms of how easily it can provide the modern online retail experience that consumers want and expect.
Amadeus, its major competitors, and numerous startups are investing in the next generation of that process in accordance with guidelines for new distribution capabilities (NDC) outlined by the International Air Transport Association.
Amadeus last year released a new AI-powered airline retail platform called Nevio that’s meant to replace the company’s older tech, but it will take a while for airlines to fully switch out their existing systems.
- “We feel this technology will evolve. However, as always when you change, you have use cases that need to be addressed. NDC, even if it started some years ago, has not yet addressed the whole complexity of travel. Therefore, NDC has had a low adoption.”
- “We feel in years from now, it will be the main technology. But still, there is some way to go. We aim to play a key role.”
More M&A
Maroto said Amadeus looks at innovation in three ways: Investing in its own tech, through partnerships (like with Microsoft), and through acquisitions. The company is always looking for potential M&A deals, he said.
- “We are not going to do everything ourselves. It is impossible. We don’t have the capability, the resources. The company is healthy financially, so having acquisitions if we find the right targets that can justify these things at the right price, we will keep acquiring companies in the future, definitely. It is part of our strategy.”
- “When looking at acquisitions, Amadeus considers tech, customer base, and knowledge in complimentary areas. “If you have companies that can bring the three things, it’s perfect. If they bring two — because sometimes they are small and they don’t have many customers — it’s also good.”
Potential Threats from Startups
There are countless startups vying for market share in various areas where Amadeus does business. While many fail, some have been doing well, particularly those involved in hotel and airline tech.
Maroto believes the market is big enough for everyone. Amadeus also had a venture capital fund.
- “I feel the industry is big enough for people to find niche players here and there where they can operate, and we are not present everywhere. And even in the areas where we are present, we need to face new competitors.”
- “It’s not easy to displace a company that has the capability to invest to scale. Because part of the innovation is not just about bringing a solution. You need to have customers to scale, be reliable.”
- “Of course, we need to be very attentive, and do well that any of these startups are not challenging our businesses.”
What’s Been Your Approach as a Leader?
- “My dream is that this company is much more than the people, even if the people are what makes this company different. I will go one day, and the company will be here, hopefully successful. I feel there is a point in your career where you think more about the organization and you try to leave some legacy.”
- “Always try to lead by example. I think you should not ask people to do things you are not able to do. Giving orders is not the right approach.”
- “Treat people with respect, no matter the nationality, the ideas.”
How do You Travel Outside of Work?
- “Travel is something I really love because I think you learn a lot from understanding other ways of living and other people’s minds.”
- “I have done leisure and business, probably more business in the last years of my career. One day, I would really love to come back to travel in a different way. I think it’s not the same to go to a country and stay one week and try to have this kind of flash view. I would like to really stay longer.”
- “I have two kids, 27 and 26. For them, we need to travel. Every year, we find a new place to go, which is not so easy, because they have traveled a lot.”
- “A country that really attracts me is Japan, because I think they are very different from a cultural point of view. I don’t know New Zealand, but I would like to go there. The majority of the places I have visited — when you have the time, they all have something really that you learn. In general, there is no single country that I have visited that I did not enjoy.”
