Amadeus is in a shopping mood.
After the travel company bought Newmarket, a US hotel IT specialist, for $500 million, it has continued to keep an acquisition list. Chief financial officer Ana de Pro told the Wall Street Journal in December:
"I don't know if we'll go for a deal of the same scale as this one, but we are definitely not ruling anything out -- and smaller deals are also possible in the future."
For instance, earlier this month, Amadeus acquired UFIS Airport Technology, an airport information technology player.
Amadeus, a darling of the Madrid stock exchange, has the financial flexibility and analyst consent to take action opportunistically.
Unsurprisingly the software and services company doesn't speculate on which firms might be potential M&A targets.
But some of the names that are likely to be on its acquisition list can be gleaned from a look at which businesses it named as "competitors" last summer during the presentations by its New Business Units on its Investor Day in June 2013.
The company shared slides (posted below) that suggest who it thinks its main competitors are in various segments.
You could consider several of their smaller competitors as targets -- for the right price. A couple of financial analysts have told Tnooz they expect deals similar in scope to Hitit Loyalty, a customer relationship management firm it acquired in April 2013.
Here's a review of the key slides -- and the possible names on its acquisition list. These companies may not actually be for sale, and individual names may not be seeking a buyout. This list is just speculative.
BUSINESS INTELLIGENCE
Amadeus has a small portfolio of Business Intelligence (BI) operations, which aim to facilitate informed decision making by airlines and travel agents in the areas of sales, marketing, network planning, scheduling, pricing and yield management.
The company's hotel platform also has a basic BI capability, but not an industry leading one.
Pascal Clement, head of the travel intelligence unit, presented this chart of competitors providing BI services, noting that the landscape in travel is "polarized and fragmented."
Amadeus forecasts that the total market for travel BI -- including data and processing, analytics, consulting and service -- will be €2.3 billion by 2022.
The company's BI division lacks enough "subject matter experts" who grasp the main needs of airlines, railway operators, hotel chains, airports, travel agencies, and tour operators.
Amadeus needs such experts to answer vital questions, such as "which data is critical for these customers?", "how do these customers track their concern areas?", and "how do they optimize revenues and identify the potentials for cost-cutting?"
Here are some of the names that appeared on the Amadeus competitors chart that are worth noting:
TravelClick is a New York City consultancy that helps 36,000 hotels drive traffic to their own websites with marketing and other services. (Tnooz examined the business of TravelClick last year.) After M&A talks broke down last September, it's back in play.
That said, Travelclick is not a software company, so that’s a challenge culture-wise -- as Amadeus primarily is. Travelclick may also only be going out to financial sponsors this time around and, at a rumored $800 million price tag, may be too rich for Amadeus's tastes.
InFare Solutions claims to be the "world's premium supplier of online competitor web fare intelligence to the airline industry." The Copenhagen-based company could help Amadeus offer pricing and revenue optimization science and software to its existing broad list of airline customers.
Innovata is an Atlanta consultancy that specializes in travel planning solutions. It has a close relationship with airports -- something Amadeus covets -- as well as with other respected third-parties, like Flightstats.
Grabbing Innovata would also be a stick in the eye to rival technology provider Sabre. Its SRS data is offered by Sabre under a reseller agreement and provides an optional data source for all Sabre Airline Solutions services requiring aggregated airline schedules data.
Accelya is an Indian firm that helps more than 200 airline customers streamline their financial processes with data analysis. At least on the surface, it could give Amadeus clients for cross-selling products while patching gaps in the Asian market.
Cornerstone Information Systems is a Bloomington, Indiana, based company that "helps over 450 travel management companies, corporate travel departments, and online travel agencies work more efficiently." Small, but plugged in to some leading thinkers in travel technology.
Prime Numbers Technology is another bit player in BI. Its emphasis is on data analysis for business travel managers. Prime Numbers belongs to Atlas Travel & Technology of Milford, Massachusetts, and it appears to be experiencing a growth spurt.
ForwardKeys is a BI specialist based in Amadeus's home country of Spain. It serves many travel companies with its analysis of trends in airfare reservation booking worldwide, especially hotel chains' revenue managers, who use its data to forecast market pickup and market average occupancy.
Diio, a Virginia-based company aviation intelligence consultancy, offers BI tools for the transportation and travel industries, including the top 16 carriers in North America.
KDS is also noted as a competitor, though its emphasis on travel and expense management doesn't seem like an obvious play for Amadeus.
Amadeus's list includes Prism, which specializes in the development of travel information systems -- particularly airline corporate contracting systems. Its client list totals more than 5,400 companies, including 15 of the 20 largest airlines. But this company in New Mexico has been fairly quiet lately. CLARIFICATION: Sabre bought it in 2012. (Thanks, Jay.)
QL2 is a Seattle consultancy that provides BI for more than 90 airlines worldwide, especially revenue and pricing managers, plus other travel companies.
RAIL DISTRIBUTION AND IT
It's difficult for Americans to take rail seriously because of national operator Amtrak's modest ambition. But in Europe -- where most of Amadeus's strategic minds are based, rail is seen as a sure, long-term growth bet.
Despite turmoil, Europe's state-owned railways have been slowly but steadily opening up, and there's a lot of integrating, standardizing, and online ticketing to be done.
Thomas Drexler, director of the rail business, has outlined Amadeus's broad rail strategy with Tnooz previously. In short, he believes there's a market opportunity for international sales and cross border traffic.
Amadeus has struggled to persuade large players to invest in developing common IT-related standards, but it's recently seen more progress on that front.
In his presentation to investors, he included this slide revealing the competitive landscape, acknowledging that its main competitors are still railways’ in-house IT departments.
Here are some names of note:
Linkon is a supplier of online booking system solutions. Based in Sweden, it has close ties to SJ, the national passenger train operator, which recently became an Amadeus customer. Amadeus could use that intel to better sell its products to similar operators elsewhere.
AccesRail sells train tickets within the booking system for air travel, for trains in Sweden, Norway, United Kingdom, Germany, Belgium and the Netherlands. It would provide Amadeus with much-needed domain experts in Canada, where it is based, and elsewhere.
SilverRail: Aiming to be like a GDS for rail, this US startup has put in place many valuable partnerships with major operators. Last November, SilverRail bought the journey planning division from Boeing's Jeppesen business. (Tnooz reviewed SilverRail's strategy last year.)
One name that is curiously missing from the competitive landscape chart is HaCon, a Hannover-based company that is European player for planning, scheduling and information solutions. The 200-employee company is a critical IT solutions supplier to operators, primarily Deutsche Bahn (DB).
AIRPORT MANAGEMENT
Amadeus is a growing airline management tool business. It has succeeded well at selling airlines Passenger Services Systems (PSS, such as ALTEA, and similar tools.
But the GDS is not the leading provider of IT services to airports. Competition in this market -- estimated at between Euro 1.6 billion and €2.4 billion -- is dispersed, says John Jarrell, the airport IT chieftain.
As noted, Amadeus already scooped up a company in this space: UFIS Airport Technology, an airport information technology player. So it may be digesting that acquisition for a while.
But here are the companies Amadeus named as competitors last summer. (This list includes UFIS twice.):
HOTEL IT
Tnooz covered the competitors Amadeus mentioned in the hotel IT space in an earlier article: Amadeus and the new long game in hotel technology: An extended interview with the head of the company's hotels IT division.
Conclusion
It's an open question if Amadeus will be a bargain hunter. Or if it'll surprise by paying over the odds for a bigger player, exploiting an immediate opportunity to gain scale in a vertical it hopes to grow in.
NB: Image of bullseye from Shutterstock