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Sabre (SABR) Ties Up With TUI Group to Boost Digitization

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Sabre Corporation (SABR - Free Report) recently announced a long-term partnership with the Hanover, Germany-based TUI Group. Per the deal, the travel tech company will globally distribute the leading global tourism group’s own hotel brands, which include TUI Blue, Robinson and TUI Magic Life.

Together, Sabre and TUI intend to develop an innovative revenue generation strategy to support the gradual recovery of the global travel industry from the pandemic blues. Utilizing Sabre's SynXis hospitality platform, which powers over 40% of the world’s leading hotel brands, the hotel group will facilitate new distribution strategy and product innovation opportunities.

TUI Group will benefit from the platform's advanced technology to streamline its operations. This will expand the hotel group’s global presence and accelerate its revenue growth from both direct and indirect channels. It will also utilize Sabre’s SynXis Central Reservations and Channel Connect to accelerate its digital transformation process, and provide new and personalized digital experiences to its guests worldwide.

This partnership is likely to aid the leading travel-related software and technology provider in expanding its customer share and driving its Hospitality Solutions segment revenues. Sabre has its customer base spread over 160 nations with more than 425,000 agency partners globally. It is one of the largest marketplaces in the world that manages approximately $260 billion worth of global travel spending annually.

With a rise in vaccination efforts and lifting of restrictions worldwide, Sabre is well-poised to capitalize on the travel industry's improving market scenario. The hospitality industry (part of the broader travel industry) is also rebounding from the pandemic induced woes. The company’s Hospitality Solutions segment revenues totaled $55 million in the third quarter compared with $51 million in the second quarter and $45 million in the year-ago quarter.

Sabre has been winning consecutive deals from major global airlines, hoteliers and travel agencies of late. Recently, it entered a distribution partnership with Calafia Airlines to enable the airline company to distribute flights and services to travel agencies in the United States through Sabre’s travel marketplace, thereby helping it in accelerating revenue growth and reaching new markets.

Additionally, in November, it inked a strategic partnership with Japan-based Hotel Keihan Chain to create tourism opportunities in the country. In the same month, it entered a distribution agreement with the second-largest hotel group in China, Huazhu Group, to expand global reach for its upscale and luxury hotel brands and support the latter’s global growth strategy.

In October, Sabre signed a new, multi-year, worldwide distribution agreement with one of the world’s largest international airlines, Emirates, to provide Sabre-connected travel buyers and agencies access to Emirates’ content, through GDS. Prior to that, in September last week, it strengthened its partnership with the Chinese Shiji Distribution Solutions to offer hoteliers a broader access to the Chinese travel market.

It is worth mentioning that even though its latest financial results reflect significant year-over-year improvement in gross bookings and reservation-system transactions, Sabre refrained from issuing an outlook citing uncertainty about the impact of the pandemic on its financials. This is disappointing. During the fourth quarter, the company usually suffers from seasonality in the travel industry. Revenues from travel bookings decline massively during the quarter, especially in December, as holiday related bookings are done in the earlier part of the year. Business travels also decline during the month, hence, overall revenues fall.

Zacks Rank & Stocks to Consider

Sabre currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector are Advanced Micro Devices (AMD - Free Report) , Qualcomm (QCOM - Free Report) , and TD SYNNEX (SNX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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