Sabre Corporation

Good morning and welcome to the Sabre fourth quarter and full year 2021 earnings conference call. My name is Victor and I'll be your operator. As a reminder, please note today's call is being recorded. I will now turn the call over to the Vice President of Investor Relations. Kevin Christie, please go ahead.

Thanks Victor. Good morning everyone. Thank you for joining us for our full year and fourth quarter 2021 earnings call. This morning we issued an earnings press release which is available on our website at investors.SABR.com. A slide presentation, which accompanies today's prepared remarks, is also available during this call on the SABR Investor Relations webpage. A replay of today's call will be available on our website later this morning. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry and recovery trends, benefits from commercial and strategic arrangements, expected revenue, costs and expenses, cost savings, margins and liquidity, among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our third quarter 2021 10Q and 2020 Form 10K. Throughout today's call, we will also be presenting certain non-GAAP financial measures. References during today's call to adjusted operating loss, adjusted net loss from continued operations, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS, free cash flow, and net debt to LTM-adjusted EBITDA have been adjusted to exclude certain items. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at investors.saver.com. Participating with me are Sean Minkey, our Chief Executive Officer, Kurt Eckert, our President, and Doug Barnett, our Chief Financial Officer. Scott Wilson, our President of Hospitality Solutions, will be available for Q&A after the prepared remarks.

With that, I'll turn the call over to Sean. Thanks, Kevin. Good morning, everyone, and thank you for joining us. As we know, the past two years have been extraordinarily disruptive. We, like others, have had to deal with numerous unpredictable headwinds. Despite these challenges, we never lost sight nor abandoned our focus on future opportunities. Some needed to be reprioritized. Others, specifically the technology transformation, continued notwithstanding the challenging environment. During our earnings call in February of 2020, we articulated the importance and expected benefits of our technology transformation. Despite these headwinds, we, with our partners, continued to execute. 2022 is the midpoint of these efforts. and we are intent on accomplishing our goals for the technology transformation. We are confident that we will accomplish these goals by the end of 2024, and we believe our advanced agile global technology footprint and efficient cost structure will be superior to our competitors. In 2025, we believe our full-year run rate efficiencies and accrued technology benefits will drive superior financial results under multiple scenarios when compared to 2019. The global travel recovery was slow at the beginning of the year, but that has changed significantly. February month-to-date global GDS bookings were on pace to reach a similar level of recovery versus the same period in 2019 as November 2021, which was the best month since the onset of COVID-19. For these reasons, we believe 2022 is shaping up to be a year of recovery and progress. Turning to slide four, Let me now provide an overview of the topics we will cover on today's call. I'll begin by discussing the considerable opportunity we see for Sabre and our investors as recovery takes hold and we reach the other side of COVID. Next, I'll provide an update regarding the ongoing travel recovery, including specific booking, passengers boarded, and hospitality CRS transaction trends, and how Omicron has temporarily affected the recovery. Then I'll detail our expected strong financial performance under specific recovery scenarios in 2025 and the investments we are making in our technology transformation to achieve these results. Finally, I'll turn the call over to Doug to walk you through the results of the quarter and financial outlook for 2022. But before I start, I do want to take a moment and thank my Sabre teammates around the world. 2021 was another challenging year for the travel industry and for Sabre. I believe my team members are aware, but it is important for me to emphasize how much I do appreciate their extraordinary efforts, serving our customers, looking out for one another, and at the same time, executing our transformation to help enable a new marketplace for personalized travel. I'd also like to welcome Kurt Eckert to his first earnings call at Sabre. Kurt joined us in January and is quickly learning the organization. Kurt's background and skills make him a perfect choice as president. He has had an exceptional understanding of the travel marketplace, global air in the hotel distribution, consumer e-commerce, and corporate travel. I look forward to working with him in the years to come. His arrival will allow me to continue to focus on our long-term strategy and goals for 2025, as well as to spend more time externally with our customers, investors, and other important constituents, something that I'm eager to do. I won't ask Kurt to present our results just yet, but thought it would be good for him to say a few words of introduction. Kurt? Thank you, Sean. I appreciate the welcome, and this is an exciting time to have joined Sabre. Having worked as an executive at one of Sabre's competitors, and more recently, at a top customer with CWT, I knew Sabre well from the outside. After just over a month, I'm gaining better appreciation for Sabre's many strengths firsthand.

Dynamic changes are coming in the travel sector, and I believe that Sabre's people, compelling product offerings, and strong client relationships uniquely position us to capitalize on these changes. I'm excited to partner with Sean and our global team to drive world-class innovation and financial performance.

I also look forward to meeting our investors and analysts in the near future. Sean, back to you. Great. Thanks a lot, Kurt. Now I'd like to turn us to slide five. I'd like to start today's call with what I consider to be some of the most important aspects of the investment case for Sabre. As we've seen in our booking data over time, the demand for travel remains very strong. It has been curtailed by global travel restrictions designed to counteract the COVID-19 pandemic. As COVID case counts fall, we once again see travel restrictions lifted and know our revenues and earnings improved. We believe SABR is a travel recovery investment opportunity in the near term based on these points. But SABR offers much more as an investment than just travel recovery momentum. As we look ahead, we are investing to drive EBITDA, EBITDA margin, operating income, and free cash flow higher than 2019 levels. As mentioned, I'll provide an illustration of what our 2025 financials look like under different recovery scenarios. Despite the challenges caused by the pandemic, our expectations for 2025 are in line with or better than our pre-pandemic guidance provided in February of 2020. Our ambitions are higher and illustrate the positive financial impact our technology transformation is expected to have on future earnings. We believe as we achieve these goals, value not currently recognized in the market will be unlocked. Turning to slide six. Our volume metrics, namely distribution gross air bookings, IT solutions passengers boarded, and hospitality gross CRS transactions have broadly tracked the inverse of COVID-19 cases over time. We saw a slowdown in travel bookings beginning in mid-June 2021 associated with increased Delta variant cases, followed by a sharp recovery from September to the end of November. The Omicron variant hurt our booking trends in December and into January, But similar to past trends, we are seeing a quick acceleration in booking recovery, with hospitality leading, followed by air as COVID case counts and restrictions abate. Please note that we've changed our travel recovery slide to display a percentage recovery of 2019 instead of a percentage decline versus 2019. Hotel CRS transactions continue to lead and have recovered 77% in January versus the same period in 2019. IT Solutions passengers boarded have recovered 68 percent in January versus the same period in 2019. And finally, distribution gross bookings recovery was 31 percent in January versus the same period in 2019. During the month, booking recovery did accelerate with the final week reaching 37 percent of 2019 levels. Turning to slide seven, where we present GDS industry data regionally, The global travel recovery was gaining momentum through most of Q4, but slowed again in December and January due to the Omicron variant. After this pause, month to date, February global GDS recovery is tracking over 50% versus 2019, similar to last November, the best month of recovery since the onset of COVID. We are encouraged by both the strength of the recovery and the better global mix versus the previously heavily weighted U.S.-centric recovery with lower margin bookings. Based on historical pre-COVID booking curves and the absence of a future travel-restrictive COVID insurgence, we are optimistic that the current momentum in corporate and international, as well as leisure demand, will accelerate into the strong seasonal travel months ahead. We continue to be bullish on the return of corporate travel and recently expanded our commercial relationship in the more profitable corporate travel segment with American Express Global Business Travel. This long-term strategic partnership includes incremental bookings for us and a multimillion-dollar annual investment in joint technology by GBT. Turning to slide eight, we talked in the past about the travel marketplaces evolving and how we are committed to helping lead our partners into the future. We've discussed strategic investments such as personalized offers, low-cost carrier growth, distribution, and NDC, and our technology transformations. Our commitment and belief in the value of these initiatives has only strengthened over time, and each are moving rapidly forward. Today, I'd like to give you further perspective regarding our tech transformation, which includes our mainframe offload and migration to Google Cloud. We believe our tech transformation is one of the primary facilitators of higher margins and cash flow for Sabre in the future. We've chosen to continue to invest in the tech transformation despite the pandemic, because we expect it will produce an outstanding return on the investment. In 2019, we spent about $450 million in hosting costs to run our systems. By 2025, without tech transformation efforts, we would have expected our annual hosting costs to increase about 50% or $200 million to $250 million. We would also have needed to invest an additional $150 million to $200 million in CapEx to refresh our servers and data centers. Finally, we would not have been able to take advantage of the many product enhancements that technology transformation unlocks, including faster time to market, enhanced stability and security, a global distributed cloud footprint, reduced latency, easier customer deployment, and lower cost of development. We believe we are ahead of our competitors in this endeavor, and the global distributed cloud footprint, reduced latency, and other enhancements have been instrumental for us in winning new business. We estimate that over the next 10 years, the ROI of the technology transformation is expected to be between 30% and 35%, with an NPV north of 300 million. Turning to slide nine. In 2021, we identified three key technology milestones as a reminder. They were to deploy travel solutions for air shopping in Google Cloud Platform, or GCP, transition hospitality solutions, CRF, into GCP with a global footprint, and migrate 15% of our mid-range workloads to GCP. I'm pleased to say we met or exceeded all of these previously communicated milestones. Travel Solutions, Air Shopping, and Hospitality Solutions CRF both moved to GCP, and we actually moved 18% of our mid-range workloads to GCP. As we look ahead to 2022 and 2023, our technology transformation continues with many exciting and essential activities planned. The key milestones for the project are laid out on this slide. In 2022, we expect to invest an incremental $45 million versus 2021, or about $100 million in total, in the tech transformation as we exit our Sabre managed data centers and migrate to the Google Cloud. We also expect to offload passenger name record, PNR, from the mainframe to Google Cloud. You can think of a PNR as the customer reservation database, which is obviously an important step forward. Our tech transformation spend is anticipated to decline each year until we complete our goals for the mainframe offload of GDS functionality and our cloud migration expected by the end of 2024. In addition to realizing the benefits of the cloud, by the end of 2024, we expect our annual run rate technology savings versus 2019, assuming only an 80% recovery of 2019 volume, to be more than $150 million. Eighty percent is only illustrative of the fact that we expect our technology transformation and what it encompasses will drive better adjusted EBITDA, adjusted EBITDA margin, adjusted operating income, and free cash flow versus what we produced with higher volumes in 2019. Turning to slide 10. Building on my comments from the previous slide, we take the stewardship of your capital very seriously and have carefully evaluated the investments we are making. The technology transformation, along with our other investments that support our business execution, are expected to unlock significant value for our shareholders as we drive the company to higher profitability and cash flow generation. On this page, we provide specific financial targets to which we are driving SABR by 2025. Obviously, the extent of the travel recovery will affect our results, but even under an only 80 percent SABR GDS booking recovery scenario, we are targeting expected results to be better than 2019. Under a scenario in which Sabre GDS bookings return to 2019 levels, we expect our EBITDA margin to be greater than 26%. This is in line with the guidance we provided in February 2020 before the pandemic. Under a more positive illustrative scenario in which Sabre GDS bookings are 120% of 2019 levels, we expect our EBITDA margin to be greater than 28%. To be clear, our ambitions and associated investments in technology are not to just get back to 2019 levels. Our ambitions are much greater, but the comparison to 2019 is simply to illustrate the positive earnings potential driven by our technology transformation. The capabilities unlocked with a modern agile technology footprint and associated products we believe position us well to not only reach previous financial returns, but grow well beyond. Note that these targets exclude the financial results of Air Center, as we expect the sale to CAE will close as anticipated in Q1 of 2022. As a reminder, in 2019, Air Center generated about $150 million in revenue and $55 million in EBITDA. On slide 11, you can see an illustration of how we expect revenue, EBITDA, operating income, and free cash flow to trend through 2025. even under the more conservative 80% SABR GDS booking recovery versus 2019 scenario. Despite the near-term uncertainty regarding travel volumes, by 2025, we expect to manage SABR to increasing levels of profitability and cash flow generation and to be able to de-lever and create value for our shareholders. We do not need a full travel recovery for SABR to produce better financial results in 2025 than pre-pandemic 2019. And at this point, I'd like to hand the call over to Doug. Great. Thanks, Sean.

Good morning, everyone. Turning to slide 12. As expected, the COVID-19 pandemic continued to weigh heavily on our results in Q4. However, the fourth quarter showed significant financial improvement versus Q4 of 2020 and sequentially from Q3 2021. Total revenue was $501 million, a significant improvement versus revenue of $314 million in Q4 last year, due to the continued recovery in global air, hotel, and other travel bookings. Distribution revenue totaled $286 million, an improvement versus revenue of $131 million in Q4 of 2020. Our distribution bookings totaled $58 million in the quarter. Compared to 2019, net air bookings recovered at 44 percent, 51 percent, and 39 percent in October, November, and December, and 45 percent in the quarter as a whole. Our average booking fee in the fourth quarter was $4.96 versus $390, $384, and $459 in the first, second, and third quarters of the year. Our IT solutions revenue totaled $165 million in the quarter, an improvement versus revenue of $145 million last year. Passengers boarded totaled $129 million, representing a 69% recovery versus the fourth quarter of 2019. Hospitality solutions revenue totaled $54 million, an improvement versus revenue of $41 million in Q4 of 2020. Central reservation system transactions were at 90 percent of 2019 levels and totaled $23 million in the quarter. EBITDA showed meaningful year-over-year improvement but remained slightly negative in the quarter, reflecting the continued impact of the COVID-19 pandemic. The significant year-over-year improvement in revenue in the quarter was partially offset by increased travel solutions incentive expense and hospitality solutions transaction fees due to higher volumes. As expected, our technology costs and selling general and administrative expenses increased due to volume recovery trends and increased labor and professional services expenses. Operant income, net income, and EPS also showed improvement versus the prior year. Free cash flow was a negative $30 million in the quarter aided by working capital seasonality. As a reminder, air center assets are being treated as held for sale on our balance sheet while their operating results remain in our P&L. When the sale to CAE closes, which we still expect to occur in the first quarter of 2022, Sabre will no longer recognize revenue earnings associated with air center products. Although our reported passengers boarded will not be impacted, Our revenue per passenger is boarded for our IT solutions will be lower as a result of excluding Air Center-related revenue. Additionally, post-close, Air Center employees will transition to CAE, and a transition services agreement will go into effect. We will be compensated by CAE for the costs related to the transition services agreement activities. We ended the quarter with a cash balance of $1 billion and have no significant near-term uses of cash. The sale of Air Center is expected to further strengthen our liquidity position. We expect cash proceeds of $393 million from the sale of Air Center upon closing. We feel confident in our current liquidity position, anticipate free cash flow turning positive during the second half of 2022, and continue to examine refinancing opportunities in the credit markets. We maintain our medium to long-term leverage target of 2.5 to 3.5 times. Now turning to slide 13. The near-term outlook for travel remains very difficult to forecast due to the evolving COVID-19 backdrop. The 2022 financial outlook we present here is not intended to suggest we know the bookings recovery we will experience in 2022. Rather, it is designed to provide a frame of reference for you to understand how our financials could look this year at different levels of Sabre Net Air Bookings recovery. We presented the scenarios with and without Air Center for ease of comparison to help ensure its expected sale is taken into account, including its impact on revenue, earnings, and revenue per passenger reported. As mentioned before, in 2019, Air Center generated about $150 million in revenue and $55 million in EBITDA. As I mentioned before, the sale expected to close this quarter. As Sean discussed, in 2022, we expect to invest an incremental $45 million versus 2021 in our tech transformation. We're also investing in global business systems such as our billing system, cybersecurity, and increased compensation to attract and retain our highly sought after talent. These incremental investments are expected to total $40 million and to improve processes and increase workflow efficiency while also helping reduce risks. Investments in our internal business systems will also allow us to better support our customers as modern retailing strategies advance and new commercial models emerge. Additional detail on a breakdown of these investments is listed on the slide. Of the incremental investments, we anticipate that only cybersecurity insurance and increased compensation should be viewed as ongoing expenses. The balance of the spend is bubbled related to activities underway, and we expect that they will revert once work is completed. As I mentioned earlier, in Q4, net air bookings recovered at a 45 percent pace. With the impact that we have seen from Omicron, and even with the pickup in bookings in February, we do not expect the recovery in Q1 to reach Q4's level. Please keep in mind that cash settlement occurs after bookings, so the cash flow impact of Omicron is expected to largely affect Q1 rather than Q4. We do, however, expect continued quarter-over-quarter bookings recovery, resulting in strong momentum as we exit 2022. Therefore, from a revenue, earnings, and cash flow standpoint, we expect a similar pattern to what we experienced in 2021, with the back half of the year stronger than the front. Even without Air Center's financial contributions and including the incremental investments we outlined, Assuming a Sabre Booking's full-year recovery of just 50 percent, we'd expect free cash flow to turn positive during the second half of 2022 and continue trending positive thereafter. I'll turn to slide 14. I'll end where Sean started with the investment thesis we see in Sabre over the next few years. We expect our revenue, profitability, and free cash flow to grow as the travel limitations caused by the pandemic continue to subside. The investments we are making in technology are expected to create the opportunity for unit cost savings on higher margins than pre-pandemic levels by 2025, even if travel volumes do not return fully to 2019 levels. We strongly believe this opportunity is not fully reflected in the market today. Thanks for joining us today, and Victor, please open up for Q&A.

To ask a question, you will need to press star 1 on your telephone. To withdraw your question, just press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from Mark Mortler from Bornstein Research. You may begin.

Thank you very much, and thanks for all the additional details both on the 2025 and on the IT change. I'd like to drill in a little bit on the IT side. Understanding that you've exceeded your technology target for 2021, how does this impact the timeline to completion? Are you planning to finish a little ahead? Is that why the additional payments and spending you're going to have is to pull that forward? Are you seeing any benefits in customer retention or in closing new deals? Any color on that would be appreciated, and then I've got to follow up.

Yeah, so Mark, this is Sean, and I'll let Doug jump in as well. And I think I'm going to take you back to February 2022, what we stated, and walk you through a couple of things to try to address your questions. First, I'm going to focus on the global business system. So if you go back to 2020, we really tried to illustrate what we were seeing at that point in time relative to the savings and what it does for us relative to the benefits. And in doing that, Mark, you know, this is the one thing that we've been able to sort of leverage through the pandemic is the relationship we have with our partners, specifically Google, on how do we think about the spending curve of this taking place. Because we talk about essentially they are, you know, providing some level of support in this happening. So as you look at what we have been able to progress through the pandemic, we've actually been able to stay on course. If you look at what we're doing from here going forward, it's really completing what we outlined to do. So what we've talked about, Mark, is really the exit run rate of 2024. And I would tell you, I think we're on track for it is what's happening. As it relates to the global business systems, this is one thing that we did push back a little bit, the reprioritization of spending. So when we announced that we were essentially cutting back expenses after the pandemic, This is one that we paused for a period of time. We actually were spending some money, but we have to complete this because it does really get into the capabilities when we think about how the model is changing with some of the contracts that are out there. We look at just leakage and being able to make sure that we're recapturing that. These are all focused on what we have been talking about exiting 2024 and really giving you an insight into 2025. So hopefully that helps you, Mark, in sort of how we walk through all this.

That makes sense. And then maybe a follow-up in there. In the prepared marks, you talked about savings based on 80% of 2019 revenue. How should we think about IT spending now scaling, or scaling once this is done, if you beat those revenue targets? Is it going to scale in line or slower, and how does that compare to the way in which costs scale pre the conversion, the tech conversion?

Thanks. Yeah, I think the way that I would answer that, Mark, is As we've looked at essentially what we have provided you for an outlook of 2025, a big part of that is really just recovery taking place. And if you think about, you know, the core technology of just the infrastructure, that is essentially will continue to come down, right? Now, you'll see that with volumes going up under the Google Cloud agreement. But that's a good thing because we're driving more volumes, which would see a revenue increase. I think the other way of looking at it is what is happening with R&D. And when I think about the R&D side of the equation, and I'm sort of looking at Kurt across the table, it is one versus the ability to what are we investing in that is going to drive more revenue. So the important thing is, you know, as we look at this, there's definitely margin improvement that will occur with what's taking place as we go through this transition, Mark.

Yeah, I think the other thing, Mark, that obviously the big benefit to this transformation is the unit costs would be much lower than if we hadn't gone through it. Because before us, we had the DXC contract and AWS was our call provider. We have much better economics now than we had before.

That's exactly what I was looking for. So you figure that unit economics will scale in line where maybe the unit costs scale a little slower than the revenue scales.

Yeah, that is true.

Perfect. Thank you very much, and I appreciate it. Thanks, Mark.

Our next question will come from Matthew Broom from Mizuho Securities. Your line is open.

Thanks very much. So, hey, guys, you spoke a bit about the impact of Omicron and bookings and cash flows sort of towards the start of the year. Could I also ask about the near-term revenue implications? Is the revenue that you've already recognized, you know, that relates to flights that were booked but subsequently canceled and, therefore, that revenue would would maybe have to be backed out, particularly in Q1. Is that fair to say?

No, no. The way to look at it is when we gave you the monthly trends they had in October, November, December, Okay, what we're alluding to there is obviously we had really good strong bookings momentum coming in out of October and November and saw almost a 12 percentage point decline coming into December. Well, obviously that cash is now going to spill over and be collected in January. Same thing. We got off to a slow start in January. You saw that we're only at 31% recovery. Obviously, we now expect that to pick back up. So you're going to have two slow months of collections because of low bookings that took place in December and January in the first quarter. That's what we're alluding to.

Okay, fair enough. And then I guess in terms of your new agreement with American Express Global Business Travel, what are your expectations there in terms of how that could affect bookings growth and over what kind of time frame?

Yeah, so one, if you look at it, you know, part of that agreement is that we're the primary GDS, and what we talked about is additional bookings going forward. So, you know, you're going to see a lift relative to the bookings that are taking place. You know, when you think about Amex GBP and what they're doing, it's not only on the large corporate side of the equation, but it's also on the SME side of the equation. So, you know, that's important and what's there. You know, if you... sort of look at the discussions, and I would even go broader relative to our discussions with other large TMCs that are out there. It's the technology, technology capabilities, and where do we drive, because we do think that this is an opportunity as it relates to the services and the technology that we have. So it's not only from a MXQPT perspective that we think we can continue to get additional bookings, but by enabling other TMCs, we think it's also important. The thing that I call out a little bit, because this gets broader into just global corporate travel recovery. And, you know, there's a lot of discussion relative to what's happening on the corporate side. And I think it's important just to talk about the numbers and what we're seeing right now. If you go back to the recovery on COVID, we really saw the first two weeks of November, probably the best recovery period in corporate travel, down about 50% versus 2019. As you would assume with Omicron and the impact, that did fall off. So, you know, on a global basis, we are seeing probably those bookings down 60, 65, 67% in the beginning of January. What we're seeing right now is, again, that momentum coming back. We're sort of down 50% on the global basis, North America leading that. So the reason I bring that up is we're a believer in corporate travel. When we look at the relationship with AMX GBT, what we're focused on there as it relates to technology, and it really does get into corporate booking tool capabilities, How are we thinking about merchandising and retailing? And, you know, really for them, it's how do they make sure that they continue to serve their customers in the way that they need to be served.

All right. Thanks very much, Sean and Doug. Appreciate it. Thank you.

Our next question comes from Josh Baer from Morgan Stanley. You may begin.

Great. Thanks for the question. Just wondering, in the 22 and 25, scenarios and assumptions, what is embedded for the assumption around bookings mix versus pre-COVID levels?

Okay. So let me talk about 22 and then I'll go to 25. The guidance that we're giving you with regards to those ranges that we had in the scenarios was basically based off of the booking mix that we had coming out of 2021. So it's still not a great mix for us. Sean talked a little about corporate picking up, but it really is not at the level. Remember before, we always wanted to see kind of 50-50% of where you have domestic versus international and 50-50 versus leisure versus corporate side. Obviously, we're still more on the other side of where it's still closer to 70-30, 65-35 for those. So it is conservative. with regards to 2022. With regards to 2025, we've assumed a good recovery back to normal, what I'd call international and domestic, but only a 90% recovery of corporate travel. We didn't expect the numbers, the guidance we gave you does not assume that corporate travel comes all the way back to 100% in 2025.

Okay, that's really helpful. Thank you. And just to confirm that, In those frameworks for recovery, when you're talking about percentage of bookings, is that just looking at 2019, your reported bookings numbers, and taking the percentage off of that, or are there any adjustments for the lost Expedia business or any other changes versus 2019?

It's literally just off of the 2019 fully reported bookings number.

Okay.

Great. Thanks, guys.

Thank you.

Our next question will come from Neil Steer from Redburn. You may begin. Hi.

Thanks very much for the opportunity to ask questions. Just following on from the last question, actually, could you quantify what was the Expedia shift share impact that we saw on the air booking volumes in the fourth quarter? Could you just give us some sort of flavor on that, please?

Neil, I mean, I'll go back to what we talked about, because I think it's really more focused on 2022, that it's, you know, the $15 to $20 million in EBITDA impact, you know, were sort of immaterial relative to what happened in the fourth quarter relative to where they settled and what we're seeing in the first quarter.

Okay, thanks very much. And just on the Amex GBT partnership, you've talked a great deal, obviously, about the technology investments you're making and how there are some joint investments to be made there and the broader opportunity amongst other TMCs. Do you have the opportunity to take the platform and the solutions that you're developing in partnership with Amex GBT and sell those to other TMCs? Or is there a large part of that joint co-development work that remains proprietary to Amex GBT?

No, the way that we have entered these discussions, they would be available to the ecosystem in total.

Okay, thanks very much. And could you just also give a little bit of flavor on the airline IT pipe? Obviously, there was a little bit of sort of trading of carriers that we saw over the course of 21. What's the pipe like for airline IT renewals and new business opportunities?

Yeah, it's actually probably been on the low-cost carrier side. You know, this is an area that we are focusing on quite a bit. There's been a lot of action there, Neil, in what is taking place. I think if you look broader, because it's something I sort of push the team on, is if you look at where we entered or where we were in 2019 as it related to total PVs, I think we're in the 780, 800 million PVs. And I always sort of reference back to that. If you look at where we are now with sort of referencing what you're talking about, you know, we are net up as it relates to PBs and what's taking place. So I feel good about, you know, where we were in 2019. Let's just assume everybody gets back to 2019 levels. We've got to use that as the base. If we look into the future, I would say there's more activity definitely on the low-cost carrier side as we look at full-service carriers. It's typically what we've seen historically. There's renewals that are taking place that we work through. There's other opportunities that we try to advance on, but it's sort of similar to what we've seen historically now.

Okay. Thanks very much. Thank you.

Our next question comes from Jed Kelly from Oppenheimer. You may begin.

Hey, great. Thanks for taking my questions. Just going back to the technology investments and the road map you're laying out for the Google Cloud, can you discuss how these investments are going to improve your win rate or what we should expect for new business opportunities as you start to scale these technology costs?

Yeah, Jed, I'm happy to answer that question because it's really important in what we're doing. You know, when you think about it first and foremost, it goes back to just what it's going to do with the underlying cost structure. And, you know, the information that we provided you gives you a lot of detail on that decision side. But it really does get into some of the things that Doug had highlighted and I've highlighted is, you know, really if you look at it from the faster time to market with things that we can do, if you look at it again on the stability side, but I look at the development side and what we need to do and what ends up taking place and there's things that are happening. I can tell you, you know, specifically the lube win on the hospitality side was the ability to actually have landing zones in Europe. And as we continue to think about this, this becomes very important across the board, not only in hospitality and airlines, but also on the OTA side because they're so focused on speed and what's happening. You know, the other reason I think it differentiates us, and, you know, we don't get asked this question a lot, But we do believe we're ahead. And you look at technology transformation and organizations like ourselves that are going through it, you know, we've embarked upon this really beginning in 2019. We've had recent announcements by, you know, two of our competitors that they're going down the same path. Well, if they're really going to do what we're doing, guess what? They're going to have to invest as well. And we think that we're well ahead in what's taking place and the capabilities that they provide we think are setting this organization up for, you know, essentially what we've outlined in 2025. So I'm really pleased with where we are. We've kept our head to the grindstone as it relates to just continuing to manage through this as we've gone through the pandemic.

Thank you. And just following up, you said in your 2025, you have business travel getting back to 90% of 2019 levels. Just in those assumptions, where is leisure travel relative to 2019 that's going through the GDS versus brand.com?

Obviously, if business travel doesn't come back fully, then the balance would flow over to the leisure side.

Do you have an update, though? Do you think it'll – so it's 20% high?

Can you provide, like, what the – Well, yeah, so if you think about it, as I've told you before, the basic breakdown between corporate and leisure is roughly 50-50. So if we get back to 90, then the other 10% is going to flow over. So that's how you can calculate that. All right. Thank you. Thanks, Jeff. Yep.

And once again, that's our one for questions. Our next question will come to the line of Victor Chang. from Bank of America. Your line is open.

Hi, morning, Sean, Kurt, Doug. Thanks for taking my question. Are you able to provide some more color on the commercial updates? Have you signed more NVC distribution agreements with airlines? And then secondly, are you able to provide some more color on the booking fee unit economics? As Q4 is, you know, If I see currently it's about pre-COVID levels despite more domestic mix. So how should we think about this going into 2022?

Yeah, Victor, I'll take the first question on NBC and pass the second question off to Doug. There continues to be an enormous amount of engagement with carriers around the world. It's not only on new agreements, but it's also just on the capabilities and building out the capabilities. Again, as we went through the budget process this year, there's a whole host of things that we're getting accomplished to make sure that One, you know, you can actually have those capabilities, but you're actually able to do it at scale, and that's one thing that's there. So as it relates to just additional agreements, you know, off the top of my head, I don't have them. I know the team has been doing a lot of different things there, so I feel good about the progress that we're making.

Yeah, and yeah, sure. With the rest of the average booking fee, it's a combination of things you alluded to. One, it partially is the... lower than we have expected bookings that we get from Expedia, and also a little bit higher corporate international bookings. So kind of split one-third, one-third, one-third if you want to take a look at the differential between the rate in Q3 and the rate that we ended up in Q4.

Gotcha. And then maybe just one final one. I think you have alluded to it just now. If there is any updates on the Expedia bookings, I guess you were saying that it's broadly in line with what you have communicated in Q3. Is that correct?

That's correct. That's correct, Victor. Yep.

Okay, gotcha. That's clear.

Thank you. I'm not showing any further questions in the queue. I'd like to turn it back over to Mr. Shawn Minkey for any closing remarks.

Great. Thank you very much. Well, as you can see, we have continued to move forward on our technology transformation You know, as I look at 2022 and what's happening, we are definitely looking into the future and really finishing what we started because there is an enormous amount of, you know, financial upside as it relates to the technology transformation and what we're doing, but it's the capabilities that it's going to allow us to win in the marketplace. And, you know, hopefully we'll continue to see a nice recovery throughout the balance of the year, and we look forward to talking to you again after the first quarter results. Thank you.

And this will conclude today's conference call. Thank you for participating. You may now disconnect. Everybody, have a great day.