Sabre Corporation
Q3 2021 Earnings Call Transcript

Published: 2 Nov 2021

[Operator:]

Good morning and welcome to the Sabre Third Quarter 2021 Earnings Conference Call. My name is Josh, and I will 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 Crissey. Please go ahead, sir.

[Kevin Crissey:]

Thanks, Josh, and good morning, everyone. Thank you for joining us for our third quarter 2021 earnings call. This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. A slide presentation, which accompanies today's prepared remarks, is also available during this call on the Sabre 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, cost 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 second quarter 2021 10-Q and our Form 10-K from 2020. Throughout today's call, we will also be presenting certain non-GAAP financial measures. All references during today's call to adjusted operating loss, adjusted net loss from continuing 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.sabre.com. Participating with me are Sean Menke, our Chief Executive Officer; and Doug Barnett, our Chief Financial Officer. Dave Shirk, our President of Travel Solutions; and Scott Wilson, our President of Hospitality Solutions, will be available for Q&A after the prepared remarks. And with that, I'll turn the call over to Sean.

[Sean Menke:]

Thanks, Kevin. Good morning, everyone, and thank you for joining us. We have a lot of material for you today, so let me give you a quick overview of the topics we will cover. I'll start today's call by discussing how Sabre's business strategy has evolved, taking into consideration changes in the travel ecosystem brought on by the COVID-19 pandemic. I'll also provide details regarding the announced sale of our AirCentre operations portfolio to CAE and how that sale fits into our strategy. Then I'll provide an update regarding the ongoing travel recovery, including specific booking, passengers boarded or PB, and hospitality CRS transaction trends. I'll also provide you with data regarding how the U.S. opening for international travel starting in November has improved booking trends. Then I'll provide a commercial and technology update where we are very active and making great progress. And finally, I'll turn the call over to Doug to walk you through the quarter results and key financial metrics. But before I start, I'd like to thank all my Sabre teammates around the world. Sabre is moving at an accelerated pace, not just in response to the impact of COVID pandemic but also as we rapidly advance modern retailing and develop a new marketplace for personalized travel. In this pursuit, my teammates are working extraordinarily hard, and I'm very appreciative and proud of their results. Turning to Slide 5. The COVID-19 pandemic unambiguously impacted travel demand whether business or leisure, domestic or international. We believe it has also fundamentally changed the way the travel industry, Sabre included, will operate going forward. Given this evolving landscape, we have been taking a critical look at Sabre, challenging norms and reexamining the way we do business. Our review focused on industry trends and technology, current and future capabilities, desired growth and returns, ongoing investment requirements and financial health and flexibility. We believe this exercise was necessary to help position Sabre for long-term success. The assessment reinforced what we already knew

[Doug Barnett:]

Great. Thanks, Sean, and good morning, everyone. Turning to Slide 15. As expected, the COVID-19 pandemic continued to weigh heavily on our results in Q3. However, the third quarter showed significant financial improvement versus Q3 of 2020. Total revenue was $441 million, a significant improvement versus revenue of $278 million in Q3 last year due to the continued recovery in global air, hotel and other travel bookings. Distribution revenue totaled $245 million, an improvement versus revenue of $105 million in Q3 of 2020. Our distribution bookings totaled $54 million in the quarter. Compared to 2019, net air bookings were down 60%, 65% and 62% in July, August and September and down 62% in the quarter as a whole. Said another way, bookings recovered 38% of 2019 levels in the third quarter. As Sean mentioned, our third quarter bookings were impacted by some share shift activity. Even though booking volumes went down sequentially this quarter, largely driven by seasonal trends and the COVID-19 Delta variant, our distribution revenue increased quarter-over-quarter. Meaning, we made more money off a lower bookings pace due to a more favorable business/leisure and domestic/international mix shifts as well as the accretive impact the share shift had on our average booking fee. Our average booking fee in the third quarter was $4.59 versus $3.90 and $3.84 in the first and second quarters of this year. We expect the Expedia share shift activity to result in a bookings impact of approximately $55 million to $70 million and an EBITDA impact of approximately $15 million to $20 million in full year 2020. Our IT Solutions revenue totaled $145 million in the quarter, an improvement versus revenue of $132 million last year. Passengers boarded totaled $116 million, representing a 62% recovery versus the third quarter of 2019. Sequentially, recall that the second quarter benefited from some upfront revenue recognition due to new implementations that went live ahead of schedule. Hospitality Solutions revenue totaled $55 million, an improvement versus revenue of $45 million in Q3 2020. Hotel bookings continue to lead the COVID-19 travel recovery. Central reservation system transactions recovered to 88% of 2019 levels and totaled $27 million in the quarter. EBITDA showed meaningful full year-over-year improvement but remained 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 incentives 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, increased labor and professional services expenses, including internal investments in risk and security, business systems and consulting related to our business strategy as well as increased litigation costs. Recall that in the third quarter of 2021, we began to anniversary the longer-term cost-saving actions put in place in Q3 2020, including the renegotiation of our DXC contract and a reduction of about 15% of our workforce. Exiting September, our head count was down 21% versus 2019 year-end. Operating income, net income and EPS also showed improvement versus the prior year quarter. Free cash flow was negative $83 million in the third quarter, a significant sequential improvement versus Q1 and Q2 of this year. As Sean mentioned, the agreement to sell AirCentre to CAE for $392.5 million in cash represents approximately 11x multiple of 2021 EBITDA. When we report fourth quarter 2021 results and until the transaction closes, the AirCentre assets will be treated as held-for-sale on our balance sheet, while their operating results will remain included in our P&L. When the transaction closes, which we expect to occur in the first quarter of 2022, Sabre will no longer recognize revenue associated with AirCentre products. Although our reported passengers boarded will not be impacted, our revenue per passenger border for IT Solutions will be lower. Additionally, post close, AirCentre employees will transition to CAE and the transition services agreement will go into effect. We will be compensated by CAE for the costs related to the TSA activities. Any additional costs associated with transitioning the business will be excluded from our adjusted results. Turning to Slide 16. We ended the quarter with a cash balance of $1 billion and have no significant near-term uses of cash. The sale of AirCentre is expected to further strengthen our liquidity position. With expected cash proceeds of $392.5 million from the sale of AirCentre upon the closing, which is expected early next year, this divestiture creates optionality with regard to how we invest going forward. We plan to continue to invest in our business across a more streamlined portfolio and in product areas we believe have the highest returns. Remember, our target leverage ratio remains unchanged at 2.5x to 3.5x. Therefore, the sale also creates optionality to potentially pay down debt. As you no doubt are aware, we have taken quick and decisive actions since the onset of the pandemic to reduce our cash usage and raise additional liquidity. In addition to the proceeds from the expected sale of AirCentre, we announced that we established an at-the-market equity distribution program in August. This ATM program is a continuation of a thoughtful approach on liquidity. To date, we have not sold any shares pursuant to the ATM. However, we maintain the flexibility to raise up to $300 million before the end of 2022 as needed or opportunistically. We expect to update you on the ATM program on a quarterly basis. With that, I'll turn it back to Sean.

[Sean Menke:]

Great. Thanks a lot, Doug. In conclusion, with the travel environment continuing to improve, the benefits of our technology investments taking hold and with our focused strategy, we believe Sabre is well positioned to take advantage of post-pandemic opportunities and unlock shareholder value. And with that, I'd like to thank my employees around the world for all the continued hard work that they do. And we would like to begin to take questions at this point.

[Operator:]

Our first question comes from Matthew Broome with Mizuho Securities. You may proceed with your question.

[Matthew Broome:]

Thanks very much for taking my question. So from the data you provided, it looks like you're seeing an improvement in volumes on both the international and the corporate side. Are you starting to develop a better insight as to what the sort of longer-term steady state will look like once we move past this near-term recovery to both categories? And following on from that, are you still seeing a free cash flow breakeven at sort of 56%, 57% of 2019 thing so that was a favorable mix and maybe mid-60s with an unfavorable mix?

[Sean Menke:]

Yes. Matthew, this is Sean. I'll take the first part of that question and then pass it off to Doug to answer the second question for you. So, we are encouraged, as you would imagine, by the trends that are taking place. And the one thing that we had talked about in the second quarter earnings call is sort of the lumpiness in the recovery and believe long term as we continue to see restrictions, travel standards will be more succinct in nature that we would continue to see the recovery. And that's really what we have seen. If you go back to the middle part of September is the growth, that's there. The thing that I'm also encouraged about is what we have seen on the business and international side. And again, this gets into markets opening. It's also our strong belief that business individuals will be out on the road. As we look into 2022, we have not provided any guidance. But at this point, I do feel confident that the trends that we're seeing right now, as long as we do not see a spike in COVID cases, that recovery will continue to take place. And with that, I'll hand it over to Doug.

[Doug Barnett:]

Great. So with regards to the cash flow breakeven, let's level set for a minute. Remember, the guidance we provided before centered around returning to bookings, PBs and CRS levels of 2019 and then obviously factor in the business/leisure and domestic/international mixes. With that, we arrived at a range of 55% to 65%. Obviously, I think with the shift of some of the domestic leisure moving away and raising the net fee, I think we shift a little bit to the left to the 65% more normal environment recovery now. So it's a little bit less recovery now and probably break even than before.

[Sean Menke:]

So this is the one thing we had mentioned is when we start to see specifically international and business traffic coming up as a percentage of total bookings, that's really good as it relates to the break-even free cash flow number, and that's what we're beginning to see.

[Matthew Broome:]

Okay. That's helpful. And then in terms of the Expedia news, I guess, is there any more context you can provide around that decision? What they did it go into effect? And in terms of the financial impact, how much of the bookings fee uplift was driven by that?

[Sean Menke:]

Yes. So, the important thing is, as I read through our prepared remarks, and Doug did as well, the impact is really in North America, which we talk about as being really the low-margin business, and it really came out in the numbers. But maybe some of the thoughts behind that, I'll pass off to Dave to share.

[Dave Shirk:]

Sure, Sean. Maybe first is to the why, their CEO, I think it's known publicly. He's been the new CEO, who's been taking steps to simplify their business and their operations. We have to say that their focus on what appears to be a single-source strategy is pretty unusual. And as a result, when we look at OTAs and while we continue to gain share and wins globally, the OTAs typically will focus on three things

[Doug Barnett:]

And lastly, your question on the average booking fee. The majority average booking fee increase this quarter was actually due to the better business TMC and international mix than it had to do with the loss of Expedia.

[Operator:]

Our next question comes from Mark Moerdler with Bernstein Research. You may proceed with your question.

[Mark Moerdler:]

Thank you very much and thank you for all the details. I'd like to drill in a little more on the AirCentre sale. I understand completely the desire to focus the business on the core, but a couple of questions on this. The first is, was AirCentre simply much more capital-intensive than the rest of the business? Second, was the sales organization really that much separate? Was there a technology stack difference or some other difference between the businesses? Any color you could give would be much appreciated. And then a quick follow-up.

[Sean Menke:]

Yes. No problem, Mark, and thanks for joining the call. So what I'd like to do is actually take you back to probably when I took over the organization, Dave Shirk joined me. If you look at this business, and we provided essentially the revenue from 2022 at $150 million, what I would tell you, Mark, is the amount of time that I had spent, that Dave had spent, in proportion to the revenue was a lot higher. Meaning, and you'll remember this, we were spending a lot of time on stability, making sure that the product is where it needed to be. And in many of those conversations with airlines around the world, all they wanted to talk about was the op suite and when are we going to make sure that it's healthy and in the right place. And Dave and team have done a great job in doing that. But the one thing that's clear about it is it does drive a lot of attention because of the nature. The other thing that important to call out as it relates to AirCentre, and it really does get into, as I mentioned, the nature of the business, is there's a lot of regulatory side with it. So we look at it from the CAA, the FAA or international regulatory bodies, specific work rules on carriers as well as pilot union. So you find that there's a different sort of development mentality that is required to take place there. And when we look at it, just based on where we are right now, Mark, it isn't core to what's taking place and how do we make sure that we're spending our time on what are the most important things that are going to drive revenue into the future. This is one that we had been approached in the past about potentially a disposition of it. But the thing that we are very thoughtful about is if we would sell the AirCentre portfolio, many of the customers that are AirCentre customers are going to continue to be Sabre customers. And we wanted to make sure that any acquirer was actually one that had strong relationships with customers. We knew that they wanted to invest and build upon it. And the other thing is just really for our Sabre team members, that they'd have a good place to go and work. So with that, from a capital sort of deployment into it, it's one that as we go through every budget cycle, there's a decent amount of dollars that went into it. From a sales perspective, I'll let Dave just talk about the sales cycle a little bit.

[Dave Shirk:]

Yes. So Mark, just to add to what Sean was saying, the sales cycle, it is a different buying center than the retailing and distribution side. And so, different persona and executive approach and purchasing cycle that would go on around that. The sales teams are always shared in multiproduct and multi-oriented. But in the case of our AirCentre portfolio, the presales team is dedicated to that because, as Sean was describing, the various regional labor issues, et cetera, there's unique aspects to that, that was a part of that structure and the transaction model for it. And you also asked a question about whether uniqueness or something interesting in the technology stack that made it different or whatever. Again, it's a different technology stack, but it's still technology. And so at the end of the day, it really comes back down to, like I said, the buying center being different and the way in which it's sold and the types of evaluation criteria associated with it for the head of operations and the way in which they would evaluate the solution and the stack that's around it. So that just gives you a little bit more color, I think, to answer your question.

[Mark Moerdler:]

That's extremely helpful, and I do appreciate. One other quick follow-up. You mentioned that you're on schedule, or maybe even ahead, in terms of your cloud migration. Does any of this accelerate any of the later steps in the process? Do you still think you'll meet the longer-term goals in terms of the cloud migration? Do you think you can get ahead of it potentially? Any color -- additional color longer term would be appreciated.

[Dave Shirk:]

Sure, Mark. I would say as far as our progress goes, I feel really good about the progress that the teams have been making. We've stayed very, very steady. The resourcing, the support we've gotten from Google in this particular transformation and the cloud movement, we're absolutely on track. As Sean commented in his comments, for our 15% target, we just put the entire Travel Solutions of Air Shopping piece into the Google Cloud. And so we're, right now, all signs would indicate that we are definitely on track for our 2024 process and the set of steps that we have and the milestones that we have wind up for us internally. As far as AirCentre may be having some positive impact and eventually accelerating things or something like that, it's still too early for us. As we mentioned, we have a transition services agreement. We will be thoughtfully working through the movement of our customers over to CAE. And I'd like to get a little bit further through that before I'd say that we could accelerate things through it. But again, we're pleased with where we're at, and we're definitely on track for the milestones that we said we would need.

[Sean Menke:]

Yes. The other thing, Mark, and this is really within the hospitality, I mean, there was an enormous amount of heavy lifting to be able to get Louvre on the cloud. And again, this is using the landing zone that we set up in Europe. So again, if you take a step back and we look at what we're doing is having these deployments around the world, as you very well know, it reduces the latency, which allows from, one, a stability perspective, reliability perspective, but also from a speed perspective. And the other thing that I would note is just the amount of learning that has taken place within the Sabre organization of what we're doing. It's only going to help us get better at this as we're moving forward. So I'm very optimistic relative to hitting the time lines that we have met already and then how we will continue to work through it over the next year or two.

[Mark Moerdler:]

Makes complete sense. In fact, a proposed the comment you made earlier about the decision Expedia made doesn't make sense given where you're going and how fast you're getting there. Thank you again.

[Sean Menke:]

Thank you, Mark.

[Operator:]

Our next question comes from Jed Kelly with Oppenheimer. You may proceed with your question.

[Jed Kelly:]

Hey, thanks for taking my question. Just back to Expedia. Is there something structurally going on here where the OTAs are trying to control their tech stack given they haven't seen a lot of volumes during pandemic and less volumes has allowed them to take a look at their technology? You look at booking holdings, right? They're building out their own flight product, too. It seems like it's a little more vertically stacked. I mean, is there anything structural going on there?

[Sean Menke:]

Jed, this is Sean. The way that I look at it, the answer is no. I mean you -- I know you follow Expedia pretty closely. With Peter coming on board there, there has been this drive on simplification, which has been pushed down into the organization. And this is on relative to what's taking place. When we look at it and we walk you through it, there's not much of an EBITDA impact on us, even where the volumes are...

[Jed Kelly:]

What would be EBITDA in 2019?

[Sean Menke:]

We have not disclosed that, Jed. But if you go back, I mean, if you look at the numbers that we provided you, that's on a pretty significant sort of rebound to 2019 levels, and you then see the impact on it. So, I'm giving you sort of the ballpark of what that impact is.

[Jed Kelly:]

Got it. Okay. And then like when you were negotiating them with like your Google Cloud and everything you've done, like how did that go?

[Dave Shirk:]

Sorry, Mark with Expedia -- sorry, Jed, with Expedia?

[Jed Kelly:]

Yes, the like you made this huge investment in Google Cloud, and I thought this would improve relationships with customers, improve the retailing, right? And to lose this contract, that's pretty significant loss. I mean they're the largest OTA in America.

[Sean Menke:]

Yes. To be clear, we didn't lose the contract. We stated that in the comments, right? It's the North American business, which is a low-margin business. What we also called out is the number of wins that we have been getting. So when you look at it, I would not blow it out of context relative to the impact. This is something that is being done at Expedia. When we look at everything else that's happening, Jed, across the board, I'm very comfortable with where we are right now.

[Jed Kelly:]

Okay. And then anything you can talk about for '22? Like are you looking at like any business trends, call like something like the Mobile World Congress or conference, which you generally get a lot of international travelers during February? I mean anything that you can point to on what you're seeing for like business recovery?

[Sean Menke:]

Well, again, as we identified in the comments, the business recovery is there as well as international travel. I think we went through in pretty much detailed, Jed, of our comfort and what we're seeing right now.

[Operator:]

Our next question comes from Josh Baer with Morgan Stanley. You may proceed with your question

[Josh Baer:]

Thanks for the question. Sometimes we get the mix -- the actual mix of domestic leisure, just looking for any color on that mix just given the booking fee in the quarter?

[Doug Barnett:]

Yes. The mix was a little bit -- obviously a bit more favorable from domestic and international. So basically, 43% now, whereas before -- remember, it was more down to -- it was 70 25. Now you see it is coming back because it's gone from 25% to 43% recovery.

[Josh Baer:]

The -- sorry, 40 -- could you just repeat that?

[Doug Barnett:]

Yes. So last quarter, the domestic leisure was basically 50% of all our bookings. This quarter, it declined to 43%. So obviously, the shift is going to the international marketplace.

[Josh Baer:]

Okay. Got it. That makes sense. And then just thinking through some of the other product portfolio areas in -- with AirCentre in mind, I mean, is there -- if I think about like SynXis Property Hub or property management systems, is that -- does that fit in with the operations sort of theme of AirCentre? Or is that more directly part of the strategic focus areas?

[Sean Menke:]

It's different, right? I mean if you look at it, it's a core operating system. It's no different than sort of -- look at the airline PSS system, Radixx, SabreSonic. You have CRS that sits on top of it. So a little different, I think what I'd point you to is we talk about AirCentre, but we've also done some small dispositions of a product called AirPass, which really is a cost management system within Travel Solutions as well as Trams, which is some back-office stuff. The flip side of that is what we have been doing with intelligent retailing and hospitality. You look at the acquisition of Radixx. We'll be talking about essentially say AI stuff, which gets into Air Price IQ, which we'll be talking about later this week in announcement as well as the Ancillary IQ. So again, you're seeing us moving away from certain things that are not core and making sure as we bring in new things and launch new products that they're very much in alignment with the strategy.

[Josh Baer:]

Got it. And just in thinking about the sale of AirCentre, just wondering like if liquidity was not an issue. Do you think that -- I know it's a tough question, but just getting a sense for like there's different reasons maybe for the sale. Like how big was liquidity factor if liquidity was an issue? Was this part of the prior strategic plans?

[Sean Menke:]

Yes. I mean if you listen to the response that I had for Mark Moerdler, I think I went through it in detail. You got to go back in time is what this is. This is not anything focused on liquidity. This was one that, as we looked at it, it was not core. And the one thing that we're very focused on is making sure that if we had -- if we sold this, really the disposition that it went to the right buyer, which CAE is a great buyer, and this because of the alignment that they have. So it was more driven on that than anything else. This was not liquidity-focused. And again, we've talked about really where we are. Liquidity sits at $1 billion. we do have access to unsecured debt. We have the ATM program that is out there. So again, we've been very thoughtful. We've been very focused because I think what you're getting to is how do we feel about it. And we continue to be very thoughtful managing through our capital structure and what we need to do, and we want to make sure that we're nimble relative to the opportunities that may sit out there.

[Operator:]

Our next question comes from Neil Steer with Redburn. You may proceed with your question

[Neil Steer:]

Can you hear me okay?

[Sean Menke:]

Yes, Neil.

[Neil Steer:]

Okay. Sorry to go back to the subject of Expedia, but I just wanted to clarify something. It sounds as though there was part of the business that you've lost, but you suggested -- excuse from the answer to an earlier question, it seems that you've got North American domestic, but you seem to be keeping part of the business. But then in response to a question earlier on, I think either yourself, Sean, or Dave mentioned that they exceeded maybe going to a sort of a sole source strategy. So the question is, are you expecting to have meaningful Expedia volumes in the near term? And -- or is there a risk that you -- that Expedia goes completely to one GDS globally and you list Expedia volumes altogether?

[Sean Menke:]

Yes. To be clear, we have an Expedia contract that's in place. With that, it's just North American volumes that we talked about, Neil. If you look at other volumes, they're still in place. So it's almost that simple.

[Neil Steer:]

So it's just the North American domestic that you chose not to effectively chase after all because the economics weren't attractive. Is that correct?

[Sean Menke:]

That's correct. And we walk you through the impact of that, which is, as we stated, is immaterial.

[Neil Steer:]

Okay. Thanks. Just looking at some of the charts where you show the data of booking trends and so forth, it looks as though you could actually be quite close if trends show a small improvement to being free cash flow neutral in the fourth quarter. Is that something you are expecting or prepared to comment upon?

[Sean Menke:]

Yes. Again, we're not providing any guidance, Neil. But if you go back to what we have been talking about as it relates to breakeven, we watch the bookings very closely. That's why we share that information. And again, as we look into the future, we'll continue to share the information that allows us to see the recovery in a positive way.

[Neil Steer:]

Okay. And just one final one. Is there any update on -- you had a couple of quarters ago, obviously, a very positive announcement with Delta, but then American Airlines seems to take offense to that contract and how it's been put into play. What's the latest on the relationship between American and Delta and that contract?

[Sean Menke:]

You may remember that they filed a temporary injunction on that. Actually, last week, the judge ruled that the temporary injunction was denied. We are in the market discussing with other airlines, discussing with agencies and continue to be focused on the innovation that we're rolling out to the marketplace. And this is really new airline storefront as well as value-based pricing.

[Operator:]

And our next question comes from Victor Cheng with Bank of America. You may proceed with your question.

[Victor Cheng:]

Thanks for taking the question. Just going back to Expedia, can you put the impact into context? You mentioned $55 million to $70 million bookings in 2022. But obviously, you haven't disclosed your assumptions for 2022. Is it broadly in line with some industry forecast, forecast you're having?

[Sean Menke:]

Yes. Let me walk you through -- the way that I think it will be best helpful is if you think of 2019 volumes -- and we're not giving any guidance as it relates to 2022. But if you look at 2019 volumes and you actually assume a very strong recovery in bookings, and I'm talking in the magnitude of, call it, 70-plus percent recovery, you're then talking about a bookings impact of $55 million to $70 million. Again, I'm looking at the high end. But what that translates into is -- I keep going back to the low-margin business in North America that we've called out. It only has about a $15 million to $20 million impact on EBITDA.

[Victor Cheng:]

Got you. Thank you. And then can you comment on the historical growth of ASN that presumably it is slower growing part of the IT Solutions. So should we expect a stronger growth in the remaining portfolio in the long run?

[Dave Shirk:]

Yes. So Victor, on the first part, yes, you're correct in terms of the previous growth rate of AirCentre. As far as the rest of the portfolio, again, we're not giving guidance. But as I've stated in past calls, we continue to do cross-sell and up-sell, and we continue to be pretty positive on the new innovations and trying to build up the pipeline for those things in the interest level as we start to bring those out. It's also the case that whether it's data and analytics, whether it's our revenue management product set or some of the new retailing and merchandising capability sets, we see those also as positive out there in the marketplace and getting a lot of first-line interest from those as we start to move through that. So that would be our optimism for where we head.

[Victor Cheng:]

Got you. And then maybe just two final ones on hospitality. Looking at Q3 CRS bookings, it is back up to 88% of 2019. The revenue is only 75%. Can you help reconcile the difference, particularly given hospitality, if I understand it correctly, should have a bigger fixed component? And then maybe just one final one, if I may, on the hospitality revenue. Is it correct to assume that the majority of that comes from CRS? And if so, can you comment on what kinds of hotel in terms of size and region, the SynXis Property Hub will be targeting at given -- and what the opportunity is for the PMS space given some of the well-established players in that field?

[Scott Wilson:]

Yes. I've got a bit in there. I'm happy to answer. This is Scott Wilson. So let's get to the first part, which really has to do with kind of the recovery and how that translates into revenue. Keep in mind, the market is recovering a little bit differently than the airline space, but it's still a story of has and have nots. We have a lot of the local drive type hotels, limited service hotels. That's the preponderance of the recovery right now. If you're looking at your big city center business-oriented hotels, those are not. And obviously, we have a corresponding revenue recovery that goes in line with the full recovery of the market, not just the part of the market that is recovering. We're very grateful to see the part that is recovering. We're looking forward to the rest of the market recovering going forward. Going to the kind of the next part, is the revenue generally driven by CRS? Yes, the preponderance of the hospitality revenue does come from our CRS. That's our traditional space. And then, I think the last part really was pivoting now towards PMS. Maybe if you could remind me what was the specific question about Property Hub?

[Victor Cheng:]

Yes. Just thinking, obviously, in PMS, there are some -- a few established players there. So I was just wondering your announcement of SynXis Property Hub, who are you targeting at? Is it current CRS customers?

[Scott Wilson:]

Got it. That totally makes sense. So a quick reminder, SynXis Property Hub is actually our latest-generation, all-cloud limited service-oriented property management system, focusing on North America. Obviously, as well known, our launch partner and our biggest partner has been Wyndham Properties. We actually have started well over 100 of their properties on SynXis Property Hub, and that will grow to their -- most of their portfolio over the next two years. We are in conversations with any other North America limited-service hotelier who's interested in the property management solution. We believe that it is a truly mission-purposed solution for the limited-service players. We think there's a lot of opportunity for us to go win that. Right now, with the growth that we have, we will be one of the largest property management systems in the world when we finish our existing contract rollout. So, we go from -- we go to a very, very healthy position that we think sets us up well to win additional opportunities in North America for limited-service properties.

[Operator:]

Thank you. And I am not showing any further questions at this time. I would now like to turn the call back over to Mr. Menke for any further remarks.

[Sean Menke:]

Great. Thank you very much. And I want to thank everybody who has joined us on the call today. Again, I want to thank my team members around the world. We're excited about a number of things that are taking place

[Operator:]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.