Analysts: Lack Of Growth Would Hurt A GDS IPO

Although Sabre reportedly could go public in a couple of years, today's market doesn't have much of an appetite for a GDS initial public offering, a couple of financial types said last week at the PhoCusWright conference in Hollywood, Fla.
"As I see it right now, investors are paying for growth," said Kevin Crissey, an analyst covering airlines and online travel agencies for UBS. With that in mind, Crissey during the conference said he doesn't see "a big market" for a GDS IPO, since the segment is not, as he put it, "growthy."

"They've got pressures from the consolidated airlines--that makes it tough," Crissey said, "and generally they're not fast-growing companies."

Woody Marshall, a general partner with Technology Crossover Ventures, which has a stake in Travelport, agreed with Crissey's take that investors want "a growth story."

"There are a lot of headwinds that those companies are facing," he said of the GDSs. He noted that Travelport is "investing in new technologies to spur that growth," but he also added, "We're seeing the market say, 'We'll defer operating leverage and profitability if we see growth,' but you need growth."