Analyst Note| Dan Wasiolek |
Narrow-moat Amadeus announced that narrow-moat Marriott will implement its cloud-based and customizable hotel reservation system. Marriott joins narrow-moat peer InterContinental as the second major global hotel chain to use Amadeus’ technology. While terms and timing of implementation were not provided, we estimate that Sabre's December 2014 win to host solutions for narrow-moat Wyndham generated around $30 million-$50 million, mostly in 2016. Based on this calculation and the comparative portfolio sizes of Wyndham (over 800,000 rooms and 9,000 hotels) and Marriott (nearly 1.4 million rooms and over 6,500 hotels), we believe the contract could generate around $50 million in annual sales for Amadeus, starting around 2024-25. This amount of revenue would equate to around 1% of total estimated Amadeus sales. As such, we don’t expect the contract to materially alter our EUR 57 fair value estimate for Amadeus, leaving the shares overvalued.