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AMADEUS IT HOLDING, S.A. AND SUBSIDIARIES
DIRECTORS’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2011
3.1.3 Contribution
The contribution of our Distribution business is calculated after deducting from our revenue
those operating costs which can be directly allocated to the business (variable costs, mainly
related to distribution fees and incentives, and those product development, marketing and
commercial costs which are directly attributable to each business).
The contribution of our Distribution business increased by 3.2% in the fourth quarter of 2011,
leading to a total contribution of €950.4 million in 2011 vs. €926.3 million in 2010. As a
percentage of revenue, this represents a margin of 45.7%, slightly lower than the 46.5%
contribution margin in 2010.
Operating costs in 2011 increased by 6.3%, as a combination of growth in incentive
payments to travel agencies and an increase in commercial and R&D expenditure:
- As described in the R&D caption, development activities in the distribution business in
the period include: (i) new products and applications for travel agencies, corporations
or airlines, mainly around the provision of ancillary services, sophisticated booking and
search engines (e.g. Amadeus Extreme Search) and our e-Travel management tool for
corporations, (ii) regionalisation efforts, including the development of the Amadeus One
product and certain development costs for specific US clients, as well as the launch of
the Amadeus Travel Office Manager in Asia, (iii) increased investment in relation to
hotel and rail distribution or (iv) increased costs in relation to the Topas distribution
agreement.
- Increase in our incentive fees paid to travel agencies driven by the competitive situation
and the mix of travel agencies originating our bookings.
- Commercial expenses mainly related to the full year impact of certain commercial
initiatives undertaken during the course of 2010.
These effects were partially offset by:
- Certain cost control efforts put in place in light of a slowdown in the economy.
- Favourable impact of the USD depreciation in our cost base.
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