Our Distribution revenue increased by 5.8% vs. 2011. This increase was driven by growth both in booking revenue (+6.6%) and in non-booking revenue (+1.5%):
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 the business).
The contribution of our Distribution business increased by 2.5% for 2012, leading to a total contribution of €974.6 million in 2012 vs. €950.4 million in 2011. As a percentage of revenue, this represents 44.3%, a decline vs. 45.7% in 2011, as expected by management based on industry dynamics, including higher incentive payments, as well as a significant number of commercial successes, leading to a short term increase in costs. R&D expenditure also increased in the year.
Finally, it should also be noted that our margins were negatively affected by FX evolution, which positively affected our revenue (as discussed above) but negatively impacted our cost base, leading to a slightly better contribution figure, in absolute terms, but a lower contribution margin, as % of revenue.
Operating costs in 2012 increased by 8.9%, as a result of: (i) the increase in our booking volumes, (ii) the increase in our average unit incentive fees, paid to travel agencies, driven by a combination of the tougher competitive environment and the mix of travel agencies originating our bookings, with significant growth in the online segment, (iii) significant development activities associated to distribution such as: (a) new products and applications for travel agencies, airlines, and corporations to provide sophisticated booking and search engines (e.g. Amadeus Meta Pricer), (b) regionalisation efforts or (c) increased investment in relation to hotel and rail (iv) commercial expenses related to new client wins and the increased activity in the regions and (v) negative impact of the EUR depreciation in our cost base.