Damian Scokin, CEO
Despegar was created in 1999 as one of Latin America's first online travel agencies. Based in Buenos Aires, Argentina, the company raised just $31 million before going public in 2017.
Scokin joined Despegar in December 2016 and took over as CEO in February 2017. He previously ran Ultrapetrol, which he joined from LATAM Airlines Group where he held a number of roles and led the merger of LAN Airlines and TAM Linhas Aereas.
Give us a brief overview of the dynamics of the online travel industry in Latin America in terms of online booking trends, preferred channels etc
Latin America online travel bookings were approximately $46 billion and $41 billion in 2018 and 2017, respectively, a third of which was attributable to online purchases.
Looking ahead, strong overall travel growth in the region is expected to support an estimated 7.5% compounded annual growth through 2020 creating an expected $130 billion plus travel market in Latin America.
Additionally, the ongoing increase in online penetration is expected to drive an even greater 12.5% compounded annual growth rate for online travel in the region over the next several years, taking the online travel market to nearly $50 billion in 2020.
As smartphone penetration in Latin America continues to increase, Latin American consumers have begun to make greater use of mobile devices to transact online.
Mobile is an increasingly important part of our business, as consumers are quickly able to access and browse our real-time travel offerings, compare prices and make purchases through their mobile devices.
During Q1 2019 more than 38% of our transactions were completed on our mobile platform, complementing our desktop website traffic.
Our strategic focus on mobile enables us to remain connected to customers and provides the opportunity for customers to access our platform after they have arrived at their destination to purchase additional products, such as rental cars, destination services and travel insurance, or make last-minute hotel or air travel bookings.
Buenos Aires, Argentina
What are the biggest challenges facing Despegar currently?
We operate in a highly competitive and evolving market. Travelers have a range of options, both online and offline, to research, find, compare, plan and book air, packages, hotels and other travel products.
Our results of operations and financial condition are significantly influenced by political and economic developments in the countries in which our customers reside and, to a lesser extent, in the countries to which our customers may travel.
In the mid-to long-term, we believe that macroeconomic changes in the region will generally benefit us due to an expanding middle class, increasing disposable income, reduced unemployment and lower interest rates, among other factors.
Despegar has a strong track record of growth, even during a more challenging macroeconomic backdrop in Latin America.
As the leading OTA, Despegar is strongly positioned for more favorable conditions. Our local expertise in the countries where we operate allows us a competitive advantage and ability to navigate economic and political fluctuations.
Our larger size, and more efficient infrastructure coupled with our healthy balance sheet, provides a stability toward more challenging environments. We remain focused on driving long-term shareholder value by delivering balanced top and bottom line growth, while making strategic investments to accelerate long-term growth opportunities.
We remain focused on driving long-term shareholder value by delivering balanced top and bottom-line growth while investing in differentiated capabilities to expand our competitive advantages.
Our strategy is to further build our market share, improve customer service and drive long term profitable growth.
Down the road, as the economies improve across the region we expect consumers to once again spend on travel. This, along with higher internet and mobile penetration, should drive growth in online travel and we expect to be a beneficiary of this trend.
In-depth: Startups, distribution, interviews and more
PhocusWire's theme month in May 2019 was the Latin America region.
Despegar filed for IPO almost two years ago, take us through some of the biggest milestones in the business since then?
Our client centric approach leads all our efforts in the pasts years, and the milestones are in line with that.
Customer experience is a key focus for our business and we believe this is reflected in our strong brand recognition and loyalty throughout Latin America.
We emphasize providing personalized support throughout the customer purchase cycle, including automated web-based support and support from live customer service representatives.
In addition, during 2018 we launched a service button on the mobile app which enables customers to reach our company no matter where they are via VOIP or WI-FI at no cost.
As a result of our efforts we managed to increase our net promoter score (“NPS”) 432 basic points, up to 66% during 2018.
Our platform is engineered to provide a personalized and secure experience to our customers. We invest heavily in understanding our customers behavior and intentions through a combination of detailed behavioral data collection and machine learning algorithms.
We offer an omnichannel experience, so we launched sales call centers in Peru, Ecuador, Mexico, Chile, Colombia, Argentina and Brazil during 2018, and strengthen that attribute with the Viajes Falabella acquisition.
In March we completed rebranding our core business, including logos, website and images in order to update our outward facing content.
The new visual identity reflects our commitment with Latin American travelers and enable us to establish a close relationship with our clients while introducing to them a new travel standard in the region.
Project forward and tell us how you think the online travel space might look in five years time…
Digital platforms related to travel industry, like many others, today more than ever, have a very high level of dynamism. Different technologies are radically changing our user experiences.
And evolution occurs exponentially. New technologies are changing the way we plan, buy and live our trips. Looking to the future, the technologies with the greatest impact in the following years will be those related to voice assistance and machine learning.
Artificial Intelligence above all, which will allow us to have another type of interaction with digital platforms, radically improving their use experience.
It was only the third IPO in Argentina since 2015, is that something that you see changing in the online travel space in Latin America?
I believe that new IPOs of young and disruptive companies will come, but probably related to other industries, such as fintechs, marketplaces or agtechs among others.
How is the travel startup scene doing in Latin America in terms of innovative ideas, funding etc?
Latin America has plenty of talent and a lot of entrepreneurial spirit. There are also forums to promote startups and enhance opportunities.
I am confident that one of the many the new projects that usually arise, will be disruptive enough to emerge and help to improve the online travel ecosystem.
Despegar has just acquired Viajes Falabella, how does it fit strategically with Despegar?
The acquisition will allow us to further strengthen our position as the leading travel company in Latin America.
With Viajes Falabella, we are purchasing a well-established business in the fast growing region. Viajes Falabella product mix has a core focus in packages which account for about two-thirds of Viajes sales.
This is strongly aligned with our strategy to grow our higher margin packages, hotels and other travel products.
Also it reinforces our customer centricity, in an omni-channel world, we need to be available wherever our customers want to book travel, Viajes Falabella is a full-service travel operator, with online presence, call centers and, unique for us, “asset light” stores within stores.
What was the last book you read?
Crucial conversations: Tools for talking when stakes are high by Kerry Patterson, Joseph Grenny, Ron McMillan & Al Switzler.
How do you foster innovation at Despegar?
We thrive on innovation. We're always trying to do something better on behalf of our customers.
That may be a new product feature, the way we provide customer service. There are many different things that we do. We are constantly innovating. Innovation is present in every part of our business.
For us it is key to have an always on learning environment within the organization and foster the ability to learn and do based on experience as a continuous personal improvement process.
Innovation is part of our DNA, at Despegar we encourage curiosity of our teams and thrive them to find new ways to solve problems and face challenges from the business.
We work every day to make innovation real for our customers. That‘s why our efforts are focused on technological developments that allow us to make the user experience simpler and faster.
What developing technology are you betting on - chat, AI, biometrics, something else?
We invest heavily in understanding our customers’ behavior and intentions through a combination of detailed behavioral data collection and machine learning algorithms.
We are using machine learning to improve our users’ experience throughout the entire customer journey.
The combination of Despegar’s customer-centricity and AI can be seen, for example, in the roll-out of intuitive “Inspirations” app that spurs customers to dream about travel, prompting them with amusing questions like, where would you like to be? What experiences do you like? And then follow through with real offers.
This is a unique, customized and very easy to manage flow of travel recommendations based on each individual’s preferences.
Through a friendly Q&A, we walk the traveler through the process of building his or her trip and provides suggestions based on the date of the trip or time of the year, number of people travelling, assigned budget, destination – beach, city, mountains, and type of activities of interest – relaxation, sports, adventure, cultural, etc.
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