Despegar ended 2019 on a high note with a 10% increase in fourth-quarter revenue to $145.6 million, although revenue for the full year declined by 1% to $524.9 million.
Revenue
for the fourth quarter also exceeded analyst expectations of $130.4 million.
Gross bookings rose 6% in the fourth quarter to $1.28 billion but remained flat for the full year at $4.7 billion.
In a call to discuss earnings, Despegar CEO Damian Scokin says that the recent surge in gross bookings “is reflective
of the success we are having by staying focused on our key strategic initiatives even as we face challenging market conditions.”
“The fourth quarter was not without its challenges, including social unrest in Chile, which curtailed travel
to and from that country, and the ongoing recession in Argentina,” says Scokin.
Adjusted EBITDA declined by 62% in 2019 to $25.6 million, while falling 40% year-over-year to $8.3 million in the fourth quarter.
The drop in EBITDA
is attributable to increased operating expenses, which grew by 23% in the fourth quarter.
Despegar credits the introduction of a new export tax in Argentina behind the rise in expenses.
Selling and marketing expenses increased by
16% in the fourth quarter, which is partly due to the launch of Despegar’s loyalty program in Brazil.
With regards to the loyalty program, CFO Alberto Lopez Gaffney says the company is “in a period of investment because at the beginning you
start giving out the points.”
Subscribe to our newsletter below
“We are starting to see good results from the loyalty program."
Air revenue decreased 6% in 2019 to $201.6 million but increased by 6% year-over-year in the fourth
quarter to $53.3 million.
Revenue for the Packages, Hotels and Other Travel products increased by 2% in 2019 to $323.2 billion and by 12% in the fourth quarter to $92.3 billion.
2020 Outlook
In January, Despegar acquired Best Day Travel Group for $136 million to expand operations
in Mexico.
Scokin says the company expects to “achieve operational synergies” from the acquisition.
“Not only does Best Day complement our existing business, but it also provides growth opportunities with new products and services,”
says Scokin.
The Buenos Aires, Argentina-based online travel agency reports immediate challenges from the impact of the COVID-19 coronavirus.
“You actually see lower relative growth excluding the corona effect of international share,
and particularly the demand that's coming down is very much in line with where the news is coming from southern Europe, Asia,” says Gaffney.
Reflecting on the state of the online travel sector in 2020, Gaffney says the industry is “very
open to international competition with all global players and regional players being present.”
“As we look into our market share, we are glad to say that we are improving margins while also gaining market share.”
Scokin adds that
the company is “encouraged with the progress we have made in successfully executing in our key strategic initiatives, even when you take into account the volatile macro environment that we have been operating in during the last two years.”