Latin
American online travel agency Despegar says its gross bookings reach $1.2
billion in the third quarter of 2019, a 26% increase in a constant currency
basis (8% as reported) over the same period a year earlier.
Revenues
in the period totaled $132 million, up 19% on a constant currency basis (9% as
reported).
In
a statement accompanying the results, Despegar CEO Damian Scokin says he is
encouraged by the company’s performance, which he attributes in part to the
$8.6 million re-branding campaign launched earlier this year.
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“The
quarter’s results also reflect the success of our re-branding campaign launched
in 2Q19 as we gained market share in what has remained a challenging
environment in some of our key markets. Additionally, with the costs and
near-term impacts associated with the re-branding campaign behind us, we are
back on track reporting positive EBITDA,” Scokin says.
Scokin
is also optimistic about the long-term benefits of two recently-signed
partnerships.
Last month the OTA announced an API connectivity agreement with Trip.com Group (formerly Ctrip) that integrates Despegar’s direct accommodation offerings in
Latin America into the Chinese OTA’s platform.
It also Despegar
signed a 10-year exclusive agreement in the same month with Industrial and Commercial Bank of
China Limited to launch a co-branded credit card in Argentina in partnership
with Mastercard. That move is part of plans to launch a loyalty program in
Argentina next year.
Scokin
says these deals “will both expand our potential customer base as well as
provide more products for our customers.”
Business
segments
Despegar’s
business is divided in two categories: air ticket sales and packages, hotels
and other products, which includes car rentals, bus tickets, cruise tickets,
travel insurance and destination services.
Packages,
hotels and other products accounted for 42% of total transactions in the third
quarter, flat compared to the same period in 2018, but revenue increased 14% in
the quarter to $81 million. This segment accounted for 61% of Despegar’s total
revenue, up from 58% a year earlier.
Some
of that growth is due to Despegar’s June acquisition of retail
travel agency Viajes Falabella, a division of the Falabella department store
chain that specializes in packages. The third quarter results include three
months of operates Viajes Falabella in Chile, Argentina and Peru and two months
of operations in Colombia.
Air segment revenue was up just 1% compared
to 2018, to $51.2 million in the third quarter.
Regarding
gross bookings, Scokin says Despegar’s performance “was significantly better
than the single digit contraction experienced by the air travel industry in
Latin America in the third quarter in terms of gross bookings. This industry
contraction is mostly explained by the macro volatility and currency
depreciation experienced in the Company’s key markets, particularly Argentina
and to a lesser extent Brazil.”
Mobile
and more
Despegar
continues to grow its mobile transactions. The company says 39% of all
transactions are now completed in the app, which has been downloaded more than
57 million times.
Sales
and marketing expenses in the third quarter were up 12% compared to the same
period of 2018. The company says this was primarily due to the acquisition of Viajes
Falabella and associated costs of operating stores within stores and telesales
operations, and partially offset by efficiencies gained in direct marketing.
As
a percentage of revenue, sales and marketing expenses increased only slightly,
from 34.3% of revenue to 35.3% in the third quarter of 2019.
Scokin
says they will continue to monitor the macro environment but remain optimistic
about the long-term potential of Latin America and the online travel industry
there.
“Further
ahead, we remain confident that our strategic investments and new partnerships
are establishing a solid foundation and creating further differentiation to
deliver profitable growth,” he says.
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