With its acquisition of Rail Europe complete, Omio is eyeing further deals as it looks to expand its ground transportation business.
The company's purchase of the European rail distributor came amid proposed regulatory changes and competitive pressures that Omio expects will drive further consolidation in the region. Beyond Europe, Omio is pursuing growth in Japan and Southeast Asia, backed by a $10 million investment from Granite-Integral.
In an exclusive interview with PhocusWire, Omio Group CFO Jean-Bernard Moens discussed the company’s acquisition priorities, its approach to entering new markets and how AI agents fit into its broader distribution strategy.
Editor’s note: This interview has been edited for style, clarity and length.
Now that the Rail Europe acquisition is complete, where does the integration stand and what are the next steps?
Rail Europe is made of two business units. One is B2C and that largely overlaps with what we do at Omio. They have a couple of products that we don't have, like rail passes. Then we have a bunch of inventory inside and outside of Europe that they don't have and that we want to plug in to their product. That's going to happen relatively quickly on the B2C side.
On the B2B side, which is roughly two thirds of that business, they are dealing with travel agents, which we haven't really done in the past at Omio. We launched a product called Omio for Business. It’s ramping up, and the idea is that we're going to merge those two things. We are going to be able to offer to those travel agents an inventory that is much broader than what Rail Europe was offering.
What does Rail Europe give Omio that would have been difficult to build organically, and where do you see opportunities to generate additional business?
When we launched Omio for Business, we saw that it was going to take a long time to develop the brand. And Rail Europe has been going at it for almost a century. That, for us, is a tremendous acceleration.
And then you have to also plug technically into the travel agents' software, where it's not only about ground transportation; it's also about hotels and events or whatever you book with your travel agent. And that takes time because you need certifications, you need to know how this works, and this is expertise that we don't have at Omio. That is something we get through the acquisition of Rail Europe. We are in 70 countries today. So it’s a [significant increase] in the amount of inventory that we can provide to those travel agents.
How do you see the competitive landscape in the European rail market evolving? Is it becoming easier for independent platforms to compete, or is the market becoming more crowded?
COVID wiped out a lot of small players that were either not very professional or not offering an added service to customers, and so only a handful or a dozen operators like us remain in Europe today.
You have a lot of very positive pressure from a consumer point of view. You have LLMs and agents coming up that are going to help customers book their travel. You have the European Commission pushing and making sure that there is more price transparency in what we do. That's good for the consumer. It may be a challenge for us, but then also more people are buying tickets online and not at the kiosk anymore. And that's a benefit for us.
What this means is that there is pressure on platforms like ours, which means that there's going to be consolidation. You can't continue to have a lot of subscale actors, and so that's why Rail Europe happened. And I'm pretty sure that more consolidation will happen in the future.
Let's talk about your broader growth strategy. I understand you have a strong acquisition pipeline, with 12 to 15 potential targets. What kinds of companies are you looking at, and what gaps in your business are you trying to fill?
We're looking at three dimensions.
One is geographical presence, where an acquisition could help us penetrate a new market that otherwise would take a lot of time to get into.
We're looking at companies that could add modes of transportation. Today we have trains, buses and ferries, by decreasing order of importance. Either we find someone that is very strong in one of those modes of transportation and really brings it up to speed, or adds new modes of transportation: airport transfers, vans, minibuses, these kinds of things.
The third one is added services for consumers or travel agents.
We have a list of a dozen companies that either we are in touch with or we're looking at from afar.
How many acquisitions could we potentially see?
It is going to be a key part of our growth strategy. I think it's inevitable in the market that consolidation will happen, and today we have a level of maturity and a size where these acquisitions are never easy, but they are not going to be disruptive.
Rail Europe is a nice acquisition because, roughly speaking, it was maybe one quarter of our size before the acquisition.
I would be very happy if we do one such acquisition every six months. Again, we'll see what the market offers us, how others are reacting.
How do these different categories fit into your broader strategy: geographic expansion, additional modes of transportation and ancillary products and services. You mentioned that geography comes first.
The reason why we focus on geography, both organically and inorganically, is what I've learned many times in my career: You understand what you do well from a consumer point of view, and once you know that, you double down.
Geographic expansion is the realization that today we serve a particular segment in the market of international travelers that go into an unfamiliar environment, and they seem to really appreciate the support that we give them … so much so that they want to come back.
If they come back in Europe, we have the inventory. We can help them. But if they are Americans coming to Europe, they do that once in a while, and then we cannot serve them anymore. Now, if we have inventory in Japan or Asia, if we have inventory in South America, suddenly they can come back with us and have that same experience.
If you start going after new users in new geographies, it's really hard because you need to understand consumers that you don't serve today.
Can you apply that framework to Asia? You have a recent investment that could open some doors for you in terms of growing supply there, and the Rail Europe acquisition gets you connectivity to travel agencies on the distribution side.
Let's take Japan, for instance. You’re absolutely right to mention the fundraise that we did earlier this year with Granite-Integral was especially to help us develop Asia—Japan and Southeast Asia. And that's not just the money. It's also because those partners have their entries in Japan and Singapore with the Ministry of Transport and all of that. That's helping us get into those geographies much faster.
The first port of call for us is to say, if you are a traveler, you know us. Here is a new destination for you. Discover Japan with us.
The next thing is we use Rome2Rio. Through that website, we can also let them know that today we have Japan available to them, and that might trigger some conversions and people who will then try us for the first time. That’s our second port of call.
The third lever that we pull is different. Now we are in Japan. We serve our customers. We serve similar customers, but it's their first time with us. What other international customers come to Japan? We're talking about Chinese travelers, Koreans, Singaporeans, and that's a higher level of difficulty.
That's just for one country. Then you do it for multiple countries, and you have network effects starting because the more geographies you have, the more likely all of those customers are to book again with you.
How does this play in terms of B2C versus B2B growth?
For us, we want, in the end, that whenever someone books a ticket for ground transportation, it goes to us. Whether it's direct, they book on the Omio brand, or whether it's on another brand that we own, or a brand that we don't own and it's a partner.
We power Uber, for instance. In the U.K., Uber plays, from a brand point of view, against Trainline and against us. It's the customer's choice to decide where they want to book. What is important for us is that, at the end of the day, whether they choose one or the other, it ideally comes through us.
With that, we better understand customer behavior. We can build an inventory that is as comprehensive as possible, and we can always be relevant. We love trains, we love buses, we love ferries, but those industries need to reinvent themselves a little bit in the world of tomorrow.
The idea is to have as extensive an inventory as possible and help the industry improve the service to the consumer, whether it's through our own brand or other brands that we don't own, a partner or an affiliate.
If you're aiming to be the source through which people access ground transportation inventory, how do AI agents fit into that strategy?
We want to be the number one company providing booking and the follow-up experience through LLMs when it comes to ground transportation. I think Booking and Expedia want to do the same in hotels, etc., which makes sense.
We run a lot of tests, and we follow this very closely. The agents are absolutely fantastic to help you book. They are less great once you start traveling.
But more importantly, if you want to have a great experience booking, you can't have the agent starting to crawl all the websites that exist. They need a connector to a place where all the inventory is available, and that place needs to give an answer very quickly. Your average user is not going to wait five minutes for the agent to crawl all the websites in the world to find the answer.
That's the work that we're doing today. We have a partnership with OpenAI, but we are agnostic with the LLMs. We are looking to make sure that we are the best from a technical point of view to give very precise information back in record time.