Venture capital firms are turbo-charging the European expansion of the Dutch group Otravo and the French startup MisterFly. Elsewhere, Rehlat and Jumia Travel are taking flight.
One reason: Metasearch businesses, which help consumers compare prices but send customers off to other websites to book, are cheaper to launch because they require fewer employees.
Another reason: Expedia, Inc., and Priceline Group are supposed to be too intimidating as competitors because of the enormous money they spend on branding and search engine marketing.
Despite the odds, several online travel agencies have gained traction recently with consumers. While some of these are not strictly “new,” they are all young, have yet to be covered by Skift before, and have all significantly accelerated their growth in the last two years.
Otravo isn’t new, but it recently sped up its growth. The Dutch company debuted as Otravo in December 2013, the result of a merger of two large Dutch travel companies (Vliegtickets.nl and WTC.nl) trying to transition to the digital era. Since then, it has grown its turnover 40 percent a year, to become the most used online travel group in the Benelux region and in Scandinavia.
In early 2016, private equity investor Waterland took a majority stake in Otravo. It installed a new CEO, Raymond Vrijenhoek. The company then made two acquisitions — Flygstolen in Sweden and Schipholtickets.nl in Amsterdam. In February 2017, it acquired VakantieDiscounter, an internet travel agency in Amsterdam founded in 2017.
>>Skift Take: Otravo’s recent acquisition spree means that it is now hitting more than 600 million euros in transaction volume ($640 million) and more than 100,000 unique website visitors a day across its brands. Vrijenhoek says more activity is to come. The company’s success is a rebuke to comparable online group eDreams Odiego, whose brands have a similar profile but have had a flat-lined performance in the past couple of years.
MisterFly is a Paris-based online travel agency that raised $20 million last summer in a round led by private equity firm Montefiore Investment, with support from e-commerce retail company Vente-Privee. The money will be used in part for acquisitions. There’s speculation that Travelata, a Russia-based online travel agency, may be a target.
MisterFly is little more than two years old, yet it processed 111 million euro in turnover in 2016. It expects to double that volume after it enters Belgium, the Netherlands, Luxembourg, Germany, Italy, and Switzerland this year. The company says it has positive earnings before depreciation and taxes, partly from outsourcing its customer service and partly from taking advantage of the European love of private sales, which are high-margin on distressed inventory.
>>Skift Take: MisterFly is building its growth on airline tickets, even though that product has lower commissions than hotels. So what’s its secret? It mixes the traditional booking model with a large dollop of private sales and about 40 percent of its revenue coming from business-to-business services. In particular, it services travel agencies and hotels, helping with their shopping processes.
Rehlat is a Kuwaiti online travel agency founded two years ago that plausibly claims to be the Middle East’s fastest growing travel company. It forecasts that it will double its visitors and see a 60 percent increase in flight bookings in the next couple of years. The 65-employee company competes with Musafir.com, MakeMyTrip.ae, and Cleartrip.ae. Rehlat is rumored to be looking at further international expansion.
>>Skift Take: Nearly all of the global travel companies have been slow to localize their content for Arabic audiences (which means more than just translating key phrases). Rehlat, with bilingual English and Arabic inventory, excels by letting customers pay in local currencies without being charged for foreign exchange transactions. Its user design also provides a clearer comparison of flight options, including cancellation fees and baggage allowances, than some of its India-based competitors.
Jumia Travel is also not new. This Rocket Internet-backed company was founded in 2013 as Jovago. It has been building brands in Africa, Pakistan, Bangladesh, and beyond for some time. But since its rebranding as Jumia Travel last summer, it has been picking up its pace of development.
A case in point: In February 2017, Jumia Travel launched its flights product, branching out from its focus on hotels to add domestic and international flights on all major carriers for the first time.
While Rocket Internet is not its only financial backer, the German investment group is a significant one. Its recent troubles may reduce the likelihood of additional investment soon. Rocket Internet has seen its share value drop sharply in the past year due to a lack of success from many of its portfolio companies.
>>Skift Take: Jumia Travel benefits from some referrals from sister brand Jumia, a kind of Amazon for Africa. But its three managing directors are not African natives, and given that locals often like to support locally grown businesses, Jumia’s brand may be suffering when it comes to signing up suppliers. That said, the related Jovago brand in Pakistan looks promising, with further investment there expected.
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Photo credit: In 2015, online travel company Otravo opened a main office in Amsterdam-Halfweg. It has since expanded its operations to become the leader in the Benelux region and in Scandinavia. Otravo