Lastminute.com Group chief executive Fabio Cannavale has spent the last 13 years transforming a small, low-cost flight search engine based in Italy into a pan-European travel company.
Through a series of acquisitions, the company moved into new countries as well as new areas including package holidays and metasearch. The defining moment came in 2015 when Bravofly Rumbo Group, as it was then known, bought faded dot-com darling Lastminute.com for next to nothing from previous owner Sabre.
Cannavale renamed the parent company Lastminute.com Group and he embarked on a new strategy with a content arm now working alongside its online travel agent and metasearch divisions.
Cannavale recently sat down with Skift to discuss the changes at the business and where it sees its biggest opportunities.
(Note: the interview has been edited for brevity and clarity.)
Skift: Let’s look at the Lastminute.com Group as it is now and the story behind it. In the UK and in America, a lot of people are familiar with Lastminute.com, but your company is very different now.
Fabio Cannavale: Our company started out being a very transactional company. By that I mean the background of the founders is that we co-founded eDreams before, so we knew the arena. Then, we saw an opportunity in low-cost flights because there was no one doing that. [Editor’s note: Cannavale worked at eDreams Italy between 1999 and 2001; prior to that he worked as a consultant.]
Skift: Apart from booking direct.
Cannavale: Yeah, but it is not a solution especially when there are so many airlines. On 25 percent of our flight bookings you go with one airline and come back with another one.
This allows us to grow from zero to a good size. Totally self-financed. So we started with 10,000 euros, we were profitable from day one. Then we grew.
Skift: Which brand was that?
Cannavale: Volagratis. Italian flights, only low-cost and we added normal flights, then we had to expand in other markets, like France, Spain, and Germany. Then we bought Rumbo. That was a little bit more of a generalist OTA [online travel agent] so it’s where we started to have hotels and we became a little more, say, generalist because at the end, we saw that was this opportunity. Then we bought metasearch because we thought that metasearch is a booming business. So at the time we bought Jetcost it was about 8 million euros ($9 million) of revenue. This year we’ll be around 60 million euros ($67 million).
Skift: Do you see metasearch as being your future?
Cannavale: I don’t know if it is our future. I think our future is not really only metasearch, it’s probably the packages – that is the business that is growing more. But metasearch, I think, is a good trend. Then I think that basically in the future, metasearch and OTA will merge as a type of business. But for the customer, it doesn’t make any difference. It’s just that today, metasearch has a better pricing proposition, that’s why it grows more.
Skift: Taking a step back again … After you bought Jetcost, then you moved to Lastminute.com, I guess?
Cannavale: Firstly, we understood that really in the future it would be valuable to have flights-plus-hotels, making a package. We started to develop our own technology to do the packaging and to be our tour operator because that is where really there is an advantage. It is localized in Europe, because you get bulk fares for flights, bulk fares for hotels, and so again, you can get a good package and it’s a traditional market in Europe because you still have TUI/First Choice. It is a huge company. We saw this opportunity and Lastminute was available to be bought; it was a very good company because it was 70 percent packages and hotels.
Skift: It’s got a very familiar name in the UK, a very well-known brand, but it wasn’t profitable, really, ever.
Cannavale: Lastminute.com was a very nice company but they never made a profit in their life until this year. But we [Bravofly Rumbo Group] did almost 30 million euros [$30.4 million] of EBITDA.
Skift: You think it was a case of just having the right proposition?
Cannavale: I mean, we bought a company with 650 employees. Today, we have in London only 150. Then Paris, Bangalore, so probably we keep about half, less than half of the employees so 300, more or less. Then, about technology, we took out everything. We just threw away almost everything. We just kept one thing of Lastminute. That is the back end for hotels.
Skift: So what did you buy it for?
Cannavale: For the brand and for the traffic. Again, this is the synergy. Again we saved 40 million euros ($45 million) in one year because of that.
In the UK we’ve grown now in packaging, we’ve grown probably in two years about 30-40 percent despite the pound going down. It means that our platform performs better than the Lastminute one.
Skift: It’s an interesting model because you’ve got different businesses doing different things. You’ve got your online travel agent, your metasearch, tour operating and you’ve recently got involved in the media side. You bought the assets of a company called WAYN. What is the media side of things? Could you define that to me?
Cannavale: We consider ourselves a media company more than a travel company. So people come on our site and they need to have relevant content. Relevant content can be content provided by social media, relevant content could be metasearch, it can even be a lot of branded content that we are producing that people maybe are interested in.
The point is in this kind of business, 2 percent of the people on average buy something. Ninety-eight percent are not buying, but we also have to provide something for these people. Three years ago, probably the non-OTA revenue was around 0 or 5 percent. Last year we had about 25-30 percent of the revenue not coming from OTA.
Skift: That could be metasearch and media?
Cannavale: It’s metasearch and media. Metasearch is growing very well. Media, what does it mean? This is also why we need WAYN, we need content. Having an audience, you have to really to target that audience and to give to each one what they really need.
Skift: You need to know the people well?
Cannavale: So we don’t sell anymore at campaigns on the site. Five years ago, we were selling just banners, so we’d put the banner and that’s it, zero. Both in segmentation of the newsletter and whatever we do on the side, we sell audience profiles. So you want as advertisers these kind of people, OK, I give you these kind of people. If these kind of people are interested in what you’re selling, I think there is a good match.
Skift: What kind of advertisers do you have?
Cannavale: We have 60 percent in sector, so travel, 40 percent outside travel that we have from car companies or telecommunications and then we try also to expand our audience. For example, for us, WAYN is our content factory, we call it a content hub. So it’s the people that really help us to make the content and manage all the activity in content. Then we do also new kinds of activity like now we have a partnership with Spotify. It’s also a content activity. It’s just to give new content. All this is kind of creating something that excites and inspires our customers.
Skift: You seem to me very good at picking up bargains when you buy companies. Lastminute.com was a bargain. WAYN was a bargain. I don’t know how much Jetcost cost, but maybe it was a good deal?
Cannavale: No, Jetcost was expensive. I mean, it depends how they look because for Jetcost we paid a lot in shares. So again, it depends also which is the price for shares because the IPO was very expensive. Today it’s very cheap. Even if we’re trading, we are an entrepreneurial company where 40 percent is still owned by the founders, so it is our own money. Me and my partner.
Skift: What’s the decision behind the listing? Was that just to get more funding?
Cannavale: We had some small shareholders. There was, I think, a very good opportunity to fund the company, to have a secondary exit for some people.
Skift: And the acquisitions?
Cannavale: When we can, we try to buy at a bargain, I agree. Sometimes we make mistakes, like for example last year we wanted to buy Unister. That also was a bargain. It was a very funny story because we offered 20 million euros ($22 million) in September. This company declined an offer of 600 million euros ($672 million) two years ago. One year and a half ago we were very close to buying it for 100 million euros ($112 million). In September, we brought forward this offer of 20 million euros ($22 million). The administrator, he said: ‘No, you have to give me 30 million euros ($34 million).’
We said 30 million euros ($34 million) is too much because it was not very clear how it was going, and then we offered in the end after two months 70 million euros ($78 million), but another company bought it for 75 million euros ($84 million). At the end we are looking at everything. We have a very structural M&A activity. For example, we paid a lot for Rumbo because we paid 80 million euros ($90 million). In the end, it depends. I think we have a good team, we have a very structured team. This year we did an acquisition in Italy for Gartour. That really is not yet an acquisition because it’s renting the company in order to buy. Now there are plenty of companies for sale, plenty of opportunities. We have more than 70 million euros ($78 million) of cash.
Skift: What kind of acquisitions would you look at? Would it be metasearch or an online travel agency?
Cannavale: We are doing a very small acquisition in metasearch. As I said, Germany is a target for us. We lost last year; now there are other good opportunities. Then additional product. We think we have the audience, we have to give to them the right products. Flash sales is something that we are very interested in. This year we were unlucky because we lost two acquisitions. One I think I will regret. The other is VeryChic. I think was too expensive, but VeryChic was a good company. It does flash sales in France, Spain. [Editor’s note: AccorHotels bought VeryChic for an undisclosed figure.]
Skift: Let’s talk about the big competitors and huge companies you’re competing against — Priceline, Expedia I guess. How can you compete with them?
Cannavale: Booking.com is not a competitor, we have a very good partnership with Rentalcars, that is a Priceline company. We have a good partnership with Kayak as a source of traffic. So I see all the Priceline Group more like a partner than like a competitor.
Expedia it’s true, that is a competitor. I mean, if you look at the business we do together with Expedia it is flights and packages. In western Europe it’s true that they’re bigger, but they’re not so much bigger than us and we think maybe in dynamic packages we even have a better solution. In dynamic packages, we are probably one of the largest, maybe after Expedia the second largest in Europe with a good solution. Because we have a lot of local competitors like Promovacances in France, which is the largest. We have On the Beach in the UK, we have Unister in Germany, we are the biggest in Italy. At the end, I think we’re the only one present in all these countries and I think there is a good of economy of scale. Then in flights there are two competitors that are very good, that is eDreams and eTraveli.
Skift: Both eDreams and yourselves have both come up against Ryanair in legal proceedings. They see things very differently than you. You offer flights with them and maybe the return flight is with Easyjet. Is that what the travelers prefer?
Cannavale: I mean, for the traveler, it depends.
The starting point should be someone that gives everything. It could be Google, could be metasearch, could be whichever, but at the end you have to compare.