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The transaction means that Travelstart will get to move from primarily selling flights to having more local accommodation inventory than either Priceline Group or Expedia Inc., the companies said.
Contrary to its name, SafariNow only offers a smattering of safari trips and is mostly an accommodation booking site, primarily serving South Africans journeying within South Africa.
SafariNow will retain its brand, business model, and 40-person team, said Travelstart’s founder and CEO Stephan Ekbergh.
The companies did not disclose the terms of the deal. SafariNow has not taken venture firm funding.
In 2016, Travelstart received $40 million investment co-led by Amadeus Capital, and MTN, Africa’s leading mobile and digital services operator.
“We’re not looking for money at this stage,” Ekbergh said, “unless we needed it for a future acquisition.”
All About Inventory
SafariNow says it has more than 23,000 listings for short-term rentals, vacation houses, hotels, and bed-and-breakfasts.
While those numbers may seem small from an outside perspective, SafariNow claims to have far more beds in South Africa than the world’s most dominant online travel agencies. A search Tuesday of Booking.com returned fewer than 1,000 properties, with a similar result on Expedia. Booking.com said it had 7,000 properties and Expedia said it had 5,800 properties in South Africa.
SafariNow built this up partly by offering commissions from as low as five percent in some cases compared to the 15 to 25 percent charged by many of the globals.
Airbnb is an exception, here. In the past two years, the alternative accommodation booking startup has actively added lodging options in South Africa and may have somewhat more properties thanks to a different but competitive commission structure. Yet SafariNow claims to list more local beds overall than Airbnb.
A large part of the accommodation market is informal in South Africa, such as small guest houses with four or six rooms.
With the SafariNow acquisition, Travelstart will port over SafariNow’s accommodation listings. Until now, Travelstart has used inventory from Expedia on an affiliate basis, but it has retrofitted its hotel stack and will add a tab on its landing page for accommodations, said Ekbergh.
Travelstart’s hotel offering will mix Booking.com and Expedia affiliate inventory along with SafariNow’s and its own. Eventually, the inventory will be made available to Travelstart’s approximately 500 affiliate partners.
Major Regional Player
Travelstart and SafariNow’s main rivals are traditional travel agencies that do have some online sales, with Flight Centre and XL Travel Group being the largest. For all such intermediaries, market research firm Euromonitor has forecast travel sales in 2017 in South Africa to be $2.4 billion, or 33.5 billion South African rand.
Part of Travelstart’s local success is owed to it providing a greater variety of payment options that are preferred by locals in the markets in which it works, from paying by direct deposit, at a convenience store, or, in some African cities, receiving the tickets on their doorstep in return for cash payment via third-party delivery services.
It will bring that savvy in payments to SafariNow, Ekbergh said.
One area of possible concern in the next few years is mobile.
Around half of travel searches in South Africa is done by mobile, while only about 20 percent are done by mobile, market researchers estimate.
So developing their mobile-first operations will be a key need if Travelstart Group is to ride the coming wave of mobile adoption. In this, they risk being outgunned by the global giants with their vast technology investments.
Travelstart will have about 400 employees post-acquisition. It claims market leadership positions in Nigeria, Egypt, and Kenya as well as South Africa. In Istanbul its brand is Geziko.
The two companies are established players on the continent. SafariNow launched in South Africa in 1999. Travelstart debuted in South Africa in 2006, but it was founded in Sweden years earlier. For details from that mid-2000s’ period, read Skift’s Oral History of Online Travel: How Travelstart Taught South Africa’s Airlines About E-Commerce.