Despegar Tripped Up by the Ailing Economies of Argentina and Brazil
Photo Credit: The waterfalls of Iguazú on the border of Argentina and Brazil are a popular destination spot. Argentina and Brazil have lousy economies, but as critical markets for online travel agency Despegar, they are headwinds for growth. Despegar
Skift Take
Lousy economies in key markets have hurt Despegar's profit. But deft management during the recent storms suggests the online travel agency has a promising future.
What investors focus on and what the travel industry cares about aren't always the same thing.
Investors chasing near-term opportunities are now balking at the deteriorating economic outlooks for Argentina and Brazil — key markets for Despegar, South America's largest online travel agency.
Worried about a drop in demand for travel, investors recently knocked more than half off Despegar's stock price, compared with the stock's peak prices of last spring and fall.
Earlier this year, Argentina's peso collapsed in value against the dollar while inflation rose at an annualized pace of about 30 percent. That set off a series of knock-on problems. International travel became pricier. So the Buenos Aires-based Despegar sold fewer high-margin trips in the second quarter.
The travel industry will be more interested in how well the company's management is weathering the storm.
On the management front, the news looks promising. The company reported Thursday that it had gained a pe
