Despegar Uses Installment Payments to Prod Demand
Photo Credit: In 2019, Despegar launched a rebranded logo and marketing campaign that included tote bags with a theme of the online travel agency helping people plan all parts of their trip. The logo was done by brand consultant Saffron. Despegar
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Some religions take it on faith that their messiah will come, but they stoically accept that the arrival has been delayed indefinitely. Similarly, Despegar believes that the online travel revolution will sweep Latin America, but it accepts that the glorious moment has been delayed indefinitely. Consumer financing is its secret sauce to sustain itself while it waits.
Despegar has been using consumer financing as a crowbar to build its travel agency sales in Latin America, where many shoppers are reluctant to make big purchases online. A majority of its transactions are now done via monthly installment payments. None of its online rivals rely on financing as much.
A recent commercial deal in Chile will turbocharge this trend.
In April, Despegar paid about $25 million in cash to run the retail travel sales at Falabella department stores, one of the largest retailers in Chile. Last year, the stores recorded about $50 million in revenues from sales of travel products, approximately two-thirds of which were vacation packages. Falabella has a popular installment payment program.
The deal size was significant in the context of Despegar's revenues.
On Thursday, Despegar reported its results for the three months ending June 30. It generated $114 million in revenue, which was down 11 percent, year-over-year. However, factoring out a fluctuating e
