Latin America's Despegar Wants to Double Bookings by 2025: How Realistic Is That?
Skift Take
Despegar doesn't follow the same playbook as the global online travel players. Charting its own path has worked for the Latin American agency. Expect Despegar to make a strategic acquisition this year to support its heady plans for growth.
When you compete with larger players, you sometimes need to ignore the conventional wisdom if you want to avoid getting crushed. That’s the view of Despegar, an online travel agency in more than 20 Latin American countries.
Since he became Despegar CEO in 2017, Damián Scokin has charted a distinctive course. Scokin has ignored the playbook used by global online travel players whenever their methods haven't suited regional dynamics. He has improvised even though Expedia Group holds a 14 percent stake in the Argentine company.
Scokin believes his approach is paying off. Despegar forecasts growth. In December, executives predicted their company would double its annual gross bookings within five years.
Not everyone is as optimistic. After the presentation, Brian Nowak, managing director of research at Morgan Stanley, didn't change his model for the company, and his model assumes it will take Despegar longer than five years to double its bookings while also widening profitability. One hesitation is that Latin America's pace of economic growth has been volatile.
Despegar faces well-capitalized competitors, despite being ranked by Euromonitor as the largest travel intermediary in Latin America.
Its top regional rival is CVC, Brazil’s biggest travel agency that has mostly had offline sales, which has acquired Almundo, an online travel agency based in Argentina. (For details, see our story on Almundo.)
CVC already sold about as much travel offline as Despegar sold online in Brazil. CVC's acquisition of Almundo signifies its first big push in e-commerce in multiple countries.
Despegar is small by global standards. In the year through October 2019, Despegar processed about $4.6 billion in travel reservations, adjusted for the ups and downs of currency exchange. In comparison, the global giant Expedia Group handled about 20 times as many gross bookings during the same period.
Here are a few ways Despegar's strategy stands out from the approach of global behemoths.
Pursue Offline-to-Online
The conventional wisdom is that online travel agencies should focus on what they do best, which is online bookings. Yet Despegar has seen offline sales as a path to growth. Roughly 5 percent of its total sales come from old-fashioned call centers, which it opened in late 2015. Scokin expec
