Despite rising coronavirus cases and airlines on the brink of collapse, Milla Travel could still make its mark in a region that's long overdue for modernization in the travel management space.
Online travel newcomer Milla Travel wants to shake up Latin America’s travel management landscape — and it sees no better time to do it than during a pandemic.
Founder Antonia San Martin said she’s identified a gap in the market because corporate travel there hasn’t evolved in line with the rest of the world. Most bookings are made using offline travel agencies, and the market is highly fragmented, apart from some of the larger corporate travel agencies having a presence there.
Meanwhile, the pandemic has forced companies and travelers to adapt more to digital in Latin America.
San Martin, who’s based in Chile, said the countries are “about 100 years behind what’s going on in Europe and the U.S.”
“I investigated a bit, and most of the companies here hate the solutions their companies are giving them,” she added. She speaks from experience, having traveled for business a lot during previous roles at Nike and Heineken.
The region might be ripe for disruption, but by officially launching in April this year after starting out as a WhatsApp channel, Milla Travel is arguably starting out at the worst possible moment. Coronavirus cases are rising sharply in Latin America. Brazil has had more than 1.7 million confirmed cases, the second highest global tally after the U.S., with Chile, Mexico and Peru battling major outbreaks.
“There was already a recession on its way pre-Covid,” said Maren Hanschke, president of FCM and Flight Centre, Mexico and Latin America Network. “Last year we saw a slowdown in travel volume at about 18 percent to 20 percent, due to the economic situation and the fluctuation in our markets. Companies are worried, and what is more concerning is the fact governments aren’t straight with the information provided about infection rates, where to travel and how we can really protect ourselves.”
The region’s airlines are also in trouble. In the past two months alone, four Latin American carriers have gone into Chapter 11 in the U.S., including LATAM. However, this allows them to financially restructure without impacting travelers, Hanschke argued. “With this initiative, airlines are ‘allowed’ to reinvent, restructure, create a leaner structure and renegotiate better and longer payment terms for commitments with suppliers and vendors,” she said. “As local governments in Latin America are not being supportive, airlines have to get support in the U.S. via Chapter 11 filing.”
However, San Martin thinks coronavirus is working in its favor, because it has forced many countries to go digital. E-commerce has boomed following the lockdowns. Hanschke, meanwhile, thinks Latin America, overall, was already fairly tech savvy. “There are a lot of startups and online leisure platforms that have been developed in Argentina, some in Mexico and Brazil,” she said.
But San Martin claims larger companies in Chile are now watching the startups and picking up on their trends, including those related to the way they manage travel; word of mouth is key, and she says even the Chilean government called a couple of weeks ago to find out more about what Milla Travel could offer.
On the airline side, despite the financial difficulties, coronavirus could force carriers to embrace new ways of working. “We’ve been talking a lot with LATAM (airline),” San Martin said. “We’re updated on what’s going on. It’s a terrible time, but companies also need new tools now, and better tools, to build their business travel. It will restart. We have to survive, and give the insights that this new corporate travel movement is happening.”
Milla Travel took part in an Air Tech Player Responses to Covid-19 webinar, alongside Amadeus, on July 9. Organized by the International Air Transport Association, the event series showcases technology players and their solutions that could help airlines address revenue protection, cost reduction, and market stimulation/rebound scenarios.
During the webinar, San Martin highlighted how a 1 percent impact on corporate volumes impacts airline profitability by 10 percent.
Ready For a Comeback
Once the pandemic passes, San Martin hopes corporate travel will bounce back quickly as companies look to recover.
Her startup has secured funding from Planatus Ventures, and has a growing list of clients, including Fintual, Hackmetrix and Mudango. They signed up because they soon want to get their sales teams on the road, San Martin claimed, and will want to know exactly where their employees are. These technology-orientated companies represent ideal customers — startups that once traveling again could be spending around $1 million a year with Milla Travel.
From a content perspective, Milla Travel is taking the New Distribution Capability route where possible, and working with another startup, aggregator Duffel, to plug into several international airlines.
San Martin thinks airlines that do embrace New Distribution Capability have a big opportunity to “unlock their capabilities”, with the standard allowing for a better workflow with richer content and a better chance to sell more ancillaries. Upselling will be important as airlines look to claw back lost revenue, with Singapore Airlines one of the latest carriers to signal its intent.
Where that technology standard isn’t an option, it uses “direct partnership connections” with the airlines as a stop gap. That’s currently the case with LATAM.
This level of integration wasn’t always the case, though. Milla Travel has significantly evolved since its inception several months ago — so much so San Martin said she’s embarrassed by its original, rudimental platform. “It was practically WhatsApp with a connection into online travel agency Despegar. That was it,” she said. “It was a terrible minimum viable product, I’m pretty ashamed of it.”
But now, for the corporate traveler, there’s expense reporting, online boarding passes for contactless travel through airports, advice on borders thanks to a tie-up with e-visa firm Sherpa, and — going back to its roots — 24-hour support on WhatsApp. “We’re creating a bridge between business travelers, travel managers and financial officers,” San Martin said.
The new company is targeting Latin America first, and will then look to other continents, as well as aim to secure seed funding. Going beyond borders means it will compete with the likes of Taptrip and TravelPerk, who similarly have the small and medium-sized market in their sights. But if it can make it through the harsh business environment of its home market, whatever comes next probably won’t seem that daunting.
CORRECTION: An earlier version of this story incorrectly stated the company will seek Series C funding. It will seek seed funding.
Photo credit: Santiago, Chile, is home to many of the country's startups. Francisco Kemeny / Unsplash