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The comeback after the pandemic will be kinder to those online travel companies that can persuade consumers who book offline to book online. The opportunity is especially striking in Latin America, where consumers booked about 60 percent of their travel offline before the crisis. Despegar said during an earnings call Thursday it had responded to the opportunity by adding financial technology to its toolkit to woo offline customers.

Argentina-based Despegar on Wednesday closed its acquisition of Koin, a Brazilian company that offers personal loans for travel to consumers. Skift reported earlier on the deal announcement, in which the company took an 84 percent stake by settling receivables for around $4 million. But the company offered more color on the strategy behind the plan on Thursday.

Koin belongs to the emerging sector of fintech, or financial technology, companies. These businesses offer new ways to bank by using software to manage the risk of making non-traditional loans. Other players that aim to make installment payments for travel fashionable include Uplift, Affirm, and Fly Now Pay Later.

Despegar has offered Koin’s buy-now-pay-later loans to Brazilian users of its website for about a year. About 50,000 Brazilian consumers have taken the loans. Despegar plans to scale up the offering across Latin America and to add it to its mobile app.

“When demand comes back, we can leverage our Koin financing solution,” said CEO Damián Scokin on Thursday. “Fintech solutions are a natural complement to our product offerings.”

Despegar has offered installment payments for years in its home market of Argentina, but only through third-parties. Now it’s entering a risky area of consumer finance directly. Despegar’s executives said growing a new market outweighed adding to its financial risk.

“What we’re betting on with this platform is to continue to increase methods of payment,” Alberto Lopez Gaffney, Despegar’s chief financial officer. “All of these consumer loans can be securitized. The plan of the company is less in increasing exposure to our client’s credit risk than, more importantly, it’s to increase the number of methods of payment available that… is particularly relevant and makes a difference to the big unbanked population in Brazil.”

Despegar Is Desperate for a Recovery

Despegar will need every tool in its tool belt that it can muster to ensure a swifter recovery. The pandemic has decimated its revenues and profits.

During the three months ending September 30, revenues declined 91 percent, year-over-year, on a currency-adjusted basis to $11.7 million. Before taxes, the company’s net income was a loss of $41.7 million, compared with a loss of $3.7 million in the same period a year earlier.

Executives patted themselves on their backs for meeting their targets for cost savings and cash accumulation that they announced earlier this year. The company had cash and cash equivalents of $386 million at the end of the quarter. It had reduced its “structural costs run rate” from $51 million to approximately $28 million over nine months.

Latin America is about to enter its summer travel season during a time of ongoing travel restrictions. Despegar’s management team said their company was positioning itself to capture any potential rise in demand in the coming months. But the overall travel sector recovery in Latin America will take about as long as in North America and Europe.

“It’ll be a couple of years at least to recover to pre-Covid levels, again maybe accelerated [for us] by a faster shift to online,” Scokin said.

Photo Credit: Tourists at Iguazu Falls, one of the world's great natural wonders, on the border of Brazil and Argentina. Online travel booking company Despegar has bought fintech firm Koin as a tool to appeal to many offline travel buyers who don't use banks. R.M. Nunes / Adobe