Reading in between the lines, it seems like the Berlin-based online travel agency is hoping to make an acquisition or minority investment, most likely one that would expand its product portfolio such as for its white-labeled "originals" experiences.
The pandemic has dramatically hurt the business of tours and activities operators. Yet, one of the largest online travel agencies for booking such experiences has had little problems getting access to funds. GetYourGuide, a Berlin-based agency, said Monday it had received a loan of $97 million (€80 million) from a consortium of banks, led by Unicredit.
The credit facility comes just months after GetYourGuide’s October raising of a $134 million (€114 million) convertible debt note.
Why does GetYourGuide need the money? After all, its expenses dropped during the crisis, with less need to buy advertising on platforms like Google to attract customers. Labor costs also dropped after the company laid off nearly one out of six workers in the fall. The company still has financial reserves leftover from its May 2019 raising of $484 million in venture capital in a round led by venture capital giant SoftBank Vision Fund.
GetYourGuide might use the revolving credit facility for acquisitions or investments, such as more investment into the company’s branded “originals” tour or new services to help consumers book experiences at the eleventh hour, said Nils Chrestin, chief financial officer. For example, it might use some of the money to help tour operators convert their ticketing systems to contactless tech and to accept timed tickets rather than walk-ups.
But given the sums the company has raised, an acquisition seems to be something executives are strongly considering.
“The €80 million is not raised with a specific target acquisition or investment in mind,” Chrestin said on Monday in response to our questions. “It’s put in place so we have maximum strategic flexibility to engage in these discussions.”
Since 2018, GetYourGuide had been slowly growing white-labeled tours under its own brand name, which it calls “originals.” To make this process smoother with more vertical integration, GetYourGuide might be considering making a minority or majority investment in a tour operator in a major market.
GetYourGuide may want to plug gaps in its inventory, which might include tours and experiences in Asia Pacific, where it competes with Klook, an online travel agency focused on experiences and attractions, which raised $200 million in its latest round of venture capital funding in January.
“In the second half of last year, in China, Taiwan, Singapore, and Hong Kong, we have seen domestic rebounds of anywhere between 70 percent to 80 percent of pre-Covid levels,” Eric Gnock Fah, chief operating officer and co-founder of Klook, said last month.
Chrestin dismisses skeptics who wonder why GetYourGuide has turned to convertible debt and loans to get cash when its Hong Kong-based rival Klook has been able to raise venture capital. The company has adequate capital and would be fine even if the pandemic has a worst-case scenario.
GetYourGuide does have inventory worldwide but has a great proportion of inventory in countries where pandemic restrictions have undercut tour bookings, such as Germany, France, Italy, and the U.S.
Klook’s biggest competitors include Airbnb Experiences, Expedia, GetYourGuide, KKday, Musement (owned by TUI), Tiqets (backed by Airbnb), Trip.com, Viator (and its parent company TripAdvisor).
GetYourGuide hasn’t focused on multi-day bookings much yet. So brands that have focused on that content, such as Vienna-headquartered TourRadar or a rival, might be in consideration, according to speculation by experts in recent months.
During recent Skift events, GetYourGuide executives have told attendees that the company doesn’t want to copy the path that other online sellers of tours have taken by acquiring tech providers, such as Booking Holdings acquiring FareHarbor and TripAdvisor’s Viator acquiring Bokun. When asked, Chrestin said GetYourGuide’s stance on that issue hasn’t changed, and that wouldn’t be the kind of vertical integration it might consider.
“GetYourGuide has a history of growing very organically, and successfully so,” Chrestin said. “Our view is that, at some point, there’s going to be consolidation in this sector. We certainly see ourselves as playing a leading role in that, and this is a step of giving us the flexibility to act.”
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Photo credit: An image of one of the branded "Incredible" experiences offered by online travel agency GetYourGuide before the pandemic. The Berlin-based agency has received a loan of $97 million (€80 million) from banks. GetYourGuide