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Travel startup OneTwoTrip‘s gamble with a business-to-business service in Russia and Europe may tempt companies to test similar products worldwide.
The Moscow-based online travel agency has developed a “travel-as-a-service” solution. This name plays off the popularity of software-as-a-service businesses that sell access to cloud-based tools and enterprise applications via a subscription model. OneTwoTrip’s Forma product lets banks, telecoms, and other companies sell travel to their customers, allowing those customers to earn cashback in their loyalty programs and pay in installments. Banks can integrate it into their websites and apps to redeem loyalty points on travel.
OneTwoTrip said it has signed up more than 40 banks and fintech players with significant customer bases in Russia and Europe, including Rosbank (controlled by Societe Generale group), Gazprombank, Austria’s Raiffeisen Bank, Italy’s Unicredit, and the fintech Home Credit based in the Czech Republic.
Forma is essentially a white-label travel agency — though if consumers need customer service on a trip, they speak with branded OneTwoTrip agents (such as for rebookings and cancellations). Companies make a commission on each trip purchased via the solution. The companies can either keep that fee as a profit or pass it along to consumers via a cashback reward.
Cumulatively these banks and fintechs have issued more than 50 million travel debit and credit cards. They have loyalty programs, incentivizing customers to use their cards for transactions to accumulate points that consumers can redeem for various products and services, including travel.
For banks, the benefit is monetizing their existing customer bases and avoiding having to do the legwork of making technical and commercial connections to travel companies or handling customer service issues.
The startup has been offering the service for four years. Forma now accounts for about one-third of OneTwoTrip’s revenue.
Before the pandemic, OneTwoTrip had annual sales of $500 million, though it declined to disclose the latest figures. It said it had enjoyed a 25 percent compound annual growth in gross merchandise value and a 32 percent growth in net revenue between 2017 and 2019.
Banks and Travel Do More Together
Banks, fintech, and travel companies have been cutting more deals with each other lately.
Some banks have gone their own way in similar, parallel efforts without the help of a party such as OneTwoTrip. Revolut, a global neo bank or fintech based in London, said it plans to launch a travel offering.
In the past year, Capital One acquired Freebird, a business-to-business startup, and has been building out the sale of some travel services, with a planned launch of Capital One Travel, powered by Hopper, later this year. The banking giant led a March $170 million funding round in the travel agency Hopper.
Several years ago a fintech in Russia called Tinkoff created an online travel agency on its own.
Mastercard, Unicredit, and Raiffeisen have integrated various travel platforms into their businesses, and American Express has famously built its in-house.Michael Sokolov, OneTwoTrip’s managing director for strategy, touts his company’s offering as letting a bank offer cashback to customers who buy travel through them as a marketing incentive to promote the bank’s brand.
“What we’re doing is quite complex,” Sokolov said. “We need to integrate with the partner’s loyalty program on the back-end to assure a smooth process for redeeming bonus points, given all applicable taxes, accounting, and redemption rules.”
The concept of white-labeled travel agency sales isn’t new, though OneTwoTrip said it had put a few modern spins on it. For years, airlines and other companies have outsourced the sales of vacation packages, rental cars, and other travel to third-party companies. Banks and airlines have let customers redeem loyalty points across brands with tech help from companies like Points.com.
What’s new is that many banks and fintech players are turning their apps into superapps to encourage consumers to use them for more than just banking. OneTwoTrip said its solution simplifies the vendor outsourcing and commercial challenges for these companies. Rather than an affiliate model, OneTwoTrip is the merchant of record and has agents on hand to resolve any problems that might happen to trips, such as a need for a consumer to rebook for different dates.
OneTwoTrip Is a Pandemic Survivor
OneTwoTrip said that it had raised $30 million in primary proceeds from venture capital and private equity funding since its launch a decade ago this month. One key backer has been East-West Digital News, a Swedish venture firm previously known as Vostok New Ventures. Atomico is another.“We went through the pandemic without raising any additional capital or receiving government assistance,” Sokolov said. “We recently returned to break-even on an EBDITA (earnings before depreciation, interest, and amortization) level.”
The startup, which has 319 full-time employees and contractors, may see more growth at the intersection of finance and travel. Last week Booking Holdings revealed a new Fintech unit that aims to enable travelers to avoid bank and credit card companies’ foreign exchange fees.
OneTwoTrip in the past year has issued 50,000 virtual payment cards that offer cashback and loyalty points, with the backing of a bank partner. The virtual card is embedded in its app and website, enabling consumers to pay with its virtual as an alternative.