Despegar's Strength in Mexico and Colombia Helps Blunt Pandemic Impact

Despegar notched what executives described as the company's best quarter of the pandemic based in part on enhanced geographic diversity, which reduces the seasonality conundrum that hinders many travel companies.

Because of fewer Covid restrictions, as well as tech and marketing investments, Mexico, driven by the company's Best Day acquisition in 2020, and Colombia were Argentina-based Despegar's top-performing markets in the second quarter.

When excluding Covid-impaired Argentina and Chile, Despegar's international transactions increased 120 percent in the period that ended June 30 compared with the first first three months of the year.

A core market, Brazil, where it is currently winter, is experiencing a second Covid wave.

"Our geographic diversification provided the seasonality offset," Despegar CEO Damian Scokin told financial analysts in a Thursday briefing about second quarter results. "Following strategic acquisitions, we have generally removed the seasonality factor from our retail. Now we have a summer, the peak travel period all year round in our business model."

Despegar saw its revenue rise to $63 million in the quarter from a cancellations-impacted negative $9.7 million a year earlier, and its net loss narrowed to $31 million from a $57 million in the red a year earlier.

A wave of cancellations dampened revenue growth during the quarter, but that had a positive impact on working capital as voucher grants enabled the company to conserve cash, Scokin said. The cancellation rate, however, was 55 percent lower than the year-ago period, when there were no vaccines.

He said the company has been gaining market share during the pandemic, and that its algorithms enable it acquire customers at optimal levels using revenue management technology.

Scokin pointed to the company's efforts in Colombia, which is rebounding in both domestic and international travel, as particularly productive.

"And particularly in Colombia, I can disclose at the general level that we've been gaining share significantly," Scokin said, adding that Despegar has taken advantage of opportunities in several geographies where competition has diminished because "many of our competitors have left the business."

In other news, Despegar's loyalty program, Pasaporte Despegar, debuted in Mexico during the second quarter. The program now has 900,000 members overall.