“Have physical expansion plans in Brazil and also in Argentina, it is a historic milestone for a company that was born digitally”, says Santiago Elijovich, vice president of Grupo Despegar. “This is related to the acquisition of the Best Day travel agency; one of the objectives was to learn from Best Day’s experience managing and managing face-to-face stores”.
Despegar’s strategy has a precedent in other markets; In Chile, for example, the company acquired the agency Falabella Travel in June 2019, which had a similar dynamic to Best Day: An Agency offline with presence on-line.
This is part of a general increase in sales expenses and marketing of the company, which in the first quarter of this year shot up 73.3% to accumulate 165.2 million dollars. About half of this increase was related to the increase in the segment business to business (B2B) and with sales channels offlinewhich led to the brands Viajes Falabella and Best Day to increase their reservations by more than 80% and 50% in the annual comparison, respectively.
In the case of Mexico, Elijovich considers that it has been one of the “best cases” in terms of the tourism industry since, since the outbreak of the pandemic, it has kept its borders open. The strong domestic demand and its international appeal make it the second largest market, only behind Brazil.
In Brazilthere is strong interest, especially in markets to the north, while in Argentina –Despegar’s native country– brand awareness is the highest of all countries, with which its market penetration is very high.
At the moment, the company has other business units that remain challenging, such as koin, the fintech take off which it introduced to the Mexican market last March, and through which it offers travel financing alternatives, with the motto “buy now, pay later”.
Koin has had challenges in markets such as Brazil, where the financed amount in dollars had a 18% drop in the year-on-year comparison. This resulted in a negative total adjusted EBITDA of $2.5 million.
Elijovich reports that this is due to adverse macroeconomic factors, although the company has the prospect that Koin will break even in the second half of the year. “As a product of the pandemic, the prices have risen a lot. interest rates. Some private banks have imposed restrictive measures ”, she concludes.