Argentina-based online
travel agency Despegar is boosting its position in Mexico with the purchase of
Best Day Travel Group for $136 million.
According to a
release, Best Day had revenue of $140 million in 2019 and EBITDA of $8 million,
with 70% of its sales coming online. Despegar says this makes the transaction the largest
in the Latin American travel intermediary space in terms of revenue
and will allow it to increase its revenues by 25%.
Approximately 75% of
Best Day’s revenue is generated in Mexico, with the remainder coming primarily from
Brazil, Argentina, the United States and Canada. The majority - 95% - of its
revenue comes from the sale of packages, hotels and other travel products sold direct
to consumers online and through call centers and at more than 200 kiosks.
The company also
offers ground transportation and tours and activities across Mexico.
On the B2B side, Best
Day subsidiary HotelDO provides online wholesale travel products to agencies
worldwide and white-label services for travel vendors, including exclusive
partnerships to operate packages platforms for Aeromexico and Volaris, Mexico's largest airlines.
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“This is a significant
milestone in our consolidation strategy that started with the acquisition of
Viajes Falabella,” says Damian Scokin, CEO of Despegar.
“Additionally, this acquisition is a significant landmark given
our goal to continue expanding our operations in Mexico, Latin America’s most
important tourism market and the seventh most important destination worldwide.
“Together, Despegar’s unique competitive levers combined with Best
Day’s expertise in wholesale hotel offerings and destination services, will
further enhance our value proposition. Best Day also has strong partnerships
with leading travel vendors. We are acquiring a company with a solid strategic
position and a successful track record that provides significant opportunities
to strengthen Despegar’s presence in Mexico and to grow its business to customer
value proposition.”
Despegar will keep the Best Day brands and network of kiosks, as
well as key executives.
“We have been operating in the market for over 35 years, and the
fact that a company like Despegar, the leader in the Latin American travel
market, sees in us an opportunity to strengthen their value proposition in the
Mexican market, speaks clearly about the capabilities we have built,” says
Julian Balbuena, president of the board of Best Day.
Despegar
says a portion of the purchase price is payable on a deferred basis and
includes a variable component of about +/- 10% based on future performance. The
transaction is expected to close during the first half of 2020.
Founded in 1999,
Despegar went public in 2017 and now operates in 20 countries.