Originally published by Sramana Mitra on LinkedIn: Billion Dollar Unicorn: Decolar Is The Latin American Entry To The Club
Analysts at Phocuswright estimate the Latin American total travel market to be a $100 billion market opportunity this year with online travel accounting for an average 15% of the spend across more than 20 countries in the region. The region is dominated by six key markets - Argentina, Brazil, Chile, Colombia, Mexico, and Peru with Brazil accounting for $36 billion gross booking market opportunity this year. Decolar is a leading player in the market and also a rare Billion Dollar Unicorn from the region.
Sao Paulo, Brazil-based Decolar was founded in 1999 to cater to the traveling demands of the Latin American region. Today Decolar is the largest online travel agency in the region that provides services to more than 21 countries through its Spanish language site Despegar.com and the Portuguese language site Decolar.com. Customers can plan vacations, make hotel, cruise, and airline reservations, purchase travel packages and attraction tickets, and rent cars to various places around the world through its sites.
Decolar has direct tie-ups with more than 35,000 properties in Latin America. It also has tie-ups with hotels outside of Latin America allowing consumers to make bookings to international markets through its website. Decolar has, since 2002, also partnered with Expedia's Affiliate Network to help expand its reach outside of Latin America.
Decolar is a privately held company and does not disclose its detailed financials. Analysts estimate that the company had recorded $4 billion in gross travel bookings in 2015. Nearly half of these travel bookings are estimated to belong to its hotel segment, of which nearly a third comes from international hotel bookings. The company is expected to record a 30% topline growth this year.
Decolar shot to fame last year when Expedia bought a minority stake in it. After partnering with Decolar for nearly 13 years, Expedia invested $270 million in Decolar to purchase less than 20% stake in the company. Other funding details for Decolar are not known, but Expedia's investment in Decolar helped value it as a Unicorn. The deal helped Expedia gain presence in the region that is still highly fragmented.
Latin America is not an easy market to crack for global online travel leaders like Expedia and Priceline. Providers need to deal with differences in language, consumer behavior, government regulations, and economic environments that make it a high investment market. But the region offers huge opportunities as well. Unlike more mature markets like those of US and Europe where travel growth is seen on the demand side, the emerging markets such as those of Latin America are witnessing growth both on the demand and supply side. Vendors like Expedia will end up relying on the expertise of local players, such as Decolar to expand their own offerings.