European travel company Lastminute.com has forayed into the India market with the acquisition of iTraveller.com, a Bengaluru-based, online travel discovery and booking start-up.
The acquisition, which closed on May 29, was an all cash deal which saw all the shareholders of iTraveller.com exiting the start-up and 45 of its team members becoming part of the Lastminute.com India team.
iTraveller has a revenue of $3 million, has raised a total of $4.8 million in funding, receives 3 million visitors/month and averaged ₹1.5-2 crore in transactions/month till last year.
The Indian travel industry has been in the doldrums since 2016, with the first big blow to the sector being delivered by demonetisation in November 2016 followed by the GST roll out in 2017, with high GST payout of 9 per cent charged on tour packages, which was subsequently reduced to 5 per cent. The third and final blow to the struggling industry was dealt by Covid-19, from as early as February 2020, when international travel came to a grinding halt followed by domestic travel.
“Since 2016-17, the market has been very bad of us, having to contend with competition from OTAs on the one hand and hundreds of offline travel operators on the other hand. To compound matters, the funding environment was bleak, making it very difficult for us to raise additional funds to run the business. We forged a strategic partnership with Lastminute.com since the last 18-24 months, during which time they have been using our holiday booking engine to power holidays in Europe and carry out due diligence on the India market,” said Shiju Radhakrishnan, one of the three co-founders of iTraveller.com, founded in 2012 along with Nisanth Kumar and Chitra Parija. He did not disclose the transaction value of the acquisition.
Lastminute.com is a Switzerland-based, publicly listed $2 billion, online travel firm which is the largest OTA in the UK, Italy, Germany, Switzerland, France and Spain.
“The India market is an attractive growth opportunity for Lastminute.com as Europe is a saturated market, therefore, launching its India operations with an acquisition is a natural extension for the company,” said Radhakrishnan.
Many travel firms that were managing to keep their heads above the waters over the last 4-5 years, have been forced to shut down after the Covid outbreak. Bengaluru-headquartered, ₹150-crore travel firm, Chariot World Tours, a major player in organising tours to the US and Europe shut down 95 per cent of its operations and offices across Karnataka in February.
Travellaax, an end-to-end travel services provider, had zero business in the last four months. “We have all taken 50 per cent salary cuts and the situation is really grim for the travel industry with 45-50 per cent of travel agents having shut down in Bengaluru alone, in the last few months. With the Covid-19 vaccine currently being tested, we are optimistic that the industry will recover by September/October,” said Karthik Jonnakadla, founder CEO, Travellaax.
The travel industry saw early signs of consolidation in October 2016 when MakeMyTrip acquired smaller rival, the Ibibo Group in an all stock transaction valued at $1.8 billion. In August 2018, Nasdaq-listed Ebix, announced that one of its Indian subsidiaries has signed agreements to acquire Mumbai-based Mercury Travels and Delhi- based Leisure Corp for a cumulative amount of approximately $14.2 million.