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Building the online travel marketplace in Latin America The Despegar strategy

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Building the online travel marketplace in Latin America The Despegar.com strategy. Christian A. Vilate Chief Product Officer. Agenda. Who we are Is there any potential for online travel in Latin America? What are the challenges and rewards of entering the Latin American market?

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building the online travel marketplace in latin america the despegar com strategy

Building the online travel marketplace in Latin AmericaThe Despegar.com strategy

Christian A. Vilate

Chief Product Officer

agenda
Agenda

Who we are

Is there any potential for online travel

in Latin America?

What are the challenges and rewards of entering the Latin American market?

How we deal with different cultures

who we are
Launched in December 1999

Today: full operational presence in 9 countries

9 call centers with fulfillment offices

100 employees

Who We Are

The leading online travel agency in Iberoamerica

USA

Spain

Mexico

Colombia

Venezuela

Brazil

Chile

Uruguay

Argentina

who we are5
Who We Are
  • Management Group Profile:
  • +20 MBAs from top tier US Schools
  • From 8 nationalities
  • With experience in diverse areas, among others:
    • travel industry
    • business consulting
    • investment banking
    • software implementation
    • media industry
    • telco industry

Institutional Investors:

Hicks, Muse, Furst & Tate; Merrill Lynch; Texas Pacific and The Accor Group

agenda7
Agenda

Who we are

Is there any potential for online travel

in Latin America?

What are the challenges and rewards of entering the Latin American market?

How we deal with different cultures

latin america in f igures
500 million people

15-20% with standards of living of first world countries

The fastest growingInternet region in the world

Latin America in Figures
iberoamerica is a healthy travel market
Iberoamerica is a healthy travel market...

Travel & tourist demand in Latin

America, Spain & Portugal

  • Improvements in hotel infrastructure
  • Increasing competition among airlines
  • More stable macroeconomic scenarios:
    • Exchange rate stability
    • Resurgence of credit markets

600

500

519

400

6.4% CAGR

US$ Billions

300

263

200

100

0

1999

2010

Latin America

Iberia

Source: WTTC

with a huge opportunity for e travel
...with a huge opportunity for e-travel
  • Fragmented industry with no dominant leaders
  • Unreliable travel industry structure
    • Non-professional
    • Limited access to information and services
  • Frustrating buying experience for customers.
  • Inefficiencies and high cost systems
  • Non-transparent service: agents run after commissions
agenda11
Agenda

Who we are

Is there any potential for online travel

in Latin America?

What are the challenges and rewards of entering the Latin American market?

How we deal with different cultures

challenges
Low PC penetration

High cost of telecomunication services

Lack of confidence in e-commerce

Lower credit card penetration / fraudrisks

Non-transparent pricing policies & regulated markets

Delivery process

Huge managerial effort

Understanding of cultural issues

Low look-to-book ratio

Challenges
slide13
Almost untapped market

Easier to achieve brand dominance / cheaper media cost

Very limited competition

Higher profitability

Inbound & outbound tourism

First mover advantage is a key asset

Rewards

our s trategy
Expand regionally at a fast pace

Build strong local operations

“Human touch” customer service

Use technology as a key differentiator

Explore new segments

Our Strategy
agenda15
Agenda

Who we are

Is there any potential for online travel

in Latin America?

What are the challenges and rewards of entering the Latin American market?

How we deal with different cultures

latin america is not a single country
Latin America is not “a single country”
  • Cultural diversity
    • Languages
    • Preferences & traditions
  • Economic diversity
    • Payment methods
    • Currencies
    • Regulatory & legal frameworks
cultural differencies
Top 10 travel destinations coincide among countries...

...but relevant content is different.

Cultural differencies
  • Andean countries (Colombia, Venezuela) & Mexico are very “US oriented”
  • Brazil is almost a continent in itself
  • Southern cone (Argentina, Chile & Uruguay): preference for european and caribbean destinations
  • Spain: is a more sophisticated market with completely different tastes
economic diversity
2 hemispheres: allows for seasonal diversification

Payment methods

Different currencies

Regulatory & legal frameworks

Suppliers change from country to country

Economic diversity
our strategy
Our strategy

Make local what is localRegionalize everything else

Operations

Technology

Contents

Brand Awareness

local call centers
Local call centers
  • Customer service support tailored to each markets needs
    • Local language
    • Local 0-800 number
    • Staff trained in local editorial and travel content
  • Educational and selling mechanism
    • Goal is to migrate call center users to 100% web users
    • Call center is a necessary intermediate step from bricks to clicks
  • Reduces Latin American consumers’ skepticism
local presence
Local Presence
  • Higher understanding of each market dynamics
  • Opportunity to build and leverage local negotiations and to gain access to cheaper rates
  • Payment methods adapted to local usage
  • Local content (editorial + commercial)
  • Cross selling of products among countries
  • Greater control of local operations
local fulfillment
Local Fulfillment

Achieved through an association with a travel agent

Revenue sharing

c

Travel Agency

Carlson Wagon Lit

Back office capacity

regional economies to s cale
Regional Economies to Scale
  • Technology: lower labor cost
  • Brand awareness
  • Leverage local negotiations
  • Traffic deals with portals
  • Share best practices
  • Reference content
regional branding
Regional Branding

REVENUES

TRAFFIC

Online and off-line advertising campaigns

Alliances

Public Relations

results by now are very rewarding
Results by now are very rewarding
  • Conversion rate (look to book) is steadily growing
  • Strong improvement in quality of products and reservation tools
  • Regional expansion completed
  • Products have become competitive compared to market rates
thank you

Thank you.

Christian A. Vilate

Chief Product Officer

[email protected]

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