Trip.com Acquires Travix Group Guidelines on Appeal from Small Travel Agents – Skift | Instant News



Trip.com Group purchased the online travel agency group Travix from travel giant BCD Travel in December. The regulator approved the sale last month, even though only the Dutch media were paying attention. The companies did not disclose the price of the transaction. The deal gave Chinese travel titans a set of brands based in Amsterdam, including Vayama, Vliegwinkel, and CheapTickets.nl.Trip.com Group shy of why they bought the company. Here are some reasons that make sense. Plus, we will consider which European companies might be targeted by mergers and acquisitions by online travel companies and private equity companies. Get the Latest about Coronavirus and the Travel Industry about Skebeb Liveblog One reason for the interests of Trip.com on Travix may be the Dutch approach the company to sell plane tickets. Some background, first: In 2015, Ctrip, the name of the company’s operations at the time, bought Travelfusion, a technology vendor that supports searching, booking and payment for airlines that establish connections with travel agents. But Travelfusion has little automation to change or cancel tickets. Travix has solved several problems with Tripfusion Groupfrom misses. Last year, the company began mixing new ways of selling tariffs together in the old way with an easy comparison of the two. It got help for this with technology from Amadeus, a travel software giant based in Madrid. This system promises to skip special technical work and commercial negotiations that agents need to carry out to sell airline “fare” families, or bundle airplane tickets with other facilities. Migrants want to sell their rates as they wish. So they want more technological control about how third parties sell their tickets and related sales, such as additional legroom seats. The Dutch airline, KLM, for example, waived the $ 24 round trip booking fee (€ 22) for each travel agent using preferred technical connections, such as those through Travelfusion.Trip.com Group might have other reasons for wanting Travix, of course . might believe Travix is ​​better at utilizing data than the average small online travel agency group. Important data for the agency. Flight sales are low margins. So sales and packaging provide the most profit. But agencies often find it difficult to find data to learn how to sell effectively. Five years ago, Travix had a dozen data gatekeepers with access to a dashboard to ask for data. Now, thanks to the use of Google’s cloud services and business intelligence services from companies like Looker, it has more than 150 workers with access to data for faster analysis. For example, the democratization of data access helps accelerate testing of new consumer sales tactics. At least, in theory, these tests can increase transactions and profitability on a certain scale. Game Ad “Winner Take Most” on Niche MarketsTravix has a weakness, which makes it a strange acquisition for giants like Trip.com. Perhaps its biggest weakness is its size. Like all small agencies, global giants like Expedia Group and Booking Holdings beat Travix in advertising spending. Speeding up customer acquisition through advertising expenditure is a game of scale. Google’s ad auction is supportive, meaning they accept lower winner bids, from companies whose ads are worthy, in their view, have a high “quality score”. Quality scores sound like consumer-friendly features. Google gives advantages to advertisements that are likely to be clicked by consumers. But it benefits the travel giants. Like how private tutoring and schools over the years can help a child gain an advantage in university admission, giant travel brands can find ways to put their thumbs on the scale in Google’s ad auction. Scale provides many benefits for travel brands, such as machine knowledge and a large TV advertising budget. That advantage means consumers are more likely to click on their ad. That factor, in turn, wins the company with a higher quality score and thus a cheaper auction rate in Google’s ad auction. Smaller agencies can compete by developing a loyal customer base in a niche, such as the Dutch-speaking market for intra-European vacation flight bookings. As you have more repeat customers searching for your brand, you increase the quality score of your Google ads relative to the giants and thus lower your costs of getting new customers online. Travix is ​​certainly small. It only sells about $ 2 billion in trips, mostly on low-margin plane tickets, a year. The Travix brands are one of the market leaders in the Netherlands and Germany and have four million customers who transact in a year. To increase revenue, Trip.com Group may now provide advice to Travix on how to use world-class machine learning to improve prediction accuracy. about marketing effectiveness, assessing the long-term value of consumers, or recommendations for increasing sales. The Chinese giant may also offer optimized integration with other acquisitions, Skyscanner’s price comparison search engine, which can provide more traffic. Conversely, Skyscanner might learn more about the workings of European travel agents, one of its partners, benefiting from its perspective. The Trip.com group may have decided that it’s easier to get Travix, which has loyal customers in the niche segment, than to compete with Travix through its Trip brand. Travix has a few years in building a culturally relevant brand and direct relationships with suppliers. The purpose of Trip.com last year seems to be to build Trip.com into a large international brand facing West, because Skift has been reported. But small investments in agencies and technology vendors outside China, such as the majority stake taken at MakeMyTrip India last year, advised him to delay his time in the short term with targeted acquisitions in foreign markets and niches rather than building his Trip brand exclusively. Vendors that support agencies, such as Peakwork or DerbySoft dynamic packaging providers, may also be on the acquisition list. First Flight AgencyTravis is not alone among small online booking companies in Europe. So who else can be contested? Some other agencies also focus on geographical markets where locals prefer customer service in their native language. These agents can also try to present or sell tariffs that stand out from what the global giant has to offer. Plus, they might try to offer payment methods that are popular locally, such as those at regional banks, and advertise using locally relevant marketing campaigns. The following briefly names that may or may not experience immediate mergers and acquisitions. Invia Group might also attract the attention of Trip.com Group. Invia is a set of travel brands that mainly caters to Czech and German speaking holiday travelers. In 2016, the group received a loan from CEFC, a branch of financing from the China Belt and Road Initiative (BRI), which has since been passed on to the state-controlled Citic conglomerate of China. Invia’s operator, Rockaway Capital, has said that the group’s annual turnover last year was more than $ 1.5 billion (€ 1.4 billion). Many Invia Group brands, such as Ab-in-den-urlaub, emphasize sales of tour packages. This group claims to have served 3 million travelers last year. Another brand that might play is an online travel agent that faces consumers, HRS, a division of the German HRS group. Just as BCD Travel decides to focus on corporate travel by selling Travix to Trip.com Group, HRS can decide to focus on corporate travel and sell its consumer brands. HRS only has 17 percent of the German online consumer hotel booking market, down from 23.6 percent two years ago. This lost its share of the juggernaut called Booking.com, which increased its stake to 65.7 percent from 58 percent in 2017, according to the industry report “Hotel Market Germany 2020.” Expedia and Trivago have maintained an average share of around 12 percent of the market during the same two years. Personal equity might make HRS tougher by bringing products facing consumers into groups such as Etraveli or Edreams, each of which can run with relatively more modern technology stacks. Adding to the list of potential dance partners is the Otravo online travel agency group. The company covers brands such as Travelgenio, Vliegtickets.nl, and VakantieDiscounter, and has a turnover of around $ 2 billion (nearly € 2 billion). This group is a travel brand roll-up carried out by Waterland, a Dutch private equity company. Drama DrandiEtraveli, a Nordic online travel agent, might also play a role. CVC Capital Partners bought it in 2017 for around $ 565 million (€ 508 million). Edreams Odigeo, a public conglomerate, is a potential merger partner. The equity market recently beat the market capitalization of Edreams Odigeo based in Barcelona to around $ 220 million (€ 200 million). That’s far below the reported $ 700 million offer made by CVC Capital Partners for him two years ago. While eDreams has doubled its net profit in three years to $ 44 million last year, the crisis may have cut its profitability for this year. Purchasing CVC from eDreams will be a burden on the travel company’s debt. Edreams Odigeo has debts of around $ 470 million (€ 425 million) in 2023. The group has been negotiating with lending banks for leniency on the terms of service, the credit agency Moody said in April. Lethargy may be another obstacle. While eDreams has made a move, a review of its employees at Glassdoor shows that some old technology and bureaucratic processes frustrate software engineers. When it comes to European technical talent, companies like eDreams have lost to Kiwi.com, a Czech-based travel technology startup. Kiwi’s flagship product combines airplane tickets on various airlines that are usually not approved by the operator. Last year General Atlantic took over a majority stake in the company. The amount was not disclosed but sources say it was around $ 125 million. While Kiwi technology is considered good among developers, pandemics cause agencies more problems than other agencies. That’s because Kiwi helped arrange cross-airline travel plans, making it very complicated to file refunds on behalf of consumers for canceled flights. It may be months until the Kiwi digs from the deposit, CEO Oliver Dlouhý said in a video to customers last month. Scale as a Driving Force for Merging Online travel agents that sell a lot of flights are a difficult category to be smarter than your most stupid competitors. . You might create a profitable business. However, this model is too easy to emulate, causing too much competition. Usually one or two companies get an edge, maybe in developing talent with skills to deal with complicated problems in a profitable way that is difficult to imitate. The skill in which Kiwis handle what is called virtual ticket interlining might be one example. Edreams aims to stand out by offering a way to buy trips through a subscription. Etraveli has tried to separate itself with business-to-business deals. When a small company makes a profit, a private equity company can sometimes inject the cash needed to help the company get the true foot of its competitors to become a target acquisition by a global giant. Small companies can gain an edge over peers even if they are in the shadow of a giant. But in the end, the problem is scale. Several studies by Google and other technology giants have reported that the quality of predictions made by artificial intelligence is more related to the amount of data used to train models than other factors. In other words, the more data you have, the better you get. The need for scale provides an important incentive for online travel companies to join. So, expect more deals soon, because this pandemic has reduced many company evaluations to an attractive level. See full article Photo Credit: View of Schiphol International Airport in Amsterdam, Netherlands in August 2018. Amsterdam-based Travix has been acquired by online travel giant Trip.com Group at a time when many smaller online travel agents throughout Europe are looking for mergers and acquisitions. Piroschka van de Wouw / Reuters



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