Argentine unicorn Despegar purchases Viajes Falabella for US$27 million

Contxto – Last month, Argentine unicorn Despegar acquired Viajes Falabella operations in Chile, Colombia, Peru, and Argentina. The purchase worth US$27 million will help the online travel agency (OTA) increase its “off-line” presence.

In Summary

Following some major legal deliberations among parties, the agreement will entail a 10-year commercial contract between Despegar and Falabella with the possibility of extension.

Both OTAs now plan to develop multichannel service models including online, call center and retail. All the while, Viajes Falabella will maintain its brand, retail locations, and digital platform for these 10 years, and will be reviewed after its termination. This way, Viajes Falabella will help enhance Despegar’s offers and travel services.

Viajes Falabella has made US$50 million in income since its founding, 65 percent of which came from tourism packages. Keeping this in mind, Despegar will reportedly continue Falabella’s loyalty program (CMR Puntos) offering discounts and perks for clients with affiliated partners.

In-Depth

Since Despegar began in 1999 in Argentina, Despegar has become an all-encompassing OTA based in Miami. Not only do clients book airfare but also reserve hotels, car rentals, etc. Following this acquisition of Viajes Fallabela, though, clients from both companies will have access to more extensive travel and tourism products.

“We are elated to have entered this agreement with Falabella that will permit us to strengthen even more our leadership position in Latin America’s travel market,” said Damian Scokin, CEO of Despegar. “Likewise, our commercial alliance will allow us to fortify our financing offers for our products.”

Travelport, a U.K.-based technology and travel platform providing tourism solutions, predicts positive developments for the Latin America industry. According to their estimates, the participation of regional OTAs will increase from 20 percent to 42 percent by 2020.  

Furthermore, the Argentine Council of Electronic Commerce (CACE) says that OTAs are the strongest forces in Latin America’s e-commerce market. According to CACE, this industry grows at an annual rate of 24 percent.

According to the LexLatin report, law firms Beccar Varela represented Despegar Argentina while Claro & Cía worked with Despegar Chile. Fellow firm Carey delegated for Falabella Financiero while Estudio Lewin Abogados assisted with competency and coordination.  

-JA