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Consequently, it disclosed the acquisition of Brazilian fintech Koin as well the fact that it raised US$200 million.
The company will use the funds—procured via separate private-equity dealings with Waha Capital and L Catterton—for corporate purposes, including potential acquisitions.
As with these announcements go, Despegar also reported it lost US$57 million for this term and a 96 percent drop in gross bookings for its platform across the Latam region.
No surprises there considering the effect Covid-19 had on the industry.
“This past quarter, we were impacted not only by the natural fall-off in travel demand but also by the travel restrictions imposed by the different governments in the region which, in some countries, were rather severe,” noted Damian Scokin, CEO at Despegar.
But the executive is hopeful.
“Encouragingly, we have seen a positive trend in bookings both in June and July that has continued during the first two weeks of August,” added Scokin.
Despegar’s M&A strategy with Koin
Despegar and Koin had been working together since early 2019. Through the fintech, Brazilians booking through Despegar could pay for their trips in installments. The whole “book now pay later” shebang.
The Argentine platform previously made an announcement regarding its deal to acquire Best Day, a travel company from Mexico.
If you need a memory jog, in January of this year, Despegar announced it would buy booking platform Best Day for US$136 million. However, by April it reported that the terms of the agreement were being renegotiated.
Tomorrow is another day, to Koin a phrase
Ironically, Despegar’s biggest markets in the region (Brazil and Mexico) are currently the hardest hit in terms of cases and deaths by Covid-19.
Although the measures adopted by these countries, when compared to those taken in Peru or Colombia, are laxer. Brazil imposed an international travel ban but allowed for local flights. This restriction was lifted just over three weeks ago.
In Mexico, commercial aviation continued but hotels were forced to shut their doors during April and May. So the problem was, what’s the point in booking a flight (even a national one) if you didn’t have anywhere to stay?
In any case, authorities in Brazil and Mexico are loosening the reigns on the travel and hospitality industry. So tourism should slowly pick up.
Whether it’s too premature to do so is another matter. But it’s business that’s coming Despegar’s way.
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