The CEO of Despegar.com, an Argentine travel booking company, has announced plans to increase revenue and search for potential acquisitions in Latin America. This positive outlook indicates an optimistic year ahead for the company.
Since November, the company has increased its projections for important measures in 2023 on two occasions. Although its fourth-quarter results will not be released until March, analysts predict a growth of approximately 29 percent in revenue to reach around US$691 million in 2023 compared to the previous year, according to data gathered by Bloomberg.
In an interview, CEO Damian Scokin mentioned that Despegar is actively seeking takeover targets to expand its presence and take advantage of several deals, such as acquiring Brazil’s Viajanet in June 2022, which they have made in the past five years.
Scokin stated that they are constantly open to seizing favorable opportunities to strengthen their position in the market. According to him, they anticipate a strong year ahead for the entire region in 2024.
Scokin refused to disclose the names of the companies, but Despegar has a wide range of potential targets in Brazil, Mexico, and Colombia.
The speaker mentioned that currently, Despegar does not need any additional external funding and intends to wait until interest rates decrease before seeking new financing for their $150 million loan, which is scheduled to be repaid in September 2025.
Despite several Latin American carriers struggling financially due to the ongoing impact of the pandemic, the company remains optimistic about its future prospects. Even the recent bankruptcy filing and subsequent restructuring of Gol Linhas Aereas Intelligentes SA can be viewed as a positive factor for the long-term travel industry, according to Scokin.
Scokin stated that Gol’s aim with its restructuring process is to improve its competitiveness in comparison to more streamlined and cost-effective airlines, a trend that is currently increasing in Latin America.
According to data from the government, airfares in Brazil have increased by almost 50 percent since the start of 2023. The data reveals that they rose by more than 23 percent in the first half of December when compared to the same period in the previous year.
However, a report released by the International Air Transport Association in December 2023 predicts that regional passenger numbers for this year will be around 113 percent higher than the levels recorded in 2019.
According to Scokin, Despegar’s performance in Argentina has been weaker. During the first nine months of 2023, less than 15 percent of bookings and revenue came from Argentine consumers. In December, the company experienced a decline in Argentina due to worries about the peso devaluation under President Javier Milei’s administration and the government’s plans to remove subsidies and price controls.
However, the 57-year-old anticipates that the demand in the second-largest economy in South America will recover from its previous levels. In order to protect them from the high inflation rate, which is currently over 200%, he has recently linked the salaries of some of the approximately 1500 employees based in Argentina to the US Dollar.
Scokin mentioned that Despegar will be capable of adjusting itself as investors seek indicators of Milei’s progress. He further mentioned that the company has succeeded in various conditions present in Argentina.
