Mondee is looking to acquire Brazilian online travel marketplace Orinter for $40 million.
Mondee provides access to a marketplace where travel agents can book on behalf of their customers. Through the Mondee software platform, travel agents access their marketplace and ancillary software products to manage their business. Orinter offers similar marketplace services to hotels and ground transportation travel agencies, but without a technology platform.
The acquisition will give Mondee access to Orinter’s contract network. This contract network spans all of Brazil and the rest of South America. In addition, Orinter’s approximately 5,000 travel agents now have access to Mondee’s technology and network, allowing them to extend their services to their customers. The $40 million transaction consists of cash and Mondee common stock.
According to Orestes Fintiklis, Mondee’s vice chairman and the company’s chief strategy and business development officer, this is the beginning of the acquisition buzz.
“This is what we will be doing in the next two years and there will be a lot of M&A,” said Fintiklis.
Mondee’s strategy is to expand its product and market reach and accelerate growth by only acquiring companies that add specific capabilities beyond what Mondee already has, he said. .
“If you want to grow your product and expand your geography, you can do it yourself organically, but it will take another 20 years. We can also strengthen that company,” said Finticris.
Companies such as Booking Holdings and Expedia have consolidated much of the fragmented corporate-to-consumer travel industry. Now Mondee management wants to do the same in the B2B space, he said.
“The time is ripe for consolidation, especially geographically,” says Fintiklis. “We aim to be the world’s largest B2B2C player in the travel industry.”
Ongoing expansion plan
About 80% of Mondee’s bookings are flights, with the rest now consisting of hotels and car rentals. The company plans to expand its offerings soon to include cruises, theaters, theme parks, sporting events and other ticketed events.
Another new revenue stream for the company, clients can use Mondee fintech products for payments, fraud prevention and price freezes. The company also sells travel insurance.
In its continued geographic expansion, Mondee is focusing first on Latin America, with its acquisition of Orinter, followed by India and Europe.
During the pandemic, the company has started using its products not only in traditional travel agencies, but also in home agencies and others, he said. The company sees an increasing number of social media influencers downloading the technology and selling it to their followers. Businesses can also subscribe to Mondee as a service, giving employees access to discounted travel as a benefit.
Mondee announced a new affiliate program earlier this week. Through this program, distributors agree to use only the company’s services in exchange for reduced wholesale prices.
Mondee owns 6% of the North American flight market through sales through 50,000 travel agents. The ultimate goal is that the exclusivity deal will drive more bookings for Mondee’s new hotels and other services, which Mondee says is far more profitable. He said thousands of agents are lining up for exclusive rights with the company.
“This is a game changer,” says Fintiklis.
Founded in 2011, Mondee acquired seven travel tech companies the following year that specialized exclusively in wholesale airline tickets to travel agents. Mondee invested around $200 million between 2012 and 2015 to create software platforms for the company’s market segments. The company has grown 40% every year since 2015, and last year he grew 70%, Finticris said.
No other acquisitions were made until the pandemic hit, taking advantage of low acquisition costs to begin expanding its offerings. All recent acquisitions, including future acquisitions, are aimed at accelerating organic growth, Finticris said. In addition to adding offerings and acquiring to create value for both parties, he said companies only buy when valuations are very high.
Tigress Financial Partners said a report published in December said Mondee will see booking revenue grow nearly 140.8% this year to $2.3 billion due to its “advanced technology platform combined with expanded content and distribution.” Estimated.
The report estimates that the company’s cost of equity will rise to $16 by the end of the year.
Mondee went public in July 2022 through a special purpose acquisition company (SPAC) with a market capitalization of approximately $740 million. The stock debuted on the market at $11.05 per share. After a bumpy ride since then, the stock is trading at around $10.75 today.
But of all the travel tech companies that went public through SPAC, only Mondee is trading above $10 per share. Some of the leading travel SPACs have lost an average of 65% or more in value since their market debut. Mondee was loss-making before going public, but is now cash-flow positive.
Ivan Feinseth, chief investment officer and research director at Tigress Financial Partners, believes the company’s business challenge going forward will be to find growth opportunities and manage execution and competition.
“But I think they’ll get over it,” Feinseth said. “There’s a lot of opportunity for growth.”
Also, consumer demand for travel agents is alive and well, along with software that travel agents can use, especially as all companies in the industry are seeing, travel demand continues to be strong.
Feinseth said: “People say travel agents are dead, killed by the internet, but they are not. More and more consumers, especially on more expensive and complex trips, especially cruise trips, rely heavily on travel agents. doing.”