Wego. A prominent travel app for flight search and booking in the MENA (Middle East and North Africa) region, has made a strategic move into the business travel sector by acquiring Travelstop, a Singapore-based platform specializing in business travel and expense management. This acquisition represents a significant step for Wego, driven by market opportunities and the company's ambition for diversification and growth. In this comprehensive article, we will delve into the details of this acquisition, its implications, and the key players involved, exploring each facet to provide a thorough understanding of this strategic maneuver.
Wego's acquisition of Travelstop is a pivotal moment in the company's journey. While financial details remain undisclosed, the strategic implications are substantial. Ross Veitch, CEO and Co-Founder of Wego, highlighted the potential of introducing next-generation business travel and expense management products to markets where Wego is already established. This move is not just a financial investment but a strategic alignment with market trends and customer needs.
The acquisition of Travelstop brings several key elements into play. Travelstop, founded in 2017, aimed to extend the benefits of business travel management to small- and medium-sized enterprises (SMEs) in Southeast Asia. The company was co-founded by Prashant Kirtane, Vijay Aggarwal, and Altaf Dhamani. After raising USD 1.2 million in a seed funding round, Travelstop garnered ISD 3 million in a funding round led by Silicon Valley-based venture capital firm Accel in 2019. This marked Accel's inaugural investment in corporate travel and expense management in Asia, highlighting the potential and innovative nature of Travelstop's approach.
Established in 2005, Wego has become the largest travel metasearch engine in the MENA region. The company has consistently attracted investments from notable players in the industry, including Tiger Global Management, Crescent Point, Square Peg Capital, Middle East Venture Partners, and the MBC Group. Wego's journey in the online travel marketplace space has been characterized by innovation and a commitment to delivering exceptional travel experiences to its users.
Travelstop's founders, Prashant Kirtane, Vijay Aggarwal, and Altaf Dhamani, brought their extensive experience in the travel industry to create a platform tailored for the needs of SMEs. The company's focus on streamlining travel management and automating expense processes has garnered attention and investment. The close-knit relationship between Ross Veitch and Travelstop's founders, stemming from their previous association at Yahoo, played a significant role in this acquisition.
Gross Booking Value
To provide a financial perspective, it's important to consider the Gross Booking Value (GBV) of these companies. While exact figures for the acquisition aren't disclosed, Wego and Cleartrip Middle East, had they been merged in 2019, would have recorded nearly USD 2 billion in gross booking value. Cleartrip, including its India operations not part of the deal, claimed USD 1.5 billion in gross booking value in 2019. Wego, on its own, reportedly notched USD 1 billion in gross bookings in 2017, with around half sourced from its move into the Middle East a few years earlier. Ross Veitch stated that Wego expects to return to that run-rate by the end of this year.
Implications and Opportunities
The acquisition of Travelstop by Wego comes at a time when the business travel industry is undergoing significant transformation and recovery. According to the Global Business Travel Association (GBTA), business travel in the Middle East and Africa achieved an impressive 86% of its 2019 levels during 2022, outperforming the recovery in the Americas, Asia Pacific, and Europe. The region is on track to return to pre-pandemic business travel spending by 2024, which signifies a robust market outlook.
In 2022, the Middle East and Asia-Pacific regions are expected to contribute to 46% of the total global business travel expenditure, as per GBTA estimates. This places them as the largest and most rapidly expanding markets in the business travel sector. The Middle East, in particular, has exhibited remarkable resilience in its tourism sector, recording the strongest post-pandemic rebound globally.
Wego's analysis of its bookings revealed that approximately 30% of them were for self-managed business trips. This data presents a significant opportunity. For instance, common scenarios like a trip from Dubai to Riyadh for a single adult, departing on Sunday morning and returning on Thursday evening, are prevalent. This acquisition positions Wego to facilitate the transition of these individual employees towards managed business travel solutions and subsequently extend travel management services to encompass entire organizations.
The Opportunity for Wego
The amalgamation of Wego and Travelstop aims to position itself as a one-stop solution for corporate travel management. The primary goal is to offer enhanced visibility and control over expenses, a crucial need for businesses, especially in emerging markets.
In response to inquiries about the organizational structure post-acquisition, Ross Veitch stated, "Prashant Kirtane will remain Travelstop CEO, and Travelstop will operate as an independent company within the Wego Group, but we'll cooperate closely across many functions." This collaborative approach reflects the intent to leverage the strengths of both entities while maintaining their distinct identities.
Prashant Kirtane, CEO and co-founder of Travelstop, emphasized the focus on product innovation and customer satisfaction. This commitment aligns with the vision of setting new industry standards and redefining the future of business travel.
Wego's acquisition of Travelstop is not only a strategic move but also a significant financial investment in the future of business travel. With a strong presence in the MENA region and Travelstop's expertise in business travel and expense management, this partnership is well-positioned to meet the unique challenges faced by businesses in emerging markets. The combined platform aspires to offer convenience, cost-efficiency, and enhanced control over corporate travel expenses, ultimately redefining the future of business travel for organizations in the Middle East, Northern Africa, and the Asia Pacific regions.