Travel agents

Phocuswright 2019: The Latin American travel unicorn that sees loyalty as key to its future

Posted by Lee Hayhurst on
Phocuswright 2019: The Latin American travel unicorn that sees loyalty as key to its future

Leading Latin American OTA Despegar says its new loyalty scheme will take the brand into its next phase of development as it marks its 20 year anniversary.

Chief executive Damian Scokin told the Phocuswright conference that the brand will look to build on the strengths it has built up over the last two decades. A new loyalty programme is due to launch in Brazil this month.

Scokin said he understood that there is some scepticism in the industry about loyalty but that the firm believes the Latin American customer, particularly those in Despegar’s home market of Brazil, are very particular.

“We will launch a test and see how it works,” said Scokin. “We believe we are not only providing another reason for the customer to come back and increase our repeat rate but we are also generating some real value for the customer.”

Despeger filed for an IPO in 2017 making it the first Latin American ‘unicorn’ and this year launched a new identity which has helped to drive downloads of its app to the 50 million mark.

Scokin said: “We are very proud of what the team has been doing for the last 20 years but we are extremely excited about what is ahead of us. We have a lot of room for growth going forward, launching new products and new features, in particular this loyalty programme.

“We will continue that trajectory, building on the strengths of our brand and adding more and more features for our clients.”

As the Latin American travel sector has matured Despeger’s model has evolved, but Scokin said the fact that it enabled so many of its low-income clients to travel for the very first time stands it in good stead today.

“For many years our model was providing the finance and opportunities to make travel possible. For 20 years we have been providing access to travel for a lot of Latin Americans that did not travel before.”

A key factor has been to enable customers, many of whom do not have credit cards and consider it strange to pay for large ticket items by credit, to finance their holidays maybe through instalment payments.

Scokin said Despeger is the only retail online site in Latin America that provides a one-click access to financing options at checkout.

He added, post IPO, he was happy with the firm’s performance: “Our results are a reflection of our strategy to invest heavily in our growth.

“Over 20 years we have seen a lot of economic cycles in Latin America. We are going through another market downturn and we have learned that this is the best time to invest to get more market share and grow organically. We are investing, trading off some profitability for growth. We know in such a fragmented market that’s the way to go – to invest in a downturn.”

Despeger believes there is still plenty of growth opportunity for all players in a Latin American travel market valued at $100 million and which still sees 60% of transactions happen offline. “That’s not going to go away in two or three years,” said Scokin.

“We remain a digital OTA but we will invest in tactically in different areas like call centres, stores and offline.

“It’s not that we are going offline but just giving more options for our customers to interact with us.”

As well as loyalty Despeger says it will invest heavily in packages and bundles, which is a category it is seeing growth in, and adding to its menu of payment options.

Scokin said Latin America is not a single unified market and Despeger’s regional teams have to compete with local rivals country by country.

“There has to be a balance between tailoring our offer and reaping the benefits of larger scale. That’s a continuous trade off which we sometimes do better at than at other times. We are big believers in local execution.”

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