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IPO-bound Rategain sees travel demand, acquisitions driving future growth

Mumbai: Rategain Travel Technologies Ltd, a travel and tourism-focused SaaS company, is betting on pent-up travel demand and inorganic growth opportunities to boost its growth prospects as the company prepares to go public soon, said a senior executive of the company in an interaction with Mint.

Rategain offers a suite of interconnected products that manage the revenue creation value chain for travel and hospitality companies by data analytics and integration with other technology platforms helping these companies acquire more guests, retain them via personalized guest experiences and maximize their margins. The company filed its draft IPO papers in August and is among the slew of travel companies such as Ixigo, Go Air and Yatra that are looking to go public.

“Travel is going to be the next big sectoral theme, given the pent-up demand and increased vaccinations. As we have seen in other industries, there is revenge travel that’s going to happen,” said Bhanu Chopra, chairman and managing director, RateGain Travel Technologies.

“This pent-up demand combined with rapid vaccination rates and positive global outlook is expected to drive a CAGR of 26% in travel over the next four to five years. And the acceleration of this pent up demand is really being driven by a new generation of travelers whose increased reliance on social media and technology for travel inspiration and booking is driving the need for rapid digitization in the travel industry, similar to what we’re seeing in other industries,” he added.

Rategain claims to be among the top three travel tech services companies globally with clients across large hotel chains such as Six Continents Hotels, Inc., an InterContinental Hotels Group company; Kessler Collection, a luxury hotel chain; Lemon Tree Hotels Ltd and Oyo Hotels and Homes Pvt Ltd and prominent OTAs (online travel agencies) such as Expedia and Booking.com

To be sure, the company is yet to see its revenues recover back to pre-covid levels due to covid-related disruptions in its major markets in the West.

“We are not yet back to pre COVID levels, but we are seeing some very good recovery in the US. The growth in the US is quite significant for us and that is a major part of our business. We are seeing some very healthy recovery in all the three product lines that we have. 80% of our business comes from Europe and the US,” said Chopra.

Rategain’s revenue fell to ₹250.7 crore in FY21 due to the impact of covid-19 on the travel industry. It reported a revenue of ₹398.7 crore in the previous year. It reported a loss of ₹27.8 crore in FY21, increasing from a loss of ₹12.8 crore in the previous fiscal. The company had reported a profit of Rs11.5 crore in FY19 on a revenue of ₹261.5 crore.

Apart from the organic revival in travel demand, Rategain is also betting on inorganic growth to provide more services to its clients as well to have a deeper presence in markets where its international clients are based.

“M&A is also a big part of our growth strategy. We’ve been acquiring companies since 2018. This year we acquired myhotelshop. The key thing we look at is an innovative technology that can be part of our product roadmap, since there are some capabilities we don’t possess. So if we get speed to market, we will buy those capabilities. And we are talking to a couple of companies there,” said Chopra.

Another reasoning behind inorganic growth is to beef up geographic presence, he said.

“If we can get a presence and go deeper in a key market. Our acquisitions of DHISCO and BCV served this purpose clearly and they got us closer to our hotel chain customers in the US. Now we have offices in Chicago and Dallas. And similarly, myhotelshop is a German business, they have customers in Germany, Austria and Switzerland. So, we’ve got deeper in those markets,” he said.

The company will also opportunistically look at competitors too to acquire scale and dominance in the areas that it operates, said Chopra.

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