Goomo, which acquired 27-year-old offline venture Orbit Corporate & Leisure Pvt Ltd in 2015, made news this year when it raised $50 million from private equity fund Emerging India, one of the largest deals this year for a standalone travel tech startup. The PE firm had acquired a majority stake in the firm in 2015.
The travel startup operates through an omnichannel model and focuses on three major business segments—consumer, corporate and business-to-business. In an interaction with VCCircle, Varun Gupta, the chief executive of Goomo, talks about the company’s roadmap and expansion plans ahead, and its planned launch of new services and products. Gupta also said that a consolidation wave has kicked in the travel space, which will see Goomo emerge as one among the top 3-4 players in the segment.
How has the $50 million round helped Goomo grow and expand so far?
Our growth and revenues have doubled since June and we have also grown to a 380-strong entity. We were processing $8 million worth of transactions on our platform earlier, a number which today stands at $16 million. New services like visa processing and forex exchange have been introduced in our offline branches.
The online component, I suspect, should go live within the next 30-45 days as we are in the process of hiring a team and strengthening our backend to implement the same. Likewise, hotel bookings have also been launched online. Customers will also be able to book buses and trains by the end of this fiscal year.
What are your short- and long-term expansion plans?
In the short term, our tie-ups with Uniglobe, the largest travel retail franchise network in South Asia, and Payback, one of the largest loyalty reward programmes in the country, have already translated into a rise in [number of] customers. We will be opportunistic and continue to strike such partnerships wherever required to deliver key value to customers.
Come this January, we will also hopefully launch our B2B retail network, where we have tied up with a fin-tech services player, whose products and services are distributed by roughly around 1.5 lakh retail partners. Going forward, these retail partners will also start selling our products and services.
Will there be an increased focus towards the online channel going ahead?
I don’t think we will ever try to become a pure-play online player. Our belief is that India will continue to remain a pretty strong omnichannel market for the next decade at least and customers will want to have the ability to move from one channel to other when they want to.
Will inorganic growth continue to be one of the cornerstones of your growth strategy?
We continue to evaluate potential acquisition opportunities across the spectrum in travel, technology and distribution. We have been in talks with multiple players and we are particularly interested in companies that have a strong inventory and technology backbone. However, none of them are in advanced stages yet for us to offer any comments about this at this point in time.
Could you elaborate more on you monthly and annual growth figures?
Currently, as it stands, we are growing at a rough turnover rate of about Rs 6 crore to Rs 8 crore every month. Our target is to maintain this pace of growth for the next 8-12 months, post which we would have achieved a substantial size. At this rate of growth, we should be somewhere in the region of Rs 2,500 crore to Rs 3,000 crore in annualised turnover by the end of 2018 calendar year. Based on the current traction in the market, I don’t see any problems in achieving this number.
The online travel agents space is highly competitive with challenging margin levels, not to mention the need for deep pockets. How do you deal with this?
No doubt the market is fairly competitive with several players and a wave of consolidation has already begun, which will take another 2-3 years to complete. Incumbents have realised that one can’t perpetually operate this business by rewarding customers. It is extremely expensive to build brands in India. You need to have a great product proposition, great customer experience and I think we are getting to that point where we are on par with industry standards.
The $50 million we raised will help us with the required firepower to be in the fight. Also, there needs to be a very strong focus towards efficiency and cost control. The biggest challenge in having access to significant capital sometimes is a tendency to go experimental and run into various directions and we are trying not to do that.
Where do you see yourself at the end of this consolidation wave?
At the end, the market will probably sustain 3-4 large players in the OTA space alone, of size and scale. In the Indian travel space altogether, combined with the traditional and hybrid players, we will probably see 8-9 players of significant size and scale in the market. A lot of other people will consolidate. When that happens, we see ourselves among the top 3-4, which is very likely within the next five years
When you say you have enough firepower, does that mean you will not look to raise any funding at all in this period?
While we are well-funded for now and need not worry about money for the next 2-3 years, we will obviously start reacting to the market realities and act accordingly. As the India growth story and the market evolves, we will keep evaluating our position and may revise and tweak our goals accordingly.
With the onset of the consolidation wave, will Goomo consider getting acquired, if someone approaches you with the right numbers?
That’s fairly speculative and is very difficult to comment. Right from the start, our strategy has been to create and build a sustainable business and emerge as one of the market leaders.
What is your biggest revenue spinner currently?
Like most of our competition, revenue from air-ticket bookings continue to be the primary revenue generator. But the other verticals, such as hotels booking, is likely to be the next area where we think we will see maximum traction.
Is there any definitive timeline on achieving metrics like profitability?
My sense is that we are 3-4 years away from consumer side profit as far as the OTA part of the business is concerned, as we expect a price and scale war to continue. However, being an omnichannel with four business channels, two of them have already turned profitable, the corporate and the B2B that distributes. The OTA and the offline ventures that we acquired from Orbit will take some time.
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