The Travelocity-Travelguru deal marks the first sign of consolidation in the heavily venture-backed online travel agent (OTA) space in India. Besides Travelguru, other major venture capital backed OTAs are Makemytrip, Yatra and Cleartrip. Though the valuation for the Travelocity's acquisition of Travelguru is not disclosed, VCCircle has learned from sources that the hotel aggregator could be valued between $10-12 million. An email sent to Ashwin Damera, CEO & Co-founder, Travelguru, to verify this information, did not elicit a response till this article was published.
Travelguru is believed to have recorded revenues of Rs 10 crore for fiscal year ending March, 2009. Travelguru has been looking for a buyer since last year. Last year, VCCircle had reported that Travelguru was in talks to sell out to Travelocity's rival Expedia. The talks didn't materialise into a transaction then.
The VC investors in Travelguru would have lost money on the deal. Venture capital firm's Sequoia Capital India and Battery Ventures committed $25 million in two rounds of funding to Travelguru. The total amount of funding that actually flowed into the company is not known. Though investors in Travelguru would have preferred a stock deal, Travelocity is believed to have insisted on an all-cash deal.
The promoters of Travelguru - Ashwin Damera and Amit Taneja (founder of Desiya, which was acquired by Travelguru in December 2007) - are believed to have got $1 million each as part of the deal.
What does the deal bring to Travelocity? The deal would give Travelocity a base in India mainly in the hotels aggregation space. Travelguru does not do much of air travel booking. Travelocity is present in India since 2007. The company had said at that time that it would look to acquire an Indian OTA player.
Travelocity is owned Sabre Holdings, an American travel technology company with several brands in travel agency, airline, and direct to consumer business. In December 2006, private-equity firms TPG Capital and Silver Lake Partners acquired Sabre Holdings Corp and delisted the firm from New York Stock Exchange.