The Travel Industry’s Resurgence

As the world continues to recover from the Covid-19 pandemic, the travel sector is witnessing significant investments that signal its strong rebound. A noteworthy example is Prosus, a tech giant under Naspers, which is set to invest a whopping $1.7 billion in acquiring Despegar, one of Latin America’s leading online travel agencies. This strategic move aims to expand Prosus’s operations in a region poised for economic growth.

Deal Dynamics and Strategic Vision

The acquisition deal, already approved by Despegar’s board, awaits shareholder consent and is expected to conclude by the second quarter of 2025. With Latin America’s GDP anticipated to grow between 2% and 3% next year, Prosus is positioning itself to capitalize on economies of scale through this acquisition. The company already owns platforms like iFood and Sympla and anticipates reaching 100 million customers across these entities after closing the deal.

“This acquisition is a clear demonstration of our strategy to build value by creating a high-quality ecosystem of complementary businesses,” said Fabricio Bloisi, CEO of Prosus Group.

Fabricio Bloisi, CEO of Prosus Group

Despegar’s Growth Potential

For Despegar, which has faced hurdles over the past decade due to economic and social challenges in the region, this acquisition offers a promising avenue for growth. As its market cap stood at $1.24 billion last week, the $19.50 per share purchase price represents a 33% premium on that value. However, it’s important to note that this is still below Despegar’s initial public trading market cap in 2017.

“For our customers, this means access to an expanded portfolio of services, better experiences, greater loyalty benefits and more complete solutions tailored to their needs,” said Damián Scokin, CEO of Despegar.

Damián Scokin, CEO of Despegar

The Broader Investment Landscape

This acquisition is part of a larger trend in travel and tourism technology investments. Just last week, Hostaway secured $365 million from General Atlantic for its software targeting the short-term rental market. Interestingly, General Atlantic was once an investor in Despegar during its private company days.

• Despegar has been around since 1999 and operates in 19 markets across Latin America.
• The company manages both direct-to-consumer services and white-label offerings for banks and airlines.
• It processes approximately 9.5 million transactions annually with $5.3 billion in gross bookings.

A Bright Future Ahead

In an industry where innovation and adaptability are key, Despegar has embraced change by launching a conversational chatbot named Sofia to enhance customer interaction. With such strategic moves and its integration into Prosus’s ecosystem, Despegar is well-positioned for sustained growth and success in Latin America’s dynamic travel market.