Online Travel Agency Travelocity has acquired Indian online hotel aggregator TravelGuru, according to a company release. Travel news site TravelBizMonitor had reported the deal a couple of days ago. According to Roshan Mendis, Regional VP (Travelocity Asia Pacific), “Travelguru will continue to operate as a stand alone business and brand in India”.
The terms of the deal have not been disclosed, but keep in mind that TravelGuru had raised around $25 million in funding overall – with $10 million from Sequoia Capital in the first round, and $15 million from Battery Ventures and Sequoia Capital India in the second round. TravelGuru was also a Times Private Treaties company, which involves sale of stake in the company in exchange for advertising inventory.
Frankly, we wonder if the investors made any money on the investment:earlier this year, TravelGuru replaced its air ticketing business with meta aggregator Ixigo.com, to focus on its hotel booking business - B2C domestic hotels & holidays, B2C international holidays, corporate travel and retail. Much hotel network itself was by virtue of TravelGuru’s acquisition of B2B Hotel aggregator Desiya.com. Ixigo still powers TravelGuru’s flight seach, and we wonder if that will change post the Travelocity acquisition.
Readers will remember that TravelGuru was reported to have been acquired Expedia last year, but that deal was eventually denied by the company.
Related:
– TravelGuru Outsources Flights To Ixigo; Only Desiya Remains?
– Updated: Expedia Acquires India OTA TravelGuru: Report; TravelGuru Denies
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19 Comments until now.
Typo: ugh should be read as "high"
Whatever the price, it will not be a high one… This is basically Travelocity buying out competition.
This is clearly a distressed sale at a very low valuation.
- Travel Industry Insider.
$12m?
http://www.vccircle.com/500/news/travelguru-value...
Well, it boiled down to bad timing for a well planned strategy of moving into hotel segment. I congratulate Ashwin on a fantastic business that he built from scratch, should have made more money but the learning and experience is invaluable.
I heard Sequoia (& Battery) reneged on promises it made to Ashwin and was rather bad (read: distrustful) in its dealings towards the later part of the business.
I have heard similar stories about Sequoia from several entrepreneurs now, guess its not the same firm as the one in US.
$65 mn by the looks of it fellas….. if it's true, it's mind boggling…..
65!…BS
Some are saying the deal size is $15M-$20M. At $15M, that is still a 7.5X multiple of revenues, which are estimated (read: someone leaked) at 10Cr by VCCircle. That is tremendous in this economy.
Step outside a bubble and understand this people. In 3 years, to build a company worth $10M (Rs.50Cr) is a fantastic job. All the BS valuations of travel players which were >$100M wont happen again. What assets and revenues do they have to get such multiples? Also, AFAIK, none are in the black anyway.
Great job Ashwin and team. Bring back some faith to our anemic ecommerce sector.
Any one has any idea of what the deal size / valuation was in case of the WPP purchase of Quasar Media?
i think the big loser is expedia. they had a great chance to buy Travelguru last year and build a solid business in India. Travelocity has beaten them on this and should reap good benefits. i hear the Travelguru had multiple offers, including from Indian players, given that is the only real hotel player.
Travelocity said this deal took 9 months to do. they valuations should be end 2008 valuations. if indeed Travelguru had many offers (i beleive expedia tried to salvage the deal last minutee too), they should have got a good deal.
NDTV profit reported travelguru's revenues as Rs. 250 cr yesterday. I think this is gross sales adn their share should be at least 15% given the hotel business. so guessing revenue of rs. 40 cr and perhaps a 7x i.e. 280-300 cr.
cant beleive this is a $12M deal. should be >$50M in my calculation.
i think the 250Cr number is exaggerated. Somewhere near 100Cr in topline is probably accurate and given the 90% weightage to hotel sales and margins applicable in hotels and air sales, you can back calculate a valuation of $15M with a 7x mgn revenue multiple.
A distress sale of a poorly executed product.
All said and done, after about 4 year of hard work there's frankly not much to show.
Jon – in the Indian content, even $10M-15M is not a distress sale by any definition.
Nobody is an idiot and Travelocity clearly understand that Travelguru has built a lock on the hotel distribution space which has 15-20% margins compared to the 0-2% margins on flights. Its actually a win-win. The only losers are the PE funds, but even they recoup some money. Not sure how many others will recoup anything in their online investments.
The Indian internet has 2-3 successes only. All others are shades of grey in failure terms.
So before you spout your nonsense, either do some research or apply your mind. Also do let us know when you have created a 50Cr business in 3 yrs. We will applaud you too. Till then, shush!
One must give credit to a 27 yr old who started his business, raised capital and sold it to a Global company. How many such stories have we?
We will never know the real number, all that is conjecture. but that shouldnt take away from the entrepreneurs contribution.
Get $25M of cash + inject years of human capital, sell for $15M. Who are you kidding
try raising $25M first. Then you'll figure who is kidding who.
Btw – all the numbers quoted here is speculation. i have read numbers from $12M to $85M. who knows what the real number is?
try raising $25M first. Then you'll figure who is kidding who.
Btw – all the numbers quoted here is speculation. i have read numbers from $12M to $85M. who knows what the real number is?
inject ur brains first
Looks Kash is closer to reality. It's 75 CR or less. It is indeed distress sale. (info from insider)