In an interview with BW Disrupt, Yogeesh Chandra- Global Head of Corporate Development, RateGain, talks about funding and monetization status, competitors, responses post lockdown and more.
1. How did the idea come to start the business?
The idea of RateGain came after our Founder Bhanu Chopra embarked on his consulting career, where he would travel over the weekends with a limited budget and would look for the best deal online to do the maximum number of trips. As he returned to India, he wanted to start a consumer-facing portal to provide price comparison; however he soon realized that it was not practical to run this from India and pivoted to capture the opportunity of providing intelligence to travel companies, specifically OTAs on how their competition is pricing their products. From there on, Bhanu scaled the business and identified an opportunity to provide intel to hotels as well as car rentals to see prices on OTAs as well as distribute their inventory on it to allow users to book the best price.
2. What are the unique key points of your company?
We have been profitable since inception; and work with 23 out of 30 leading hotel chains; 25 of top 30 OTAs; all top car rentals; the five largest cruise lines; all the top travel management companies and the fastest growing airlines.
3. How are you different from the existing competitors?
RateGain is the only provider of end-to-end revenue maximization solutions that allow travel and hospitality companies to get the right intelligence, in real-time; and distribute it across 1500+ channels; as well as help in providing a seamless guest experience to over 13000 customers in 191 countries.
4. What is the funding status and monetization model?
RateGain is a profitable company since its very first year of inception. We are financially disciplined and will end up profitable even in the current year despite travel industry facing its biggest crisis. We raised our series A in 2015 with a minority investment from TA Associates.We have also recently had some growth capital infusion, which is a testament the opportunity ahead of us as a company. Since we have a very strong playbook on the M&A side, we would be raising our series B in the next few months to consolidate the fragmented travel tech landscape.
Our monetization model is a mix of license fee based subscription model paid in advance and transaction fee for the $13 B worth of bookings we process for the hospitality industry.
5. What challenges are you facing in running your business?
The current challenges include the mixed sentiment around recovery of travel in the short term. We see travel as a necessary human activity in today’s time where people long for experiences overspending on physical goods. The mid term to long term travel related outlook stays intact and its percentage as a GDP overall is only likely to increase. Thus the current times need to be looked at objectively where organizations that are profitable, scaled up, with a varied product portfolio and a proven management such as ours stand apart from the travel tech landscape at large. If any indication on the post lockdown travel intent is a yardstick, travel industry’s challenge is short lived.
6. How has been your partner’s/ customer’s response so far post lockdown?
The pandemic has been incredibly hard for the travel and hospitality industry. As a partner that believes in maximizing revenue, our customer success teams have doubled down to ensure our partners and customers get the required data and support to drive revenue.
From a recovery standpoint, our business is seeing a steady recovery on our distribution and marketing side, with hotels focusing in driving future bookings as well as building digital strategies to attract the guest and drive revenue.
We are now seeing a recovery of close to 45% when compared to the same period last year with recovery being driven majorly by United States, Mexico, Germany, India and UAE.
With restrictions easing off in the United States and the festive season coming up in other parts of the world, we are expecting recovery to go upto 60% for most countries except parts of Europe which are now experiencing a second wave
7. What are the traction details (achievements of the company)?
Before the pandemic, RateGain had scaled revenues by 8x in the last 5 years, completed two acquisitions in the US and had tripled profits as well. Apart from this the company had been recognized 4-times by Deloitte as one of the fastest-growing technology companies in India, as well as recognized by the Indo-American Chamber of Commerce as the startup of the year.
8. How do you look at expansion?
RateGain is building the travel industry cloud and is unique as it covers all facets of travel like Hotels, Travel Agencies, Car Rentals, Vacation Rentals, Airlines, and Cruise Lines. Even in current times, all facets of travel have not been equally impacted and some have recovered rapidly to close to pre-COVID levels. With a wide portfolio, we have a three-fold view on expansion.
Organic Expansion: Certain product categories, industry categories are positioned for high organic growth based on multiple factors like industry tailwinds, the maturity of the product, TAM, and product differentiation.
Mergers and Acquisitions: Apart from organic growth, we have a strong M&A playbook with a dedicated team covering all aspects of corporate development. The travel technology landscape has a lot of fragmentation in the lower end of the ARR spectrum and in a lot of cases those subscale, single pollution companies need global footprint and scale related expertise that RateGain offers. We are open to tuck-in, product extension and aqui-hire opportunities across specific geographies like North America, Europe and Asia. Currently we have over 40 companies on our target list and are actively engaging with 11 companies around it.
Innovation: Since the industry and the consumer behaviour is witnessing a change, this is the right time to get ahead and innovate with new product capabilities that will help us in acquiring, retaining and expanding the wallet share of end travellers for our clients.We have invested in RG Labs (An intra organization incubator with a dedicated budget)and already identified two critical areas where we would want to lead with innovation. These areas can be larger than even our current products over the next few years and we are very excited about leading innovation here.
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