The Future of Africa’s Online Travel bureau; Likely mergers and acquisitions

Skype January 30, 2018 Africa, Afrikka, Around The World, Travel Leave a comment 327 Views

Intro

The marketplace was thrown into shock at the report that Nigeria’s leading online travel agency (OTA), Wakanow, may be in some monetary crises due to huge debt burdens and forex losses. This unofficial report suggests that Wakanow may be up for sale! If this holds true, then I think that this is the beginning of combination within that area.

Let me also mention that the majority of online companies in Africa are positioning for great exits with leading global players. By this, I that suggest Jumia, for example, will do whatever to remain alive so that when Amazon or Alibaba lastly believes that it is time to make an acquisition in Africa, it would be the “just” choice. That’s why they will continue to spend to retain their management position, though they are EBITDA unfavorable. The same opts for the OTAs; everyone appears to be positioning for a booking.com or Expedia exit.

Travelstart on the Rampage

I have observed frantic efforts from Travelstart particularly to make itself look larger than it is by “buying GMV”. Exactly what do I suggest by this? As per accounting standards, if you own more than 50% of a company, that company qualifies as a subsidiary; for this reason, the parent business is expected to report the subsidiary’s numbers as part of its own.

An excellent example is the current acquisition of SafariNow by Travelstart. From the statement, Travelstart obtained bulk of business, but will not integrate its organisation with SafariNow, which will continue to run as an independent company. When Travelstart is reporting its own earnings statement, it will report the whole of SafariNow’s GMV as part of its own, though it does not own 100% of the company.

The idea is this: if Booking.com desires to obtain a player in Africa for circumstances, it may desire to get the biggest gamer. The bigger Travelstart can make itself look, the much better.

The Nigerian Context

Back to Wakanow. Travelstart might be seeking to get over 50% of the viewed struggling Wakanow, to increase its own GMV and additional position itself for a massive exit to a larger worldwide gamer.

Within the Nigerian market, there are 3 major (if not only) gamers– Wakanow, JumiaTravel and Hotels.ng. We are all knowledgeable about the transformation to JumiaTravel from Jovago. I will however focus on Hotels.ng (“Hotels” or “HNG”).

Hotels.ng’s Company Growth/ Backward/ Forward Combination

From current announcements by the CEO of HNG, the company has actually almost moved from an online hotel listing platform (“OHLP”) to ending up being a full-fledged online travel company, with presence in major African countries including Ghana, Kenya Rwanda, Tanzania, and so on. The fascinating thing about HNG is that it has to do with the only OTA that started as an OHLP. For this reason, it has a special competitive position because the most significant OTAs are seeking to boost their hotel listing organisation.

Last year, I would have explained HNG as the leading Nigerian OHLP; however, HNG is now a pan African OTA, eespecially after the statement of its pan-African companies– fly.africa and hotels.africa.

So, how will all these shape up?

Travelstart will continue its GMV acquisition technique.

Jumia, I think, will be open to a merger or an acquisition of its JumiaTravel service. The current sale or transfer of its classified realty listing organisation to tolet.com.ng and the acquisition of Afrobaba gives this indication.

HNG will look to combine its position especially with its current and huge pan-African growth drive. HNG I believe will also desire to reinforce its position in Nigeria, especially if Wakanow is gotten. If Travelstart is the acquirer, we can safely wager that it will be a GMV acquisition rather than a full acquisition.

TravelBeta will also want to broaden its share of the outgoing flight traffic specifically with the battles of Wakanow.

Existing offline travel bureau will establish their own online techniques, while keeping their offline companies. If Wakanow does not come out of its struggles, the distrust of online flight reservations will be compounded, hence increasing the offline businesses a lot even more.

Conclusion

I am not sure when Booking.com and Expedia will choose to make an African entry, however one thing makes certain: there are a few prospective acquisition targets. While Travelstart will lead on the flight booking side, Hotels.ng, I think, will lead on the OTAs corner with its huge hotel listing backend.

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