Russian startup takes inspiration from software industry with travel-as-a-service model – Skift
The bet of the travel start-up OneTwoTrip with a business-to-business service in Russia and Europe may encourage companies to test similar products all over the world.
The Moscow-based online travel agency has developed a “travel as a service” solution. This name plays on the popularity of software as a service companies that sell access to cloud-based business tools and applications through a subscription model. OneTwoTrip’s Forma product enables banks, telecoms and other businesses to sell trips to their customers, allowing them to earn money in their loyalty programs and pay in installments. Banks can integrate it with their websites and apps to redeem loyalty points on travel.
OneTwoTrip announced that it has signed more than 40 banks and fintech players with a large clientele in Russia and Europe, including Rosbank (controlled by the Société Générale group), Gazprombank, the Austrian bank Raiffeisen, the Italian Unicredit and the fintech Home Credit based in the Czech Republic. Republic.
Forma is essentially a white label travel agency – although if consumers need customer service while traveling, they speak with OneTwoTrip branded agents (such as with booking changes and cancellations). Companies take a commission on each trip purchased through the solution. Businesses can either keep these charges as a profit or pass them on to consumers through cash back.
In total, these banks and fintechs have issued more than 50 million debit and travel credit cards. They have loyalty programs, enticing customers to use their cards for transactions in order to accumulate points that consumers can redeem for various products and services, including travel.
For banks, the benefit is to monetize their existing customer base and avoid having to take the necessary steps to establish technical and commercial relationships with travel agencies or manage customer service issues.
The startup has been offering the service for four years. Forma now accounts for around a third of OneTwoTrip’s revenue.
Before the pandemic, OneTwoTrip had annual sales of $ 500 million, although it declined to release the latest figures. It said it enjoyed compound annual growth of 25% in gross merchandise value and 32% growth in net sales between 2017 and 2019.
Banks and travel do more together
Banks, fintechs and travel agencies have made more deals lately.
Some banks have gone their own way in similar and parallel efforts without the help of a party such as OneTwoTrip. Revolut, a London-based global neobank or fintech, has announced its intention to launch a travel offer.
Over the past year, Capital One acquired Freebird, a business-to-business start-up, and expanded the sale of some travel services, with a planned launch of Hopper-powered Capital One Travel later this year. The banking giant led a $ 170 million fundraiser in March for the Hopper travel agency.
Several years ago, a Russian fintech called Tinkoff started their own online travel agency.
Mastercard, Unicredit, and Raiffeisen have integrated various travel platforms into their businesses, and American Express has built its own reputation.
Michael Sokolov, Chief Strategy Officer of OneTwoTrip, touts his company’s offering as allowing a bank to offer cash back to customers who purchase travel through them as a marketing incentive to promote the bank’s brand. .
“What we’re doing is quite complex,” Sokolov said. “We need to integrate with the partner’s loyalty program behind the scenes to ensure a smooth process of redeeming bonus points, taking into account all applicable taxes, accounting and redemption rules. “
The concept of selling white-label travel agencies is nothing new, although OneTwoTrip has said there are some modern changes to it. For years, airlines and other companies have outsourced the sale of vacation packages, rental cars, and other travel to third-party companies. Banks and airlines have made it possible for customers to redeem loyalty points between brands with technical help from companies like Points.com.
What’s new is that many banks and fintech players are turning their apps into super apps to encourage consumers to use them for more than just banking. OneTwoTrip said its solution simplifies vendor outsourcing and business challenges for these companies. Rather than an affiliate model, OneTwoTrip is the merchant of record and has agents on hand to resolve any issues that may arise while traveling, such as the need for a consumer to book on different dates.
OneTwoTrip is a survivor of the pandemic
OneTwoTrip said it has raised $ 30 million in primary venture capital and equity finance products since launching ten years ago this month. One of the major backers was East-West Digital News, a Swedish venture capital firm formerly known as Vostok New Ventures. Atomico is another.
“We got through the pandemic without raising additional capital or receiving government assistance,” Sokolov said. “We have recently returned to breakeven in EBDITA (earnings before depreciation, interest and amortization).”
The startup, which has 319 full-time employees and contractors, could experience greater growth at the intersection of finance and travel. Last week, Booking Holdings unveiled a new Fintech unit that aims to help travelers avoid bank and credit card company exchange fees.
OneTwoTrip last year issued 50,000 virtual payment cards offering cash back rewards and loyalty points, with the support of a banking partner. The virtual card is integrated into its app and website, allowing consumers to pay with its virtual card as an alternative.