Cleared for take-off

Online travel agencies in Latin America cling on to hopes of a recovery.

Online travel agencies have been one of the businesses most severely affected by the COVID-19 pandemic. As tourist activities were completely paralysed for months, travel bookings in Latin America suffered a 62% decline to USD 2.1 billion in 2020.

An experienced market commentator gave us her view, “Brazil and Mexico are the leading market for internet travel agencies in Latin America, accounting for 70% of reservations in the region.”

Given that Latin American consumers are highly digital, particularly in Mexico, Brazil, and Argentina, online travel sales in the region dropped by USD 9 billion from the USD 22 billion seen in pre-pandemic days. Despegar, a leading online travel agency headquartered in Argentina registered a 78% drop in transactions from the 600,000 completed in 2019. This dramatic drop led the company to lay off 400 employees in Brazil, Uruguay and Colombia. However, travel booking sites in Latin America are not expected to fully recover until 2022 at the earliest.

When the travel industry does recover, those who survive could be well placed to succeed, the market commentator explained, “Brazil’s CVC registered massive losses during the pandemic, but they did well in reducing their debt and they lost several competitors. If they get their investments right, they will place themselves at the front-end of the recovery and extend their market share in Latin America.”

“Brazil’s CVC registered massive losses during the pandemic, but they did well in reducing their debt and they lost several competitors.”

Travel industry commentator, Brazil

In countries like Chile, Colombia and Costa Rica, public and private tourism agencies organised training webinars to promote their employees IT and digital skills, entrepreneurship and digital marketing to maximise bookings and meet revenue goals. In other countries, travel agency initiatives concentrated on developing incentive packages for business to adjust to new business models such as the increase in national travel options.

A researcher at the Department of Sustainable Tourism at the University of Quintana Roo described what he thought the recovery would look like, “Mexico, Brazil, and Chile have the most tourists in the region so their recovery will be the fastest. For instance, a recent survey reported that 26% of the Mexican population intends to travel in the next three months. A number of on-line travel agencies ceased to operate in Mexico during the pandemic, such as Almundo and Travel Impressions, this will favour larger players such as PriceTravel which, aside from facing less competition, are now better placed to form alliances with other players in the sector, like the one they recently closed with Disney.”

“A number of on-line travel agencies ceased to operate in Mexico during the pandemic, such as Almundo and Travel Impressions, this will favour larger players such as PriceTravel.”

Researcher, Department of Sustainable Tourism, University of Quintana Roo

In a post-pandemic context, the success of on-line travel agencies will be determined by their capacity to offer global access, price transparency, competitive prices and versatility options. These companies are also heavily dependent on government regulations while border policy uncertainty is hindering recovery prospects in Latin America. Beyond this, the Mexican researcher saw data as the next trend in the region, “As for what’s next, I would say data. I mean, data analysis is the future in most retail sectors, particularly e-commerce, and especially so in the travel industry.”

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