INDIA BUSINESS WORLD - DECEMBER 16^th - DECEMBER 31^st - 2007

TRAVELGURU TO ACQUIRE DESIYA FOR RS 100CR

In one of the first deals in the online travel space, Travelguru is acquiring Delhi-based B2B hotel portal Desiya for $25 million (around Rs 100 crore). Travelguru is also scouting for an offline travel player.

"Desiya will run as independent subsidiary of Travelguru," Ashwin Damera, CEO and co-founder, Travelguru said. Travelguru is funded by US-based Battery Ventures and Sequoia Capital Partners India.

Online travel industry is a $1.3 billion industry and is slated to become $2 billion industry in 2008. With so many players in the industry, analysts have been talking about consolidation in online travel space since quite some time now. "With so many portals now in the market it's likely that some of the bigger players will buy out smaller ones. We had expected consolidation to happen next year, but it's already happening," says an Indiatimes official.

While operation and people integration of the two portals - Travelguru and Desiya will be completed by January, technology integration will take around four months. By end of this fiscal Travelguru has projected a turnover of $42 million.

"Next year we will break-even with a turnover of $80 million. Around 90% of our revenue comes from hotel bookings unlike other websites where major chunk of the transactions are for airtickets," says Damera. In January last year company had raised $10 million from Sequoia Capital India and in November last year it got it's second round of funding of $15 million from Battery Ventures and Sequoia Capital India.

On the other hand, Desiya.com has 1,000 travel agents and 225 travel portals among it's clients. It has 1,500 hotels in it's inventory all over India. The portal registers 600 transactions a day, over 500 B2B transactions and 100 inbound hotel bookings. "Desiya has a strong presence in UK market. This acquisition is strategic one for us rather than a financial acquisition," added Damera. He also said that the company was looking at acquiring an offline player with a pan-India presence.

"There will be more synergies and consolidations between online and offline travel companies in next 12-18 months," he said.

And others may follow suit. Travelocity India managing director Himanshu Singh says, "Before entering the India market in March this year, we did explore an opportunity of entering with some Indian portal. Right now we are growing organically but are open to acquiring a travel website." He added that Indian online travel industry, which ranks fourth in the Asia-Pacific region after China, Japan and Australia, will witness lot of consolidation in the next 12 months.