Bloomberg News

Russia’s OneTwoTrip Shows Global Ambition to Match Priceline.com

January 30, 2013

OneTwoTrip Ltd., the Russian online travel agency part-owned by Skype co-founder Niklas Zennstrom, may sell shares next year as it expands into hotel bookings to compete with Priceline.com Inc. (PCLN:US) and Expedia Inc. (EXPE:US)

OneTwoTrip plans an IPO as early as 2014, once sales approach $1 billion a year, Chief Executive Officer Peter Kutis, 35, said in an interview from Moscow. The company had gross sales of $306 million last year and sold 800,000 tickets. Fourth-quarter sales rose sixfold to $112 million.

“We plan an agressive entry into hotel-booking market this year, displacing competitors,” said Kutis, who quit as CEO of a similar ticketing service AnywayAnyday to found the company in May 2011. “Those who win the air-tickets market will eventually be the winners in the hotels market.”

Russia’s online travel market probably grew 51 percent last year from $5 billion in 2011, according to researcher PhoCusWright Inc. Russians are travelling more as incomes increase and the trend is for independent travel rather than package tours, Otkritie Capital said.

OneTwoTrip sees itself as providing value-added online information to customers compared with its rivals, said Kutis in a telephone interview this week.

As well as selling airline tickets it offers carrier rankings based on aircraft age, distance between the seats and the probability of flight delays. The company plans to offer similar features for hotel bookings, such as indicating whether a hotel is overpriced, Kutis said.

Rapid Growth

“The online travel market is growing rapidly in Russia as more people are traveling abroad on their own,” said Alexander Vengranovich, an analyst at Otkritie Capital in Moscow. “Still, there are a lot of competitors such as AnywayAnyday, Oktogo and Ostrovok that have also raised venture capital and are fighting for clients.”

Russian travel agents may also seek to expand abroad, which will probably require “significant spending to gain recognition” because the online market is more mature, he said.

Shares in Priceline.com added 33 percent in the last 12 months, giving the Norwalk, Connecticut-based company a market value of $34.9 billion. Expedia, based in Bellevue, Washington, has doubled over the same period, giving the company a value of $9 billion. The Nasdaq Composite Index has risen 12 percent.

OneTwoTrip may also attract a strategic buyer, said Pogos Saiadian, Vice President at London-based Atomico Partners LLP, owned by Zennstrom. Atomico participated in a $25 million fundraising by OneTwoTrip in the second half of 2012.

Expedia agreed to buy 62 percent in German hotel-booking website Trivago for $630 million in December, while Baidu Inc. bought a majority stake China’s travel site Qunar in 2011.

“For a big player like Expedia, it is possible to enter the Russian market, but they would need a local team,” said Saiadian. “If you look at any of the BRIC countries, all the top players in each are local leaders: Submarino and Decolar in Brazil, Qunar and Ctrip in China or MakeMyTrip and Yatra in India.”

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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Companies Mentioned

  • PCLN
    (Priceline Group Inc/The)
    • $1138.43 USD
    • 7.45
    • 0.65%
  • EXPE
    (Expedia Inc)
    • $81.53 USD
    • 1.69
    • 2.07%
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