Bloomberg News

Ostrovok.ru Raises Funds From Yuri Milner and Former Expedia CEO

March 26, 2013

Ostrovok.ru, a Russian hotel booking service, said it raised $25 million from investors including Facebook Inc. (FB:US) shareholder Yuri Milner and former Expedia Inc. (EXPE:US) head Eric Blachford.

Ostrovok, which offers a choice of 135,000 hotels in 200 countries, plans to use the proceeds for expansion, product development and increasing its sales force, the Moscow-based company said in a statement today.

The Russian travel market was worth $48.6 billion in 2011, of which just 10 percent came from online services, according to researcher PhoCusWright. Ostrovok competes with Priceline.com Inc.’s (PCLN:US) booking.com and local rivals including oktogo.ru and iglobe.ru.

“Hotel booking is the largest and most profitable segment of online travel,” Ostrovok co-founder Serge Faguet said by phone. “In Russia, where online-travel is under-penetrated, this segment may grow fivefold within five years.”

Online agencies can earn 15 percent to 22 percent commission selling hotel bookings and a 4 percent to 5 percent fee on airline tickets, Faguet said. He and partner Kirill Makharinsky, both born in Russia, founded Ostrovok in 2010 after working in Silicon Valley.

Ostrovok has more than 1 million monthly unique visitors, and has increased revenue more than 10-fold in the last 12 months, Faguet said, declining to disclose precise numbers.

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

  • FB
    (Facebook Inc)
    • $78.69 USD
    • 1.74
    • 2.21%
  • EXPE
    (Expedia Inc)
    • $80.31 USD
    • 3.06
    • 3.81%
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