BRITISH VIRGIN ISLANDS - Despegar.com, Corp. (NYSE:DESP), recognized as a leading travel technology company in Latin America, has announced a strategic alliance with World2Meet, the travel division of the Spain-based Iberostar Group. This partnership, effective since August 1, 2024, involves World2Meet acquiring Despegar's Destination Management Company (DMC), BDExperience, which specializes in services such as airport transfers and private tours in Mexico and the Dominican Republic.
The transaction is part of Despegar's strategy to focus on its core business and enhance operational efficiency. By divesting its DMC operations, Despegar aims to allocate resources more effectively and bolster its organic growth. BDExperience has been operating for over three decades in the travel industry, providing personalized assistance to tourists.
This strategic move will result in nearly 600 BDExperience employees transitioning to World2Meet. Despegar believes that this alliance will allow the company to concentrate on its primary services while maintaining a preferred partnership with World2Meet for destination services in the specified regions.
Despegar has been a prominent player in Latin America's tourism sector for over 20 years, offering a range of travel-related services and products. The company's portfolio includes various brands like Despegar, Decolar, Best Day, Viajes Falabella, Viajanet Stays, and Koin. Operating in 19 countries, Despegar facilitates travel experiences from planning to post-trip sharing, with a focus on improving customer experience through innovative payment and financing options.
The information about this strategic alliance is based on a press release statement from Despegar.com, Corp. Despegar's common shares are publicly traded on the New York Stock Exchange.
In other recent news, Despegar.com, a leading travel technology company, has reported a series of significant developments. The firm announced robust financial performance for the first quarter of 2024, with gross bookings increasing by 12% to reach $1.3 billion and revenue climbing by 9.2% to total $174 million. Adjusted EBITDA saw a substantial jump of 126% to $39 million, and adjusted net income rose sharply by 68% to $22.4 million.
In response to these strong results, several analysts have upgraded their assessments of the firm. Citi raised the price target for Despegar.com to $15.00, citing improved EBITDA margin. B.Riley also increased its price target to $19.00, while maintaining a Buy rating on the stock. Similarly, Cantor Fitzgerald raised its price target to $17.00, maintaining an Overweight rating.
In a strategic move, Despegar.com sold its Destination Management Company, BDExperience, to World2Meet, a division of Spain-based Iberostar Group. This is part of Despegar's initiative to focus on core growth and improve operational efficiency. The company also announced the unexpected passing of board member and audit committee chairman Mario Eduardo Vasquez, with Nilesh Lakhani and Michael James Doyle stepping in to fill the interim roles. These are the recent developments shaping the state of affairs at Despegar.com.
InvestingPro Insights
In light of Despegar.com's latest strategic decision to divest its Destination Management Company and focus on its core competencies, investors may be interested in the company's financial health and market performance. According to InvestingPro data, Despegar holds a market capitalization of approximately $853.28 million. The company's growth trajectory is reflected in its revenue, which shows a 23.4% increase over the last twelve months as of Q1 2024, indicating a robust expansion in its business operations.
Furthermore, Despegar's gross profit margins are impressive, standing at 68.22% for the same period, which underscores the company's ability to manage its cost of goods sold effectively and maintain profitability. Despite the volatility in stock price movements, with a 1-month total return of -23.33%, the company's long-term performance has been positive, with a 1-year total return of 31.97%.
InvestingPro Tips for Despegar indicate that the company holds more cash than debt on its balance sheet, providing a solid foundation for financial stability. Additionally, analysts have revised their earnings upwards for the upcoming period, reflecting optimism about the company's future profitability. For investors seeking more in-depth analysis, InvestingPro offers additional tips on Despegar, which can be found at InvestingPro Despegar.
It is also worth noting that the company is expected to be profitable this year, which aligns with its strategic focus on enhancing operational efficiency through the recent divestiture. With a total of 11 additional InvestingPro Tips available, investors can gain comprehensive insights into Despegar's financials and market prospects.
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