What do the next billion travelers want
Dear Stakeholders,
Over the last few years, the travel industry has experienced an
unprecedented phenomenon of introspection - a rare moment for a growing industry to
benchmark its growth to its past. Yet, in 2023, the industry displayed exemplary
resilience to surpass the pre-pandemic 2019 levels, despite high costs of living and
persistent global uncertainty.
The travel industry is now on the cusp of the next frontier - acquiring
the next billion travelers. And unlike before, this addition will not take half a century;
it is expected to unfold in less than 10 years.
The new wave of travelers
Amidst the fast-paced growth, the fundamental question that arises is:
How would this new wave of billion travelers differ from the previous one?
The answer lies in demographics. Unlike the homogenous group that
previously dominated the market, today's travelers are incredibly diverse. The travel
industry's earlier growth was largely concentrated in Europe and the Americas -
driven by the travelers, travel companies and technologies emerging from these countries.
This made it easier to understand travel-related habits, patterns and preferences and
therefore build technology that suited travelers and travel professionals worldwide.
However, the landscape is fast shifting. Non-traditional markets like
Latin America, the Middle East, Africa, Asia Pacific, and India are emerging as the new
growth drivers. Factors like a growing preference for online travel, the adoption of new
technologies, data privacy laws and evolving consumer behavior are further driving
complexity.
A few tech companies have already broken that mold, helping emerging
markets get independent operators onboarded much faster than organized players, enabling
travelers globally to connect to new destinations seamlessly.
AI shaping the future of travel industry
The industry is also witnessing another interesting shift, with the
long gap between aspiration and accessibility narrowing quickly. This is driven by higher
income levels, and more because of easier access to the internet, alternate economic
models and not to forget AI - which has added USD 9 trillion in valuation to the world in
the last one year.
AI is revolutionizing the way people consume information and will
impact decision-making. It will empower them to localize as well as personalize results
based on their preferences much better than existing search engines and OTAs. The travel
and hospitality ecosystem is increasingly pivoting to appeal to these new consumers
through these new channels, and are evaluating the most profitable way to engage and
acquire them.
RateGain for a new era
In this new era of travel, the need for accurate data, travel intent
and scalable technology infrastructure have become critical for any company trying to
reach these new travelers. The industry must reassess their digital strategy and budgets,
and consider factors like moving infrastructure to the cloud and leveraging AI. Through
this, they can drive efficiencies and gain a competitive edge by better predicting demand
and customer preferences to effectively engage with travelers and provide them with
personalized services in real time.
RateGain being a pioneer in AI and cloud technologies in the
hospitality and travel industry, supported by a large AI-powered data lake is well poised
to take advantage of this change.
These developments are creating new opportunities for us to consolidate
our position through product innovation and acquisitions and secure a larger share of a
thriving market.
Our ability to support clients with accurate travel intent, find new
audiences, and profitably convert them has more than doubled to ' 2,847.8 million in FY
2023-24. This sharp growth was driven by the efforts to cross-sell and up-sell our
extensive offerings and investments in key markets, which are gaining traction.
We are growing well in emerging markets, establishing ourselves as a
single partner to solve all their commercial needs, paving the way for future growth
opportunities. This is an outcome of our focused M&A strategy which has proven to be a
valuable addition, complementing our strengths and emerging as a key growth driver with
interesting new opportunities.
Adara, our last acquisition, has been instrumental in driving
significant synergies, including cost savings through streamlined shared services,
enhanced capabilities through augmented tech teams, and a robust go-to-market proposition,
making us more relevant to our customers.
Performance powered by excellence
AI's role in enhancing data utilization and streamlining marketing
outreach to optimize costs is reflected in our robust growth.
Our revenues expanded by 69.3% to ' 9,570.3 million in FY 2023-24. The
Martech business grew by a robust 106.1% driven by our strong and unique value proposition
that propelled growth in the digital marketing business. DaaS business grew by 94.4% led
by traction in key enterprise accounts across segments and the addition of new logos
notably within our airlines segment.
The Distribution segment grew by a modest 9.0%, and with the completion
of integration of a large hotel chain and new partnerships in place, it is poised for
healthy growth going forward.
EBITDA increased by 124.1% to ' 1,897.2 million and margins were up 480
basis points to 19.8% supported by the high-margin DaaS business, strong performance in
Adara, and operating leverage playing out. Operational performance was equally impressive,
reflecting the effectiveness of our SaaS-based business model and exceptional execution
excellence. We continue to have industry-leading operating metrics in place that are key
to our robust performance. Our LTV to
CAC stood at 14.1, which showcases our ability to continually attract
and penetrate our leading customers efficiently. Our Revenue per employee grew 22.3% to '
13.2 million, a result of improved productivity and highlighting our ability to scale
sustainably. We closed the year with an annual recurring revenue of ' 10,232.7 million and
a pipeline of ' 4,862.2 million with healthy traction across our three segments.
Staying ahead of the opportunities
Globally, the travels surpassed the pre-pandemic levels in April 2023,
sustaining those levels since. Aligned with this, the industry is witnessing a period of
normalized growth. The demand is expected to remain steady with easing macro conditions
and a growing inclination towards travel. A Skift survey indicates that 44% of Americans
plan to increase their total travel spending over the next twelve months. As for the
Millennials and Gen Zs in the US and Europe, travel is a top spending category.
Alongside this, technologies like AI and Generative AI which are
bringing revolutionary developments in the travel industry, will find increasing adoption.
They will be crucial in improving customer experience, delivering personalized
experiences, and optimizing revenue and returns.
At RateGain, we have expertise in leveraging these technologies to
provide accurate intelligence and drive ROI for our customers. We are further making
ongoing investments to develop the right solutions that reinforce our offerings and
customer value proposition. In FY 2023-24, we successfully adopted various AI use cases
across all business segments. These include those for more efficient data analysis to
handle larger volumes, leveraging extensive social media data to improve brand engagement
outcomes and generating more targeted travel intent audiences for effective performance
marketing campaigns. Some of the key efforts undertaken by our business segments include:
DaaS: Empowering industry with AI insights
The travel industry is today increasingly shifting towards delivering
better value propositions, personalizing solutions and maximizing revenue per guest. This
involves analyzing huge volumes of data and considering multiple variables to build AI
models for enhanced decision support systems.
RateGain being one of the largest processors of travel data across
airlines, car rentals, travel agencies, hotels and cruise liners is making this possible,
empowering commercial teams to make better decisions. The addition of Adara has further
made us the world's most comprehensive travel-intent platform leveraging AI to
provide accurate and actionable data in real-time to enable capturing the right travelers,
reducing acquisition costs and maximizing customer lifetime value.
These helped us win great new logos in the air segment during FY
2023-24, and deepen relationships with large enterprise brands in OTA and car segments. We
also launched Navigator product, a pricing intelligence tool for hotels that provides
advanced analytical capabilities. Designed to empower their commercial teams to maximize
RevPAR, it will help us penetrate this space.
With strong travel demand and our ability to deliver large volumes of
data and product innovation with a focus on building AI models, we expect incremental
demand from our existing enterprise customers. This will continue to drive growth in the
near term.
Distribution: supporting guest connection
Our distribution platform, with a robust digital infrastructure,
continues to redefine connectivity for industry and travelers. With a growing tech-savvy
population, especially Millennials and GenZ, in emerging economies turning to online
channels, it has become an important platform for facilitating guest acquisitions, and we
continue to fortify it.
We expanded our footprint in FY 2023-24 through partnerships with
HotelKey and Oracle Marketplace. We anticipate several opportunities with large hotel
chains increasingly embracing digital transformation to modernize their distribution and
optimize omnichannel presence. Our RevMax platform is also experiencing increased traction
in the Middle East and APAC regions, and we remain focused on further scaling it up while
also adding better features to create best-in-class products.
Martech: comprehensive digital marketing suite to drive higher ROI
Our Martech business is witnessing rising significance driven by
increased focus from owners and the C-suite in the travel and hospitality industry to
manage performance marketing campaigns to achieve higher ROI. The recent changes in the
Digital Markets Act and the change in Google's campaign management settings have
further opened opportunities for solutions around performance marketing and enhancing
traffic for our hotel partners.
This necessitates having reliable travel intent data alongside
comprehensive digital marketing offerings, which has been strengthened with the addition
of Adara which complements our Martech segment. Through these, the value we drive for
large travel brands is strengthening our reputation as a partner of choice and enhancing
our market share within the DMO segment and across large enterprise brands, airlines, car
rentals, entertainment, parks and hotels.
Investing in people competencies
People are key to our success in this era of technology advancement and
AI penetration, necessitating us to continually enhance our competencies. Significant
milestones were achieved on this front during FY 2023-24. We have brought down attrition
rates to 11.2%, reflecting our focus on retaining and nurturing top talent. We continue to
upskill our people, promote internally and create a diverse, inclusive and equitable
culture that propels us forward. Our positive work culture won us the Great Place to Work
recognition for the fifth consecutive year.
Great success was achieved in strengthening the leadership team. Across
the organization, we have had some notable additions of seasoned industry veterans. Their
exceptional knowledge and visionary leadership align with our mission to revolutionize the
industry, and I am sure RateGain would greatly benefit from their capabilities to reach
newer heights.
Shared and sustainable growth
Sustainability is core to our business, and in FY 2023-24 we stepped up
efforts to enhance our impact across environmental, social and governance parameters. We
completed our first materiality assessment exercise by involving extensive engagements
with key stakeholders to understand their perspectives, identify ESG priorities and take
appropriate actions.
Recognizing that we operate in an emissions-intensive industry, we are
focused on undertaking efforts spanning our entire lifecycle to reduce the direct
operational impact and also support our client's sustainability ambitions.
We made significant strides in community development through the
Monk.E.Wise program by equipping students at the Government School of Gurugram with
teamwork, creativity, and character-building skills. Partnering with the Little India
Foundation, we supported cultural preservation and their year-round free meals initiative
for underprivileged children. As a sustainability partner of Vasant Valley School, we
promoted environmental awareness and a 'No Plastic' campus. Our collaboration with the
Aashray Society aimed to reduce dropout rates and enhance educational completion.
Additionally, we supported Green Yatra in planting over 2,900 saplings across 1,000 square
meters using the Miyawaki Afforestation method contributing to the reduction of our carbon
footprint.
On the governance front, we strengthened the data management practices
by initiating SOC2 certification and operationalizing a risk management framework,
enhancing our business resilience.
Advancing to a better tomorrow
On behalf of the entire Board, I thank all our stakeholders for being
our constant strength and inspiration. I also want to thank the incredible team at
RateGain for their dedication and passion that not only contributed to a great year but
also positioned us for a better tomorrow.
The opportunity in the industry is large, and with our enhanced
competencies and ability to execute, we are confident of growing our market share and
achieving our aspiration of becoming the leading travel tech company. We seek the
continued support of all stakeholders in this journey of growth and value creation.
Warm regards,
Bhanu Chopra
Chairman and Managing Director