Despegar com A start up in Latin America The Fuqua School of Business. The Internet Revolution, Throughout the 80s and the 90s the world was transformed by the appearance of the PC The emergence. of the microprocessor allowed micro computers to become personal computers Workstations. invaded homes offices universities and every single space of our lives Under the tyranny of Moore s. Law the computer power relentlessly seemed to double every 18 months and soon enough Microsoft s. vision came true A computer on every desk and in every home However as the PCs in the workplace. and home multiplied so did the desire to interconnect them. In the early 1990s the federal government sponsored by Tennessee Senator Al Gore issued the High. Performance Computing Act that set federal policy for creating a national information infrastructure. and thus encouraged broader access to an obscure but powerful network that had been only used by. academia and research labs the Internet The legislation not only promoted the creation of the first high. speed network backbone laying the foundation for further growth but also opened the Internet to. commercial use and made it accessible to millions of individual users Exhibit 1. As a result in the late 90s the internet promise was embraced by entire societies and economies. Business analysts considered the Internet s influence as significant as that of major breakthroughs like the. automobile or electricity Studies showed that Internet business solutions would result in significant cost. savings production improvement and business opportunities The Internet would be the single biggest. contributor to accelerating productivity growth over the next 10 years Suddenly words like. vertical horizontal portals search engines B2C B2B started to fill the press pages A whole new. business arena was started to blast, In August of 1995 a young and unknown company that had developed a disruptive new type of software. known as Web browser which enabled users to surf the still nascent World Wide Web went public in. an unusual IPO managed by CSFB On August 9 1995 after a few hours of the market s opening. Netscape stock shot from 28 to 75 per share closing at 58 25 at the end of its first day of trading This. was an historic moment not only on Wall Street but also in the business community it was the day that. many consider the Internet Era started As one executive editor at Fortune magazine said Nobody. expected what happened with Netscape It was the first great Internet stock It was just Whoa What is. this all about, Netscape explosive IPO conveyed to the business technology sectors three strong messages i from a. technological perspective the appearance of the Web Browser positioned Internet in everyone s life. through an easy to use and easy to install software Netscape s invention allowed the web to jump from. the obscure academic arena to the mass consumer market ii From a business perspective Netscape. triggered the notion that internet related business plans were extremely seducing and many people were. willing to invest in such high growth ventures iii But most importantly from an individual. perspective after those first round investors got a taste for those high returns more and more investors. became desperate to get their money into Internet companies More and more VCs started looking for. those big e ideas and more and more entrepreneurs rushed to present their business plans to investors. Everything connected with the Internet was hot and promised attractive and quick returns Exhibit 2. The individual investors confident in the value of the dotcom propositions helped boost the prices of. Internet related stocks Soon the dotcom stocks became the prima donnas sending the main US market. indices especially the tech heavy NASDAQ into the stratosphere from a low of 1541 80 in 10 98 to a high. of near 5000 in late 1999 Exhibit 3 On the same lines the number of IPOs shot up to 292 deals in 1999. from an average of 38 deals during the previous 2 years Of these 70 were Internet related and raised. Despegar com A start up in Latin America The Fuqua School of Business. more than 33 billion dollars Exhibit 4 IPOs commanded a great deal of attention among the media and. investors Numerous financial websites focused solely on IPOs and standard financial websites included. detailed analysis of both upcoming and past IPOs On top venture capital had also moved dotcoms to. new heights In the first 3 quarters of 1999 venture capital funds received a record of 36 billion and. more than 90 of that money was directed toward internet related businesses Exhibit 5. The Travel and Tourism Market, According to the World Travel and Tourism Council tourism is the largest generator of wealth and. employment in the world The tourism industry constitutes 11 of global GDP supports 200 million jobs. worldwide 8 of total employment By 2010 the tourism economy contribution is estimated to grow to. 12 of global GDP and will support 250 million jobs 9 of total employment. The Latin American Market, Latin America is comprised of 23 countries with a total population of approximately 500 million people. Although divided by geographical and political boundaries Latin Americans share many cultural. affinities including common languages and religions as well as a similar heritage A majority of Latin. Americans speak Spanish or Portuguese with only a small portion of the population being proficient in. A substantial portion of the buying power in Latin America is concentrated within 20 of the population. This group of approximately 100 million people controls an estimated 60 of the overall buying power in. the region and enjoys a standard of living comparable to the populations of Germany and Great Britain. As a result the Latin American market represents a highly desirable demographic profile for advertisers. and businesses in general and the travel industry in particular. Although some of the Latin American countries already enjoyed considerable tourism the area was only. recently becoming aware of the value of tourism as a contributor to socio economic health In countries. such as Argentina Brazil Chile and Mexico greater efforts were being made to market and promote. tourism more aggressively both nationally and internationally These efforts were being complemented. by investments in the development of lodge and transport infrastructure. South America Argentina Brazil and Chile, This region saw a substantial increase in arrivals and departures The growth in departures didn t match. that of arrivals due mainly to persisting economic problems The devaluation of the real in 1999. dampened the growth in departures in Brazil In comparison Argentina and Chile saw a more steady. growth in departures due to strength of their currencies Looking forward Argentina was expected to. exhibit the highest growth in departures and tourism expenditures while Chile s continuing economic. problems were likely to dampen growth in this market. Although Brazil s and Argentina s travel retail markets had the highest growth rates Chile s travel retail. market also experienced good growth although from a much lower base Sales growth in the region was. a result of economic stability and increased confidence amongst the affluent population Business was. becoming much more competitive with firms competing on price leading to cost reductions bargain. holidays and discounted services The retail travel sector for the three countries was expected to grow by. 12 5 from 1999 2004 with Argentina growing by 36 7 and Brazil shrinking by 7 3 Brazil s travel. Despegar com A start up in Latin America The Fuqua School of Business. sector was expected to suffer due to the reduction in the commission rate from air tickets sales and by. increased competition for package holidays Overall intense price competition was expected to be a. feature of this market, Mexico ranked among the top 10 tourism destinations in the world by number of arrivals Factors. contributing to continued growth in tourism were the extensive advertising promotional campaigning. and investment by the ministry of tourism Mexico s membership in NAFTA also significantly impacted. its income from tourism receipts which increased from 6 2 billion in 1995 to 7 9 billion in 1998 That. year for the first time in Mexican history tourism earnings surpassed income from oil exports. Outgoing tourism expenditure was growing significantly as economic recovery took hold in the country. and people in the mid and higher income levels could afford to travel abroad Euromonitor forecasted. that tourism expenditures would increase from 4 6 billion in 1999 to 5 3 billion in 2004. After the peso crisis in 1995 the number of travel retail outlets decreased by almost 50 leaving only. 2578 operators on the market capable of providing the whole range of travel services Flight booking was. by far the main service provided by travel agencies followed by package tours and accommodation. Travel agency sales grew from 284 million in 1995 to 475 million in 1998. The On Line Travel Opportunity eTravel, The advent of the Internet offered traditional travel agents a new tool to market their products In fact a. study by Morgan Stanley Dean Witter showed that travel scored high on two critical factors for on line. commerce consumer comfort with buying on line and internet business opportunity The later factor. captured the relevance of the advantages of the internet for a product group Exhibit 6. But traditional travel agents were also starting to see increased competition from pure online travel. agents In fact travel was one of the largest and most mature online commerce categories with airplane. tickets being the top selling consumer category on the internet Exhibit 7 In 1998 US consumers booked. 2 2 billion of leisure and unmanaged business travel through the Internet and this number was expected. to grow to 6 5 billion by 1999, A Jupiter Consumer Survey indicated that 67 of online users researched travel online and 37. purchased travel online Roughly 79 of online travel purchases corresponded to leisure travel and 21. to unmanaged business travel Air travel dominated online bookings 80 3 of total value followed by. Lodging 12 8 and car rental 6 5 Exhibit 8, Jupiter Communications forecasted that US online travel would reach 28 billion by 2005 roughly 14 of. total leisure and unmanaged business travel It was also expected that by 2005 air travel would reduce its. dominance to about 60 of online travel product categories while lodging and car rental would increase. their participation to 23 and 15 respectively, Although the market for online travel in Europe and Latin America was only a small fraction of the US. market significant growth was expected between 1999 and 2005 By 2005 the European market was. forecasted to reach approximately 60 of the US market Travel in Latin American countries showed. similar potential although starting at a later point in time Exhibit 9. Despegar com A start up in Latin America The Fuqua School of Business. Internet and eTravel in Latin America, While Internet use in Latin America was in a relatively early stage of development it had grown rapidly. in recent years and was expected to significantly outpace worldwide growth of Internet usage over the. next several yearsi The number of Internet users in the region was expected to increase to 24 3 million in. 2003 from 7 7 million in 1999 representing a compounded annual growth rate of approximately 33 ii. However Internet penetration would remain very low when compared to Europe or North America due. to the region s pronounced inequity in income distribution Internet penetration was expected to be. highest in Argentina and Chile whereas Brazil and Mexico were expected to be close to the region s. average penetration Exhibit 10, IDC estimated that in Latin America the volume of goods and services purchased over the Internet. would increase to 8 billion in 2003 from 170 million in 1998 representing a compounded annual. growth rate in excess of 117 This high growth both in the number of Internet users and the volume of. online transactions Exhibit 11 created an unprecedented opportunity for businesses to achieve. substantial profits, However on line ventures had to understand that although overall online consumer confidence would. rise over time trust would be awarded to individual stores and brands The heightened anxiety about on. line payments in Latin America the lack of a mail order shopping history and the prevailing buyer. beware mentality in off line retail would result in a loyalty bonus for the store that won over a particular. consumer to online shopping Exhibit 12 A high rate of credit card frauds in Latin America further. compounded this effect making consumers even more cautious. Of all the products to be transacted over the Web in Latin America travel products are among the best. shaped to capitalize on the growth of this exploding market The internet would allow overcoming the. geographical dispersion of consumers It was also ideally suited for an information intensive buying. process characterized by high transaction costs for the travel agencies Additionally Latin America. offered an opportunity window since the traditional travel retail sector was characterized by a lack of. dominant players substandard customer service and a lack of transparency. In 1998 airline tickets sales alone registered revenues of 23 billion Furthermore the region expected an. annual growth of air traffic of 5 p a iii The increasing complexity and time sensitivity of pricing. structures for travel services had generally outpaced traditional means of delivering accurate and reliable. information to customers at a time when many customers were demanding greater convenience and. flexibility in how where and when they shopped for travel services As a result travel products and. services were the most solicited by Internet users the most popular type of information sought online by. the typical Latin Americans were Travel related issues 90 percent while other important categories. followed behindiv, Latin American patterns of consumption over the net were very similar to the patterns of the U S v where. online travel sales increased from 7 percent of all goods and services sold on line in 1997 to 11 percent in. 1998 Travel was expected to be the single largest category of products sold over the Internet in the next. century accounting for 35 percent of all goods and services sold online in 2002vi Ticket sales were 80 of. the total online travel sales Exhibit 13 The same trend should evolve over the next years in Latin. America where it was expected that the market for online travel bookings would grow to 1 3 billion in. 2004 from 130 millions in 1999 experiencing an annual growth rate of 82 p a. Despegar com A start up in Latin America The Fuqua School of Business. Despegar com The Vision Business Model, Roberto Souviron Martin Ratalino and Ernesto Cadeiras met at The Fuqua School of Business while they. were pursuing their MBA degree Not only they were close because of their Argentinean nationalities but. also because of their common interest in the internet revolution that was taking place In many occasions. they spent many hours discussing the idea of creating an internet related venture of their own in Latin. America However they were not sure about what type of business they should focus on and which one. would be more viable for the region On the other hand the fact of being fully concentrated on their. studies prevented them from further exploring the idea Although the three of them had already accepted. full time offers they decided to think more about this internet business in their spare time. A month later in June 1999 Roberto Souviron called his two classmates and shared with them his new. vision founding an online travel site for Latin America Inspired by Travelocity and Expedia Roberto. thought that a similar business model was missing in the region and that it could be easily replicated He. was convinced that the internet value proposition was extremely important in an industry. characterized by huge information gaps and a fragmented network of suppliers consumers In fact. some of his initial research show ed that travel related issues were the most popular type of information. sought online by the typical Latin Americans Moreover he also had studies that forecasted that Latin. America would have the highest growth rate of Internet penetration in the world. The team knew that a lot of the internet based business models would not survive in the long run but. they realized that Roberto s idea of the travel industry had a great chance to succeed Convinced that it. was something promising they all agreed to start giving shape to this idea They initiated a development. process through email and weekend meetings In order to speed up things and add some other skills. Roberto brought to the team two of his undergraduate classmates Federico Fuchs and Christian Vilate. During three months the team worked hard on the idea Roberto and Federico focused on refining the. business model and building the financial estimates Martin leveraging on his network mainly Fuqua. and MIT grads concentrated in developing the alliances with the travel agencies across the region. Ernesto building on his previous internet experience was in charge of studying the sale of advertising. for the site And finally Christian was responsible of detecting and contacting potential strategic partners. at the regional level Additionally the team decided to start building the technological backbone of the. site and fine tuning the legal aspect of a regional deployment. By December 1999 the team was able to put together a business plan They also were able to set up the. stage for most of the business technology partnerships and local representatives across the region The. fundamental missing part was the capital to kick things off Roberto and Federico called some financial. contacts and successfully lined up some interested US institutional investors that agreed to have a. meeting before the end of the year In order to consolidate every part of the plan the team decided to take. some days off from their works and get together in Miami to refine the investor presentation. The Business Model, During their first meeting they concentrated on defining Despegar s core strategy In order to become the. leading online travel agency in Latin America the company had to become the unique marketplace for. travel services connecting thousands of consumers and hundreds of airlines hotels car rental agencies. and travel packages across several countries Five strategies were identified to build Despegar Regional. expansion local presence brand awareness integrated service offering and new segment introduction. Despegar com A start up in Latin America The Fuqua School of Business. i Regional Expansion The regional scope was critical to obtain sufficient scale and thus operational. synergies A regional brand would create marketing synergies and facilitate the consolidation of regional. alliances From a technology perspective development costs would be spread across different markets. ii Local Presence Latin America is a very diverse set of countries Local presence would allow a better. understanding of specific needs in each country such as local regulations payment methods and ticket. issuance Additionally local presence would enhance control of each operation and it would create. awareness opportunities to obtain better tariffs from local suppliers To support this strategy each. country would have a similar structure with a country manager functional leaders and supporting. iii Brand Awareness A strong brand positioning and fast awareness building was critical to generate the. necessary traffic to the web site The promotion strategy would be a mix of aggressive presence in mass. media TV radio and billboards strong public relations press coverage and special events and. alliances travel suppliers internet sites and co brandings. iv Integrated Service Offering A One stop Shop site allow ed customers to find all the information and. services they needed to plan and purchase their trip in a single site This increased the ratio of site visits. to actual sales and constituted an important competitive advantage over niche travel sites i e airline. sites allowing Despegar com to gain preference and retain their customer base In order to support the. strategy the site would have high quality content virtual discussion groups customer reviews 24 hours. customer service and a user friendly commercial fare searching system. v New Segments To leverage the one shop concept and allow for synergies the business traveling. segment would also be developed The corporate segment implied customizing the model to the specific. needs of companies and businesses Once the consumer segment was consolidated the corporate. segment would be developed, The team knew that building Despegar would not be easy The success depended on selecting the right. people to execute locally developing adequate incentives to implement on time with the desired quality. and having the flexibility to quickly adapt to the changing environment of the Latin American countries. However they first needed to raise money to start rolling out the plan and have a first mover advantage. Therefore it was critical to create a sound and robust business plan that revealed all the strengths of this. opportunity They knew their plan should touch two important topics 1 a risk analysis of Latin. America 2 Competition,The Latin American Region, For the region as a whole 1999 would be the worst year in terms of real GDP growth since 1983 0 5. But the outlook for Latin America in 2000 was cautiously optimistic as conditions throughout the region. were expected to improve The great diversity among Latin American economies made it difficult to. provide a unified forecast for the region But in analyzing the major countries individual economies and. the interaction amongst them it was possible to identify some correlated factors that signaled an. improved outlook for the region in 2000 and supported a forecast of 4 GDP growth. Despegar com A start up in Latin America The Fuqua School of Business. Building on policy credibility in 1999 was perhaps the most noteworthy development in the region. Policymakers throughout Latin America acted quickly to stem the threat of contagion from the recent. Asian crisis by implementing sound adjustments to fiscal and monetary policies In most countries. budget deficits were trimmed and interest rates were increased to prevent capital outflows While interest. rates were being relaxed again as the threat of a financial crisis has waned the effort to bring fiscal. accounts more into balance had remained a cornerstone of many Latin American economic policies The. inflation outlook for Latin America was positive with only a few countries expected to register double. digit inflation rates for 2000, For 2000 most forecasters predicted that the U S economy would slow down somewhat from the 3 5 to 4. percent growth rate in 1999 One risk to the positive Latin outlook lied in the possibility that the U S. economy could slow down more than expected or that the slowdown could begin before the predicted. Latin American recoveries were fully under way Perhaps the most significant risk to the forecast. revolved around the ability of Latin American policymakers to maintain or in some cases establish. credible economic policies The last few years had been quite difficult for the region Economic. stabilization and restructuring had been supposed to bring widespread benefits to Latin American. citizens Economic and financial difficulties during these years had hampered this goal but policymakers. had for the most part stuck to the path of economic reform Still in spite of these uncertainties the. outlook for most Latin American countries was that 2000 would be a much better year than 1999 had. been An important factor for all Latin American countries in achieving a positive performance in 2000. would be continued progress toward developing open market economies A detailed description of the. major developments in mayor Latin American countries is provided in Exhibits 14 and 15. Competitive Assessment, The Internet has not only increased the channel choice but the number of players as well viiRoughly the. competitors for travel bookings could be classified in three main categories Suppliers Retail Travel. Agencies and On line Travel Agents However as the market became more mature partnerships and. channel combination of these three categories emerged. Traditionally suppliers had relied on agencies to sell their travel products at an agreed upon commission. rate With the ability to access customers in a more cost efficient way over the Internet since 1996. suppliers in the U S were making aggressive efforts to encourage direct online bookings Jupiter. Research expected that suppliers would garner 60 percent of total online bookings by 2003 if suppliers. became adept at catering to the needs of their customers and they invest appropriately over the. next several years Exhibit 16, In Latin America the region s airlines pressed by the need to cut costs and drive more traffic through. their own booking channels had moved online very quickly increasing the disintermediation. phenomenon Exhibit 17 For instance Mexican airline Aeromexico offered online services since the last. quarter of 1998,Retail Travel Agencies, Retail travel agencies were the main distribution channel of the industry They offered consumers travel. services at published retail rates obtained through global distribution services such as Amadeus Galileo. Despegar com A start up in Latin America The Fuqua School of Business. and SABRE This channel received commissions and incentives on gross bookings However in recent. years retail travel agencies experienced a shrinking of their commissions Furthermore increased. competition from travel service suppliers emerged as these suppliers started to sell directly to. On the other hand traditional retail travel agents possessed in depth knowledge of the Latin American. travel industry They also had long standing consumer and supplier side relationships On the consumer. side these travel agencies enjoyed high brand awareness thousands of customer relationships and large. customer databases On the supplier side the biggest agencies had the volume to negotiate fares and. possessed preferred relationships with suppliers Moreover traditional brick and mortar agencies with. reputed brands could initiate their own e commerce strategy In fact some established brick and mortar. retailers like Samborn s of Mexico and Lojas Americanas of Brazil had used their existing physical. presence and strong brand to build consumer confidence and attract reluctant consumers to make. purchases online, A survey conducted in the U S in December 1999 by Jupiter found that 48 percent of online consumers. preferred to buy at a reliable online store with a reputation even at a higher cost Additionally 47 percent. of consumers surveyed indicated that knowing that an online store was affiliated with an off line store. was important when purchasing online Suppliers and on line travel agencies should consider the entry. of traditional agencies as a serious threat to their current and future market share On the other hand no. established player had built a significant internet presence in 1999 Moreover in the U S traditional travel. retail channels lost 1 7 of their channel share only two years after Expedia com had started operations in. 1996 This number was project ed to grow to 9 6 by 2003 Exhibit 18. Online Agencies, The online travel services market was new rapidly evolving and intensely competitive in many regions. of the world In Latin America only a few travel providers had started to offer online travel services. These were mainly ordinary travel agents providing increased service to their current customers The. only serious competitor in 1999 was Viajo com Their site provided extensive travel content as well as. ticket sales currency conversion capability language translation and complete tour ism packages. Viajo com operated off line and online stores to achieve wider distribution The company aimed at. consolidating its online and off line presence through aggressive investment in Web technology and. marketing tools, Regional portals such as Star Media and Terra had struck alliances with agencies and reservation systems. to include travel as part of their core offering and should be considered potential competitors in a near. future Some U S based online travel agencies particularly MSN Expedia and Travelocity launched. sites catering to growing Internet user populations in Canada and the UK in 1998 with other. markets to follow soon,The Challenges Ahead, The Despegar Team was working hard to have everything ready for the road show They believed that. their plan was sound and that their estimations were fairly conservative Most importantly they were. convinced that Despegar was a perfect strategic fit for the regional industry Latin America was growing. very fast as a travel market internet adoption rates were extremely encouraging and the value. propositions of eTravel Portals were widely accepted by users and businesses. Despegar com A start up in Latin America The Fuqua School of Business. However many questions and doubts floated around They knew that the company needed to raise 8 M. to accomplish its simultaneous regional deployment mission However this was a lot of money for a. business plan designed by 5 recently graduated MBAs in a market overwhelmed by good ideas The team. was aware that if they were to receive less than this amount it wouldn t be able to conquer its main. competitive advantage of covering the whole region Furthermore Roberto heard some rumors about. other people developing similar endeavors for Latin America In fact Viajo com was consolidating its. presence in the strategic Mexican market which raised some timing concerns. The Miami office had become their home in the last week and many of them look really tired However. the team was doubling its efforts to address all these issues They were convinced that if they could pull. up together a smart business and financial model Exhibit 19 20 they would get the capital they were. looking for Grabbing a cold slice of pizza Roberto returned his eyes to his excel spreadsheet full of. confidence He wasn t afraid his numbers showed an interesting business proposition for investment. Despegar com A start up in Latin America The Fuqua School of Business. Exhibit 1 Internet users Forecast,Exhibit 2 Stock Market Returns. Despegar com A start up in Latin America The Fuqua School of Business. Exhibit 3 Major US Indexes,NASDAQ NYSE,Exhibit 4 IPOs. Despegar com A start up in Latin America The Fuqua School of Business. Exhibit 5 Venture Capital,Exhibit 6 Attractiveness matrix. Insurance Financial Services,Computer Software Hardware. CONSUMER COMFORT WITH BUYING ONLINE,Music Videos,Flowers Gifts. Automobiles,Office Products,Specialized Sporting Goods. Consumer Electronics Appliances,Groceries Food,General Sporting Goods. Tools Home Repair,Home Furnishings,I NTERNET BUSINESS O PORTUNITY. Source Morgan Stanley Dean Witter, Despegar com A start up in Latin America The Fuqua School of Business. Exhibit 7 On line spending by category in 1998 USA. 0 200 400 600 800 1000 1200 1400 1600,Exhibit 8 Booking Share. Despegar com A start up in Latin America The Fuqua School of Business. Exhibit 9 International on line travel markets, International On line Travel Projections 1999 2005. in billions,15 0 12 8 Europe,9 6 Latin America,0 8 0 6 1 0 1 4. 0 0 0 1 0 2 0 3,1999 2000 2001 2002 2003 2004 2005. Exhibit 10 Expected internet penetration in Latin America. Expected Internet Penetration in Latin America,10 Argentina.
a. Wanita yang memakai pakaian tetapi auratnya masih terlihat. Sebagaimana dijelaskan sebelumnya, ia berpakaian tetapi telanjang, seperti memakai bikini, celana pendek dan busana mini lainnya. b. Wanita yang mengenakan pakaian tipis, sehingga warna kulitnya masih terlihat dari luar.
3. Read and write simple Italian prose at the sentence level. 4. Obtain a beginning understanding of Italian culture. COURSE CONTENT AND OBJECTIVES Welcome to SENTIERI 2ND EDITION, an exciting new, Italian program designed to help you learn Italian and to explore the culture of the Italy in the most user-friendly way possible.