Despegar.com, a leading online travel agency in Latin America, was recently upgraded by several analysts, including UBS and JPMorgan. The company’s shares received a “buy” rating, and the price target was increased. The rationale behind the upgrade was based on several factors, including improved margins, increasing market share, and a recovering travel market.
Despegar.com operates in 21 countries throughout Latin America and offers a wide range of travel products, including airline tickets, hotel reservations, car rentals, and vacation packages. The company’s revenue comes from commissions earned on these transactions, which are facilitated through its website and mobile app.
In recent years, Despegar.com has faced stiff competition from other online travel agencies as well as traditional travel agents. However, the company has been able to increase its market share through its strong brand recognition and marketing efforts.
Furthermore, Despegar.com has been successful in improving its margins by optimizing its operations, reducing costs, and increasing efficiency. The company’s management has also been focused on expanding its product offerings and improving its technology to enhance the customer experience.
Another factor that contributed to the upgrade was the recovering travel market. The COVID-19 pandemic had a significant impact on the travel industry, causing a dramatic decline in demand. However, as vaccination rates continue to rise and travel restrictions are lifted, there is a growing interest in travel.
According to a report by the World Tourism Organization, international tourist arrivals declined by 73% in 2020, but are expected to recover by 2023. This recovery is expected to be driven by pent-up demand, especially for leisure travel, and the availability of vaccines.
Despegar.com is well-positioned to benefit from this recovery, as it has a strong presence in key markets and has established partnerships with airlines and hotels. The company has also been proactive in adapting its business model to the changing landscape, such as offering flexible bookings and cancellation policies.
Overall, the upgrade of Despegar.com’s shares to “buy” by several analysts reflects the positive outlook for the travel industry and the company’s ability to capitalize on the recovering market. While there is still uncertainty and risks associated with the pandemic, Despegar.com’s strong brand, expanding product offerings, and improving margins make it an attractive investment opportunity in the online travel sector.