Mondee, a travel marketplace and technology platform, announced its plan to go public via special purpose acquisition company in late 2021.
The company has ambitious plans to digitize the cruise and tours segments and "transform the entire travel industry."
Mondee provides travel and technology services to the corporate and leisure sectors, membership groups and travel agents.
Its wider vision is to set itself up as the travel platform for what it believes is a growing gig economy of part-time, home-based agents who offer personalized services to the “social media generation.”
PhocusWire discusses that vision, travel SPACs and subscriptions with Mondee CEO Prasad Gundumogula and COO Jim Dullum. The conversation has been edited for brevity.
Why do you see SPAC as the right route to going public?
PG: Mondee has dual growth paths - one is organic, and we have grown organically in the past five years - and 50% is in inorganic acquisitions. So far, we have done 14 acquisitions with three to four times return.
We integrated our platform and our systems and made some real margins. Continuing that path, we are proceeding now coming out of COVID-19, and we see that there are very good companies that fit into our future vision and for the right price.
It’s a good time to have them as part of our business to continue with our inorganic plans. One way to do that is as a public company. Then, time to market through a SPAC is faster. On top of that we have talked to many SPACs and with this particular SPAC, the sponsors have the background in travel and hospitality, the chemistry was very good and they are adding value to all our plans. In terms of the business side of it and the partnership, we see a great journey ahead.
Many travel companies have gone public already via the SPAC route in the past six months and the results so far have been lackluster. What makes you think yours will be more successful?
PG: The difference here is that we are a company of growth and value historically. We are a marketplace, and we processed $3 billion in 2019, $177 million of revenue and $46 million in EBITDA. Now this year we are back to positive EBITDA, and we are growing substantially. So compared with other companies, we built our business on a solid foundation, and it has a growth aspect to it and a value. It’s a profitable business, which is not the case for all travel SPACs.
The second aspect is that we are the business of the future in the sense that we are focusing on the gig economy, which no one else is. I think the industry is at an inflection point, and it requires a platform for gig economy travel. We are focusing on that, and we see a great opportunity in the future. We think that taking an existing company with a solid foundation and the technology platform that is built for the market like this and the tailwinds we are getting with the gig economy, it opens a huge market for us.
Subscribe to our newsletter below
JD: When we announced our investors in the PIPE and raised $70 million that way, and they are significant investors, the Financial Times reported it as a bright spark for the SPAC market. When you look at that, and take what Prasad has said, we’re not even looking for the investment to help fund our organic growth, we’re looking for it for the inorganic part of the strategy - that second engine of growth.
We’re profitable, we’re growing, we were coming into the pandemic. Coming out of the pandemic, we just announced our revenue is three times what it was Q1 2021, so we’re already back on that growth track. We hope to continue to be that bright spark in the SPAC market by continuing to outperform. So we hope that’s what makes the difference in what are admittedly tough SPAC times.
Isn't it tough all around really with Sequoia and others coming out and telling startups to batten down the hatches and save costs?
JD: I agree and the nice thing is, we were looking at the Sequoia report this morning, this is not a startup - this is a real business, in real recovery producing real results. The things in the Sequoia report, we think, play to our strengths - velocity of growth - which we have - and profitability. We think those things play to our positioning today.
You have various brands including TripPro, TripPlanet and Rocketrip. What’s your ultimate vision for the company?
PG: We are operating in the closed-user-groups segment. We are not in the public-facing website segment. There is a $1 trillion-plus market size which is the assisted and affiliated travel, and we are focusing on the closed-user setup side of the market in the leisure sector, and we see the market is transitioning.
You see the macro trends there - the travelers who are setting the pace of travel, the decision-makers, are Gen Z as well as millennials, and they need a different technology platform to take care of their needs and today no one else is providing that. And, if you take the next trend around the channels providing that, travel agents are transitioning to a gig economy, part-time and home-based agents, and it’s an expanding sector and obviously they need a platform to operate and interact with customers.
TripPro is the platform for this gig economy travel segment where we see huge value. TripPlanet is for small to medium-sized businesses, and we have Rocketrip for enterprise businesses. It’s not only for corporate travel but also for leisure travel, which is another trend which is happening - people are traveling on business and taking two days off and spending time personally. There are a lot of changes in trends that we are following and creating these platforms out of our single technology deck and focusing on different personas of customers.
JD: Part of our vision is that we are the travel experience engine for the social media generation. We have that $3 billion market that we power with our state of the art technology platform, which during the pandemic we doubled down and reinvested in that technology platform to create all the tools for that rising generation of purchasers who are looking for those travel experiences - the truly collaborative and conversational commerce which is completely mobile enabled. We see ourselves as that underpinning engine for that social media generation. That’s the vision of where the traveler is going and, the way Mondee is built, we can support them through any channel that is an opaque closed user group channel, whether B2B or B2C.
What makes you think there is a desire for us all to become gig travel agents or that Gen Z wants to go back to using a travel agent?
PG: We’re not saying Gen Z is going to start using a travel agency but they need a platform to be able to connect with the right people when they need it.
For example, if you want take a trip to Hawaii, today the curation of the content is being done by the traveler - OTAs for air, Tripadvisor for reviews and hotel sites for hotels - and then they look around for what to do when they get there. Now with Gen Z and all these new segments of customers they need help to get the travel experience, the personalized experience, when they need it. They need a local expert so we created a platform to connect the traveler and the expert and to provide the travel experience and personalized service.
We are not providing it from a call center. It is a crowd-sourced, gig economy providing the local expertise. It’s like the Uber platform, it has drivers and the travelers app - we have the travelers' app as well as the affiliate or local expert app.
What’s your background Prasad?
PG: I’m a serial entrepreneur. I came from technology and did my masters in computer science and started a few companies in logistic and retail space, tech companies and sold them successfully them and started Mondee in 2011.
What are your areas for growth, what gaps are there for acquisitions, what are you trying to build out?
PG: We are creating this super-app environment for our users. Our acquisition strategy has always been product and content expansion or geographical expansion or technology expansion. For product and content we’re entering into cruise and tour product and dynamic packaging. We think creating these additional products will make a big difference with very easy interfaces for customers, so that's one area where we are looking for acquisitions.
The industry is at an inflection point, and it requires a platform for gig economy travel... we see a great opportunity in the future.
Prasad Gundumogula
Another challenge for the business is being a change agent, it’s not easy and the challenge is to have a solid, working technology platform with all the latest innovations. We have invested more than $200 million into our tech platform and bringing these businesses in and plugging them into our platform to provide the content to the different distribution channels is a good way to expand.
You mention the challenges of being a disruptor and having to invest in your technology stack, what are your other challenges?
PG: Obviously COVID-19, the market is not out of it yet. It is recovering really well, we have seen recovery in the U.S. domestic market of up to 90%, but internationally it’s only 40% to 50%.
We expect it to be opened up to 2019 levels in 2023. The good news here is the plans and execution that we did during COVID-19. We added new revenue streams to our business so that even with fewer transactions during the recovery, we are actually making more money. We added a fintech stream, a subscriptions stream and an ancillary-based revenue stream so all means a more efficient business and taking a better business into the market in this recovery scenario. We are making a bet in 2023 that it will be back to 2019 levels, and by increasing our revenue margins and with these new revenue streams, we are fairly confident that if it’s not back to 2019 level, we will make our numbers.
Do you think that subscriptions are the way forward in travel? If you project forward to a few years time, will we all be buying some element of travel via subscriptions?
PG: There’s a good chance, but I wouldn’t want to just depend or plan that subscriptions are going to be the way. They should be one of the ways for any business to succeed in this challenging market. There are a lot of new revenue streams, fintech for example, for us adds value to our customers, financial institutions and us. So if you ask me, subscriptions is going to pay its own contribution, but in my view we have to depend on multiple revenue streams in the years to come.
Project forward, travel will be back with a vengeance, Mondee will be a listed company, how will it look in two to three years time?
PG: We think, with our strategy of organic and inorganic growth, we look forward to being a prominent and significant player in the new generation of travel, this gig economy travel set-up. As that technology and the market evolves, we will put ourselves beyond the travel side of it and evolve into a super app that provides significant services to the market and different customer personas.