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Published on: Nov. 15, 2021, 11:45 a.m.
How RateGain maximises revenues for hospitality industry
  • Chopra: reaching more customers

By Lancelot Joseph. Executive Editor, Business India

Last month, RateGain Travel Technologies Limited, a provider of SaaS solutions for travel and hospitality, acquired myhotelshop, a company incorporated in Germany, which provides a platform to help hotels improve direct guest acquisition. RateGain offers travel and hospitality solutions that unlock new revenues every day.

“Together, myhotelshop and RateGain will now offer hotels the ability to reach more customers at higher returns. This is in line with RateGain’s mission to become the leading revenue maximisation platform for the hospitality and travel industry,” explains the 45-year-old Bhanu Chopra, CMD of RateGain, an entrepreneur with experience of over 15 years. He holds a master’s degree in finance and computer science from Indiana University, after which he began his career with Deloitte in 1998.

 According to a Phocuswright report, pre-Covid-19, in 2019, the global travel and tourism industry was 10.4 per cent of the global GDP but faced a number of challenges, the most critical of them being low digitisation and disparate systems that were not interoperable. The report states that, since Covid-19 accelerated digitisation of customer interactions, nine out of ten travellers now engage with travel online. The research also shows that most travellers do not shop and book from the same source, with a majority of online shoppers searching online travel agents (OTAs) and booking on hotel websites. In the midst of multiple channels including intermediaries, metasearch and OTAs, hotels are struggling to create the optimum distribution strategy that helps them drive more bookings and lower acquisition costs.

“This increases the need for hotels to move away from disparate systems and have a single provider that can help them get better control on guest acquisition and reduce dependency on one channel. myhotelshop offers reporting, bid management and campaign intelligence platform for metasearch publishers and other travel products that enables hotel suppliers, OTAs, and agency clients to reach more customers at higher returns,” says Chopra adding: “The merger will help in addressing a key challenge that the industry is facing in the post-Covid world that is witnessing increased digitisation. The need to become digital first is increasingly becoming chaotic and we aim to make it simpler for hotels to manage their acquisition strategy and enable them to unlock new revenue.”

Laser-sharp focus 

“In an age where companies focus aggressively on topline, and higher valuations”, reckons Naveen Wadhera, MD at TA Associates, “RateGain has been one of the few companies that has displayed laser-sharp focus on maintaining profitability and improving margins. Their acquisition strategy is prudent and is helping them augment the market and build a strong foundation with the promise of providing end-to-end capabilities to the travel and hospitality industry”.

RateGain has historically derived a significant portion of its revenues from operations from a limited number of markets, namely, North America and Europe. Revenue generated from sale of services in North America and Europe was Rs214.79 crore, Rs333 crore and Rs199 crore and represented 82.12 per cent, 83.60 per cent and 79.74 per cent, respectively, of the total revenue from operations in fiscals 2019, 2020 and 2021, respectively.

However, RateGain’s competitive advantage is that its key driver lies in the vast and continued volumes of data flowing through the taps. “Native end to end integrations with all major CRSs and PMSs, as well as long-tail channels, allow RateGain to access data at a level that cannot easily be replicated. Our DHISCO distribution platform is one of the largest processors of electronic hotel transactions and it is one of the few travel technology companies to provide end to end support from data & decision through distribution and marketing technology.

Chopra adds that another key factor is the gathering of data across all supplier sectors and geographies to form the basis of artificial intelligence (AI) models that become more powerful as the data models grow. The emergence of more recent AI models like those for deep learning have the advantage of being able to consume large datasets, determine the relationships between the data, and then provide increasingly powerful predictions. As the models consume more data, they improve and can spot relationships humans cannot uncover.

“Once a company begins saving data and building these models, it becomes increasingly difficult for other companies to catch up. Large datasets with deep learning AI models constitute one of the very few remaining moats companies can build. It’s no longer enough to just have multiple products to serve a supplier type or function; successful companies must build products that leverage each other’s capabilities and data to create unique value,” adds Chopra. “RateGain, for example, uses data from its rate shopping and switch products to inform its AI products. Each product has its value as a standalone service, but it also contributes to the larger capabilities of the product suite.” While some of RateGain’s competitors have multiple products, RateGain has a unique suite of interconnected services to offer its clients and is among the leading distribution technology companies globally.

Lastly, the total addressable market for RateGain is large and rapidly growing. According to the Phocuswright report, third party travel and hospitality technology is estimated to be a $5.91 billion market in 2021, growing to an estimated $11.47 billion in 2025 at a CAGR of 18 per cent. Enterprise applications focused on guest acquisition, distribution, revenue maximisation and wallet share expansion in the hospitality and travel industry have a serviceable, addressable market size of $4.34 billion in 2021, growing to an estimated $8.45 billion in 2025.

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