Yatra acquires online hotels aggregator Travelguru from Travelocity

In a surprising move, Gurgaon-based online travel agency (OTA) Yatra Online Pvt Ltd has acquired online hotel distribution network Travelguru from Travelocity. The US-based travel company had bought the Indian hotel aggregator in 2009 (See our story; subscription required). It's not known why Travelocity has offloaded Travelguru three years after the acquisition.

Dhruv Shringi, CEO of Yatra, confirmed the deal to Techcircle, but declined to comment on the deal value. He said it is an all cash deal and would be effective July 1. However, separate media reports said the deal could be in the region of Rs 100 crore.

Travelguru is known for its hotel and holiday bookings services even as it also offers flight search through a partnership with other OTAs such as Goibibo.com and Via.com. This arrangement with Via and Goibibo will be discontinued with the Yatra acquisition, said Shringi.

Yatra offers both hotel and airticket booking services and a deal with Travelguru would boost its hotel and holiday booking practice to take on its key rivals Nasdaq-listed MakeMyTrip and Cleartrip.

It was in 2009, that US-based online travel firm Travelocity Global acquired Travelguru. The deal was pegged at around $10-12 million. Earlier, venture capital firms Sequoia Capital India and Battery Ventures committed $25 million in two rounds of funding to Travelguru.

Before the Travelocity deal, Travelguru was in talks with another global OTA, Expedia, for a deal which didn't materialise. The company initially focused on air ticketing, but soon pivoted to focus on hotels aggregation. In December 2007, it acquired a B2B hotels aggregator Desiya.com in a stock deal rumoured to be valued at $25 millon.

Privately held Travelocity, which launched its own India edition few years ago, retained Travelguru as a separate site, though it brought in some common branding element in the logo. With the sale of Travelguru, it may now focus on pushing its mother brand rather than playing with a dual-branding strategy, though there are rumours about a strategic rethink over its business in India.

Travelocity spokesperson could not be immediately reached out for comments.

"Travelguru was up for sale. And we had individual discussion, with Travelocity's management for the same," said Shringi.

He said he cannot comment on behalf of Travelocity on the sale but added: "I feel Travelocity has its global priority. Anyway, India was  very small part of its business. Right now they are shifting their focus from India to concentrate more on North America, Asia and European market."

Interestingly, Travelocity's decision to sell Travelguru has surprised the industry. CEO of a leading online travel company told Techcircle, "Very odd that they would sell this asset."

For Yatra, this would be its third acquisition in the past one year. Last August, it snapped Bangalore-based Magic Rooms Solutions India (P) Ltd, a hotels aggregation site backed by Nexus Venture Partners. Three-year-old startup MagicRooms was founded by Niranjan Gupta, co-founder of online travel agency Via (formerly FlightRaja).

Last we checked, MagicRooms was not operational. However, Yatra may retain the Travelguru brand and operate it separately rather than shutting it down, given its brand recall.

Early this year, Yatra also acquired Buzzintown, a website that provides information on deals and events. Buzzintown is owned by five-year-old Bangalore-based startup Wortal Technologies Pvt.Ltd and led by its co-founder & CEO Amitabh Saran. It is backed by venture capital firm Intel Capital (that invested through two rounds in 2008 and 2009). Intel Capital is also one of the investors in Yatra.

In October, 2010, Yatra also acquired New Delhi-based Travel Services International for an undisclosed sum and entered the ticket consolidation space.

The latest acquisition comes as Yatra, one of the largest OTAs along with MakeMyTrip and Cleartrip, has been looking to expand its holiday and hotel-booking services. In April last year, Yatra had raised Rs 200 crore in pre-IPO funding, led by Valiant Capital Management, to rev up its hotels and holiday booking business. The investors included Norwest Venture Partners and Intel Capital. The company had said this funding would be used for expanding Yatra's holiday and hotel booking services through acquisitions.

Yatra had previously raised a total of Rs 150 crore from Norwest Venture Partners, Reliance Capital, Network 18 and Intel Capital, the strategic investment arm of chipmaker Intel. The company had said last year it is not looking at any further funding and was targeting to float an IPO in 2013.

Recently, actor Salman Khan picked up a small stake in Yatra and also became its brand ambassador.

(Edited by Prem Udayabhanu)