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bne June 2017 Companies & Markets I 13
Kiwi.com –
the next Czech unicorn is coming
Nicholas Watson in Prague
F
ation of over $1bn is appearing on the horizon – the online travel agency Kiwi.com.
If you haven’t heard of Kiwi.com, that might be because it rebranded last year from Skypicker, in a move its founder and CEO, the boyish-looking 29-year-old college dropout Oliver Dlouhy, explains was designed to differentiate itself from the myriad of other online flight search engines and travel compa- nies with similar-sounding names. However, it is the valua- tions of those companies that indicate just how close Kiwi.com is to unicorn status.
Last year Skyscanner, an Edinburgh-based travel aggregator that allows people to search for cheap flights and hotels, was sold to the Chinese tourism group Ctrip.com for £1.4bn, which was 11.7x its 2015 revenues. Given Kiwi.com is set for gross ticket sales of €700mn and revenues of €120mn this year, then the same multiple would give the Brno-based company, which celebrated its five-year anniversary in April, a valuation of around €1.4bn.
To some in the industry that’s likely to be an underestimate, because Kiwi.com is a more interesting company in several aspects than its competitors like Expedia, to which it is often compared. “Kiwi.com reminds me of Expedia 12 or so years ago. There is a collaborative, curious and innovative company culture, full of young, smart employees. The rate of growth
is very fast and ambitious,” says Alison Couper, a consultant for Kiwi.com, who cut her teeth at the US travel company
in the noughties during its transformational period into the world’s largest online travel agency with annual gross book- ings of around $60bn.
At the heart of Kiwi.com’s business is its proprietary algorithm, designed by its software engineers in Brno – a centre of today’s Czech IT industry. This flight search algorithm allows users
to automatically combine flights from more than 650 airlines, many of them budget carriers that do not normally collaborate
with each other, into a single itinerary in a process it calls “virtual interlining”.
This throws up significant savings: the German maga-
zine Focus found Kiwi.com to be, on average, 28% cheaper than the competition, and in some cases the savings were as high as 90%. A demonstration of its ‘multicity’ flight search engine came up with an eight-city European itinerary for €161.
Kiwi.com also marks itself out from the competition by being a ticket vendor, so that while many other flight search engines like Skyscanner patch you through to the airline or travel
“The rate of growth is very fast and ambitious”
agent that is selling the ticket, only to find sometimes the ticket for that price no longer exists, Kiwi.com will book the flight and issue you with a boarding pass.
Finally, flight delays and cancellations are the bane of all travel- lers – something that can be especially troublesome when trips involve multiple bookings. To mitigate this, Kiwi.com covers trip itineraries with its so-called ‘Kiwi.com Guarantee’, which means that if the first flight is delayed and the connecting flight with the other airline is missed, the company will book another flight to the final destination free of charge or refund the money.
That’s certainly a major selling point, but for a company that sees more than 6,000 flights booked daily it’s also quite a risk in an age when a volcano can shut down the entire airline industry, as the eruptions from Iceland’s Eyjafjallajokull
did in 2010.
“When investors ask me about any real threats to our business, whether it be competition or market changes, I always say that only the eruption of an Icelandic volcano could really harm us,” Dlouhy says, laughing. “But actually our business is now
or all its noted manufacturing and IT prowess, the Czech Republic still only boasts one unicorn company, Avast
Software. However, another Czech startup with a valu-
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