In August, I wrote an article “eDreams: A Multi-Bagger That is hiding in Plain Sight.” Given that they just reported their second quarter earnings, I thought it was worth an update given there was some incremental guidance given during the report. The quick summary is it’s still a multi-bagger hiding in plain sight. Now, let’s get to why.
Solid update. Have been reading your updates on this. Only concern I have is; are they front-running long-term growth by doing the shift to subscription? I.e., sacrificing long term growth for short term gains. Interestingly the Bookings-Etraveli acqusition got blocked by EC - they recently (Etraveli) relevered their balance sheet (owned by CVC) and shared some interesting points about the busienss in the process. They Seem to be taking share pretty fast.. what are your thoughts on competition and whether they are sacrificing long term growth for short term gain?
I don't think that is the case. I think the eDreams business, at least in Europe, benefits the customer three main ways. 1. Their app and call centers provide a customer service component that is missing, or lacking, within the European airline industry. 2. The subscription model provides a cost advantage for their subscribers. 3. They provide a one-stop shop for several travel purchases, that makes booking with them convenient. Customers are not going to pull forward travel demand because of the above 3, but they will utilize eDreams vs. other booking options because of those three.
1) Subscription business gives them stickiness, long-term longevity, and avoids the google tax
2) Look at Etravali vs edreams Trustpilot review and nps scores. Its clear eDreams is making an active effort to please the customer - only real long-term signal of success in such a competitive consumers discretionary business, I've personally used their customer service a few times an it is excellent. They also do really give good packaged deals (even non-prime).
3) Its not hard to take share by spending a bunch of money - but in the European markets eDreams, via subscription, is locking in the frequent and thus more profitable traveler (edreams comments on this was v interesting this q - they think as time goes on the quality of a non-prime customer is getting worse and worse). Thus rest of OTAs are spending on less profitable customers
That said, would you have a link to etravli's comments? would be an interesting read.
Solid update. Have been reading your updates on this. Only concern I have is; are they front-running long-term growth by doing the shift to subscription? I.e., sacrificing long term growth for short term gains. Interestingly the Bookings-Etraveli acqusition got blocked by EC - they recently (Etraveli) relevered their balance sheet (owned by CVC) and shared some interesting points about the busienss in the process. They Seem to be taking share pretty fast.. what are your thoughts on competition and whether they are sacrificing long term growth for short term gain?
I don't think that is the case. I think the eDreams business, at least in Europe, benefits the customer three main ways. 1. Their app and call centers provide a customer service component that is missing, or lacking, within the European airline industry. 2. The subscription model provides a cost advantage for their subscribers. 3. They provide a one-stop shop for several travel purchases, that makes booking with them convenient. Customers are not going to pull forward travel demand because of the above 3, but they will utilize eDreams vs. other booking options because of those three.
I would think its quite the opposite.
1) Subscription business gives them stickiness, long-term longevity, and avoids the google tax
2) Look at Etravali vs edreams Trustpilot review and nps scores. Its clear eDreams is making an active effort to please the customer - only real long-term signal of success in such a competitive consumers discretionary business, I've personally used their customer service a few times an it is excellent. They also do really give good packaged deals (even non-prime).
3) Its not hard to take share by spending a bunch of money - but in the European markets eDreams, via subscription, is locking in the frequent and thus more profitable traveler (edreams comments on this was v interesting this q - they think as time goes on the quality of a non-prime customer is getting worse and worse). Thus rest of OTAs are spending on less profitable customers
That said, would you have a link to etravli's comments? would be an interesting read.