Online travel sales stood as one of the pre-pandemic mainstays of the travel industry in Latin America, but the sector also was one of those hardest-hit by the crisis. Travel represented about half of Central America’s eCommerce before the pandemic, but it has dropped to as little as 3% in some countries since 2020. Even as digital payments and eCommerce are booming in Latin America in verticals such as shopping, streaming and gaming, the online travel industry still is working to recover. Nevertheless, research suggests that online travel sellers in Latin America are on course for a major comeback, with their sales estimated to rebound to pre-pandemic levels this year.
This month, PYMNTS examines how the online travel and payments sector in Latin America has evolved over the past two years and the direction the industry is likely to take in the near future.
Digital Travel’s Changing Landscape in Latin America
Tourism has become one of the most significant contributors to economic development and job creation in Latin America, with the World Travel and Tourism Council ranking it the fourth-most important tourism region in the world. The pandemic took a particularly hard toll on the sector, with a recent study finding that online travel sales in Latin America plunged from a pre-pandemic level of $22 billion to $9 billion following the onset of the health crisis in 2020.
Even during the height of pandemic restrictions, however, online travel agencies were the most popular option for travel search and planning in major Latin American countries, including Argentina, Brazil and Mexico. The study found that Mexico had the highest online travel market share at 46%, while Brazil held 31%. Argentina-based company Despegar, meanwhile, became the top online travel agency in Latin America, controlling as much as 10% of the market.
Researchers estimate that the online travel market in Latin America now is on track to regain its pre-pandemic sales level this year, with its value predicted to reach as high as $83 billion by 2024.
Some subcategories of the sector already are trending toward recovery, especially in hotel or resort and rental sites, with the four leading players in the region being Booking, Airbnb, Trivago and Decameron. Airbnb’s Q3 2021 financial results were its highest on record, up a notable 36% from Q3 2019. Airbnb also exceeded its Q3 2020 revenue of $1.3 billion by nearly 70% year over year. Moreover, revenue growth nearly quadrupled from 10% in Q2 2021 to 36% in Q3 2021, reflecting, in part, strong gains in Latin America.
Of note, although Despegar ended Q3 2021 with an adjusted earnings loss of $10.3 million, the company’s gross bookings rose 34% quarter over quarter due to domestic travel demand in Argentina, Brazil and Chile.
Innovative digital payment methods also are shaping the travel industry’s future in the region. Consumers in Argentina are turning to cryptocurrencies to pay for their vacations in the face of banking restrictions on credit payments for tickets, accommodations and services abroad. The Travala platform, associated with Booking.com, allows cryptocurrency payments for flights, stays and excursions.
Another player is the CryptoAvisos platform, which permits vacationers to book and pay for rental accommodations, including cabins and apartments, using only cryptocurrency. In response to the popularity of these services, payment processors Visa and Mastercard launched prepaid cards funded with digital currencies that can be used worldwide to make payments, offering another option for travelers to and from the region.
With health restrictions lifting, LatAm consumers continue to show strong enthusiasm toward online travel planning. As travelers in the region begin to hit the road again, digital commerce promises to play a prominent role in helping them reach their destinations.
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