The numbers shown doesn’t show a correct picture. How can a majority stake be at USD 17 million ???? As per the article they received USD 25 mil. from investors and they had acquired desiya for another USD 25 mil.  Read the story released by content sutra on 21 Dec 2007 http://www.contentsutra.com/entry/419-travelguru-acquires-desiya-for-25-million/

Anybody with simple math capability can calculate the valuation of the company to be more than USD 50 million…

That is interesting i heard that they were brought out for $150mn, also on the street the talk was that Expedia had met all the online travel agents - Make My Trip, Clear Trip and did not find the flight model profitable in India. Hence they went with Travelguru which has a hotel focus.

The numbers don’t seem to add up.
$17 Million for a majority stake and a $30 Million valuation seems way too low. Is this the final figure?

Math of deals is always not as simple as it sounds. It seems Desiya deal was an all stock deal. In that case those $25m (valuation of Desiya) would have never exchanged hands!

Of $25m secured in funding, one wont know how much of that was actually drawn by travelguru.

So actually $30m valuation may not be so bad, after all! Its 120 Crore for a 2 year old company. But at the same time it is low, if they achieved $42m of revenue last year (claimed by travelguru). May be the margins were too low, and opex too high.

I expect the valuation to be more in $100m range.

As per MediaNama (Nikhil Pahwa’s new site), TravelGuru denies the report.
http://www.medianama.com/2008/06/223-expedia-acquires-india-ota-travelguru-report/

Thats interesting.. Now the new update above shows the valuation of Travelguru to be around USD 75 million instead of USD 30 million (though USD 75 million seems a more realistic figure).. I guess we’ll know the true story from the horse’s mouth when they make an official declaration rather than speculate on such hearsay figures…

Well said Arun.....

Speculators R.I.P.... Frankly, I believe the Investors like Sequoia with a history of having funded cos like Google, Yahoo and Cisco wouldn’t be foolish enough to put $25 mn in terms of funding the company and then sell it off for $17 mn.... Hence, in the eventuality of Travelguru stake actually changing hands,,, the figure will be far far higher.....

Secondly, approaching MMT , Yatra and Cleartrip for a sale or a merger seems a figment of the writer’s everflowing imagination as each of them are themselves trying to wriggle out of a tight situation which has arisen from their focus on flights, where margins have been dwindling to near naught.....and each of them are themselves looking out for a buyer.

well the valuation of these deals if any is far more than whats stated here

There are a few issues to be looked at before determining the valuation.

One - your sales and profits if any
second - your market position
third - the market itself

none of the people who have commented here has a clue about all of them, and still want to say that $30 million is not enoufgh, or it should be valued at $100 million and stuff liek that.

guys, take a break.

TG’s revenues are said to be not more than $2 million which means $30m is 15 times the revs. And that is a hell a lot of money.

Second, it’s still not clear who is the leader in hotels. Only becasue your focus is hotels does not mean you are the leader. we know that hotel space is still in its infancy and none is a leader there.

third - hotels market is yet to evolve into a mature market. it’s a long term game. so this seems to be more of a “weak getting bought by the strong” kinda situtaion.

If anyone is thinking TG should get a higher valuation, why not they argue it out here with facts.

You cant say that they have drawn $25 million in VC financing and so cannot sell it cheap.

First - it’s not clear if they have drawn that much money form the VC funds. (Most of them must be in paper - and some tranches may not have been disbursed. only if the busienss is progerssing, VC will infuse more money). You need to cross milestones to get your subsequent infusions.

second - If indeed they have drawn that much money, it’s a sale that sequoia and battery will love to forget. there is nothing wrong here. entrepreneurship is like that. some lose, some win.

in this case, TG has lost. I have nothing against TG, but just stating a few things about startups. and some startups are likely to fail becasue of some strategy flaws, leadership inadequeacies or pure bad luck.

by the way, how many of remember booking a hotel room on TG?

Nari

Good strong points, but your sole point of data is also tainted. Two points here:

1. Who says that TG actually earns $2M? The source report used its own conjecture - no quotes, no substantiated data.

2. Who says a margin revenue multiple of 15 is good for a travel portal? Multiples closer to 20 are the norm, and that would make the valuation quite different from what you suggest.

Also, basis an examination of their site today (the hotel user reviews), I think quite a few would be able to remember booking a hotel room on TG. Sample sets of 1 are always misleading - esp when you are the sample.

I myself prefer Expedia

Ram

Prasad

i few quistion on it

1:- How can non profit making company can take over onother company in same business in 25MN $ (Only Products )

2:- 25MN$ is big amount INR 100 CR ...I DONT THINK SO.

3:- If 17 MN $ is the stake amount not accepetble becouse of above calculations.

4:- Then Desiya is expensive to travelguru and travelguru is cheaper to expedia
as far as mojority stake concern means 51% then 17MN $ = 51% STAKE ...not at all....

5:- There are some wrong fighures in it....

6:- it is not right movment for indian online travel becouse travelguru is only ota who had strong presence in internet and mind of perople and after all its indian product so ....

Dees this deal mean that more indian travelers are going to be scammed? (Click on my name to read how expedia tried to scam me 1254.95 U$D and failed.......miserably). Monopolizing the travel industry (by EXPEDIA ) is going to be awful for travelers.