Online travel agency Exoticca bags $4.1M for market expansion

Barcelona-based online travel agency Exoticca — which sells “affordable luxury” holidays to popular destinations such as India, Kenya, Brazil, Thailand and South Africa — has closed a €3.5 million (~$4.1 million) Series A to expand into more markets.

The lead investor is early-stage Madrid-based VC K Fund, with existing investors Sabadell Venture Capital and Grupo Palau also participating, along with new investors Nero Ventures, Palladium Corporate Venture and Smartech Capital.

Exoticca was founded in 2013 and currently operates in three European markets: Spain, France and the U.K. The new funding will be put toward expanding that tally — with the German market next in line, and a launch into the U.S. and Canada also on the horizon. Funds will also be funneled into further developing the platform.

“The company spent the first couple of years developing the technological platform and sales have grown very rapidly since then (€4.4 million in 2016, €10.5 million in 2017 and a budget of more than €20 million for 2018),” says CEO Pere Valles, a recent recruit to the business and previously CEO of Scytl.

Valles argues that Exoticca’s progress to date proves both the profitability of its business model — noting that Spain was “the first market which Exoticca launched is already profitable” — and its replicability. “Last year we launched the U.K. and France and the U.K. is already bigger than Spain,” he says, adding: “In July, we are launching in Germany and we have plans to open in the U.S. and Canada in 2019.”

Valles says the market Exoticca is operating in is one of the few travel market segments that has not yet been digitized — with people still purchasing these types of trips in traditional “offline” travel agencies, owing to relative complexity, with the holidays typically having multiple legs and components, perhaps including international and domestic flights, land transportation, hotels in different locations, tour guides and so on.

Exoticca’s platform allows users to buy such trips online in a single visit, thanks to a proprietary booking engine that integrates with all the various providers — enabling real-time pricing for each component (so no need to phone up for an actual price before being able to book, for example).

“There is nobody else who provides real-time pricing for these types of trips through an online platform,” argues Valles. “Our competition uses internet only to generate leads and then close the sale either on the phone or in a store while we allow our customers to do the entire purchase process online in a single visit.”

There are some differences versus traditional bricks-and-mortar travel agents, though. Exoticca customers can’t spec out a very bespoke holiday in discussion with an agent, for example.

Rather it offers an inventory of around 50 trip packages in its permanent portfolio, covering what are described as “the most popular destinations” for its target travel category. (Though Valles points out it does offer a degree of light personalization — such as being able to pick a hotel category and optional excursions, for example.)

If you’re content to choose from the selection, Exoticca claims the trips are 30 percent cheaper on average versus “traditional providers” — as a consequence of the disintermediation process (i.e. it acting as both wholesaler and retailer).

“Each one of these trip packages is our ‘own’ product in the sense that we are the ones who ‘build’ it by engaging directly with the provider of each component,” says Valles, adding: “We also give our own personal touch to the tours in each one of these destinations.”

There’s a pretty striking branding style on show too — which features 1950s-esque graphics illustrating elements of the holiday packages and service…

Presumably the hope is the retro styling will resonate with the older adults who are the demographic most likely to be in the market for long-haul, luxury trips.

“We have customers in all age groups but those between 45 and 65 tend to be ‘overrepresented,’ ” agrees Valles.

He says the company is generally targeting a similar customer profile to that of GV-backed members-only travel club Secret Escapes.

Though they are not like-for-like competitors, with Exoticca’s product certainly having more of a focus on, well, exotic holidays — versus Secret Escapes offering hotel getaways to almost anywhere (so long as the hotel is up to snuff).

Other European online travel agency startups include the likes of Dreamlines, which is focused exclusively on cruise holidays to address a distinct market segment; and Evaneos, a marketplace for tailored travel experiences that connects travelers directly with a community of local travel agents — so is doing the lead generation Exoticca’s approach avoids.

Valles says the packages it sells are with “high-quality providers” (4- and 5-star hotels) but offered at “discounted prices” intended to appeal to a mass market of middle- and upper-class travelers.

The overall aim is to “democratize” this segment of the travel market. (“A great experience at a reasonable cost” is the pitch.) Though if they really succeed in widening the funnel they may end up undermining their luxury promise. But clearly that’s not something they have to worry about yet.

Funding wise, Valles says Exoticca previously raised €1 million in two seed rounds, one with F&F and another with Sabadell Venture Capital. The business is not breaking out any user or usage metrics at this stage, five years in.