Stack Capital Group Inc. (“Stack Capital”) has invested $7 million USD into preferred shares of Omio, Inc. (“Omio” or the “Company”), a leading multi-modal travel booking platform that allows consumers in Europe, the United States, and Canada to easily book trains, buses, ferries and flights – saving them both time and money.
The Company initially became known as an app to book trains throughout Europe with an easy-to-use solution but has since expanded into multiple business lines and geographies that have strengthened the Company’s revenue and scalability. In late 2019, Omio acquired Rome2Rio, a multimodal travel veteran which allows users to compare various transportation options all around the world with a global reach from over 10 million locations worldwide.
Stack Capital’s investment was part of the recently announced financing and was completed alongside fellow investors including Goldman Sachs, Lazard Asset Management, New Enterprise Associates (NEA), and Temasek Holdings, amongst others. The Company continues to work diligently towards sustainable profitability and plans to deploy the capital raised into global expansion activities (including M&A); scaling its existing partnerships with Kayak, Huawei, LNER (London North Eastern Railway), and others; building out its products and services; and investing in its talent.
Omio is strategically positioned to benefit from the global travel recovery in the growing number of regions it services and continues to strengthen its place as a leading global travel platform connecting transport networks worldwide. With its origins in European rail, ferries, and buses, it has taken years to negotiate and integrate the Company’s API to calibrate the complicated travel landscape. This difficult process has created a significant moat for Omio; today, partnerships with key service providers are difficult to obtain and even more difficult to integrate. In many cases, the rail organizations are nationally owned, and most countries will only work with reputable companies such as Omio, making it difficult for new competitors to enter the space. These ‘barriers to entry’ are the main reasons why the competitive landscape is so limited; and why the opportunity for Omio to eventually become a one-stop application for global ground and water travel is so attractive.
Omio differentiates itself from other travel booking peers by focusing on the underserved and highly fragmented ground and water transportation markets.
Although trains, ferries, and buses are underserved across other booking platforms, combined these modes of transportation in Europe have a total addressable market that is larger than that of flights. In Europe, 60% of tickets are sold offline, and the industry operates at 50% capacity, meaning that there is significant room for further penetration and growth in the sector.
Clearly, modes of transportation vary greatly across the world. For example, flights are commonly used in North America, while buses are a more common mode of transportation in developing countries. The key benefit for Omio users is the ability to easily compare different modes of transportation in real-time, across a growing number of geographies, paving the way for them to save both time and money.
Omio is currently benefitting from incredible tailwinds as global travel demand increases and, over time, the Company plans to strengthen its position as a leading player in the travel sector. Future growth is expected to come from its ability to i) grow organically, ii) expand globally through acquisition, and iii) leverage its API by making it available to third parties.
While adoption for digital ticketing in ground and water transportation has increased significantly over the past two years, there is still a lot of room for growth. As Omio continues to fill any gaps with deeper offerings in their existing markets and creates better route-level optimization, this will enhance the overall user experience and the Omio brand. Over time, as the brand becomes ubiquitous with ground and water transport, there is an expected network effect that will allow for further organic growth. It’s worth noting that Omio already has a significant lead against their competitors when it comes to its user interface and depth of inventory.
Omio also plans to grow by entering new markets and adding additional transportation inventory globally, which is expected to be achieved through building inventory internally, along with acquisitions. Adding inventory contributes to the network effect and has a low incremental cost long-term as the Omio platform is already built to grow.
In 2019, Omio acquired Rome2Rio which added a significant amount of inventory and added technology functionality which help users compare travel options between two locations. For example, if you were traveling from Berlin to Paris, you could compare the travel time and price between rail, bus, and flights to quickly determine the best mode of transportation.
In 2018, Omio completed its acquisition of BusRadar, a European transport aggregator, which also grew the Omio team and inventory. The Company made no acquisitions during 2020 and 2021 given the global travel restrictions.
Another growth-driver for Omio is the ability to leverage its large and unique inventory to find new sources of revenue. This could be done through enterprise partnerships whereby Omio sells access to its API, which is also known as Inventory as a Service (“IAAS”). Given the large moat and difficulty to build the inventory that Omio has and continues to grow, it is far more likely that other travel focused companies will choose to partner for ground and water transport.
A great example is SJ AB (“SJ”), a nationally owned passenger train operator in Sweden that carries over 31 million customers. While locals in Sweden regularly use SJ for their domestic train travel, they struggled with travel outside of their country. For this reason, SJ has opted to use Omio’s IAAS offering to allow customers to book ground and water transport across Europe – solving the problem. Great outcome for Omio as it receives a portion of the fees charged by SJ, by simply allowing access to their API.
PERFORMANCE DURING THE PANDEMIC
The Pandemic was difficult to navigate for the tourism and travel industry in Europe, to which Omio was highly exposed. The management team, led by Founder and CEO Naren Shaam, raised the necessary capital early in the pandemic which enabled the Company to continue strengthening its platform and become more capital efficient. Costs were reduced and the team became disciplined through the COVID-19 pandemic, which has allowed the Company to thrive through the recovery. Stack believes that the next few years will be strong for the industry and Omio is in the right place to capitalize on the global return to travel, in addition to potential enterprise partnerships. According to the Apple App store, Omio has 27 million monthly users and a rating of 4.9 stars out of 5.
Globally, ground and water transportation is highly fragmented and primarily dominated by regional players, which in many cases are state owned. The user experience is limited, and it can be complex booking travel between countries and working through potential language barriers. Omio’s platform provides an effective solution, calculating the best route, across a number of travel options, in 21 different languages. By becoming the leader in this space, Omio is equipped to compete against smaller regional competitors.
In addition to the domestic regional players in each country, Trainline is a notable competitor to Omio in the United Kingdom. Trainline is a public company on the London Stock Exchange and has been successful in creating a platform for the rail travel system, serving the UK population. Trainline also serves as a great benchmark/comparable from the perspective of what Omio could potentially trade for as a public company.
While Trainline does have plans to expand throughout Europe, it has yet to do so and remains focused on the UK population. Furthermore, it has no stated plans of growing globally. This leaves Omio as the largest player in the space, with a growing lead.
Omio is another strong addition to the Stack Capital portfolio, representing an innovative business with a leadership role in the underserved and highly fragmented ground and water travel markets (trains, buses, and ferries). With an existing presence in Europe, the United States, and Canada; the Company is currently benefiting from the resurgence in global travel demand and is poised to generate future growth.
Give the Omio app a shot the next time you’re booking a train, bus, ferry or flight in Europe, the US or Canada.
Leading travel booking app focused on ground and water travel options
· Innovative platform that provides travelers with easy access to train, bus, ferry, and flight options - saving them both time & money
· Company currently issues travel tickets across 37 countries, in 21 different languages, and 26 different currencies, for 1000+ transportation providers
· Company is rebounding faster than many larger travel platforms; ticket sales are more than 140% above pre-pandemic levels*
· Company continues to benefit from the shift towards bookings through mobile applications; ~80% of Omio's bookings are mobile (25% increase since 2019)*
Expanding revenue profile
· Partnership with Kayak is a great example of how Omio is already leveraging its API; Kayak users benefit from Omio's ability to access rail and bus partners
· Omio's unique search API has been integrated into Petal Search and Petal Maps - allowing users to compare multi-modal train, plane and ferry travel options
Attractive long-term growth potential
· Global travel demand continues to increase, serving as a major secular tailwind
· Fresh capital on the balance sheet coupled with strong travel demand will enable Omio to accelerate growth and further adoption of its app
· Multiple levers to generate future growth
o Organically, through existing markets
o Globally, through acquisition
o Further leverage its API, making it available to other third parties
· Significant 'barriers to entry' - reducing the risk of competition
o Search API for unique forms of travel has taken years to develop - creating a significant 'moat' for Omio
o Access to complicated travel options/solutions with Rome2Rio and other Omio apps are extremely difficult to replicate
* Sourced from the Omio European Mobility Report (omio.com/corporate/reports/eu-mobility-report)
TO ACCESS A PDF COPY OF STACK'S INVESTMENT OVERVIEW ON OMIO, PLEASE CLICK HERE.