Timing was in Wego’s favour with the last round of fund raising – Priceline had bought Kayak for US$1.8 billion and Expedia had acquired a 61.6% stake in Trivago for 434 million Euros – and suddenly, meta search became the flavor of the month.
Ross Veitch
“It definitely helped,” said Ross Veitch, CEO of the company he started with partner Craig Hewett eight years ago. “The world’s two biggest online travel players buying into two of the world’s biggest meta search companies – it was a great validation of the meta search model and that the proposition is here to stay.”
The valuation placed by Priceline and Expedia on Kayak and Trivago respectively “certainly helped our cause – both are considered to be smart investors and people are looking at the meta search model and sector now,” said Veitch.
And in fact, Veitch believes the meta search model has a lot more value to consumers in Asia Pacific than in the US or Europe due to the lack of price parity in the marketplace. “In most of our markets, there are more suppliers, more independent hotels, vibrant low cost carriers and more comparison shopping is needed.
“Search is able to add more value in Asia and the consumer proposition is stronger here.’
Having said that, he admits that Wego has not been able to build as strong a consumer facing brand as Kayak and Trivago have done in their markets. And this is what the latest war chest is for – to turn Wego into a top online travel brand across the region.
It’s just hired Joachim Holte, formerly from Wotif in Sydney, as chief marketing officer and “one of his challenges is to turn Wego into a household brand by whatever means necessary”, said Veitch.
And one of those means will include “getting out of our comfort zone of online stuff into above the line”, with Veitch citing Trivago as an example of how the company built a brand out of nothing, by using television direct response.
In this last round, US$17 million was raised, bringing to US$36 million the total raised by Wego since its founding. The latest investment round was led by Crescent Point with contributions from Victoria Capital and existing shareholder Tiger Global.
What also helped was that Wego brought in The Raine Group, a US-based merchant bank focused exclusively on the digital, media & entertainment and sports & lifestyle sectors, to help the process. 
“I strongly recommend this to anyone who is looking to raise funds. It is hard to run a company and raise funding at the same time. They helped us position the company, kept the competitive dynamics healthy, introduced us to new people – VCs, private equity, sovereign wealth funds – and they managed the entire process,” said Veitch.
“It is ironic however that sitting in my office at Shaw Towers, I can see the offices of our new investor (Crescent Point) in Millenia Tower and it took a US bank to introduce us.”
The entire process took five months. What held it up slightly was the late entry of Victoria Capital and Paul Bassat into the picture. Bassat, co-founder of SEEK, an Australia-based job search website, set up his own private equity fund last October to ““look for opportunities with a technology, internet and media flavour”. Bassat now sits on the Wego board.
Veitch said that Wego is entering a new phase. It hired its 100th employee recently, its business is growing 100% year on year and the number of markets and products it has now “is not trivial”.
Product-wise, it’s got a roadmap out for the next three years. It’s been hiring engineering and product designers and doubling down in innovation and research and development. “You will see new product features soon – there are lots of innovation still to be played out this space.”
Veitch, who admits that Wego came into the space three years too early, said much has changed in the last few years and that the company was now in full stride, riding on all the developments taking place in Asia.
“The more consumers coming in to search, the more value we bring to our partners. Every hotel chain and airline has a direct strategy and we facilitate that. For the OTAs, we provide a pretty high volume of highly converting stoppers by dumping people on their checkout pages.”
Its business model has also evolved – from a pure PPC-based referral model to now various models in line with partner requirements such as CPA, commissions and variable PPCs based on gross booking value. It’s also introduced an auction mechanism whereby partners can big higher to get a larger share of the traffic, per hotel per point of sale per route – “taking ideas from both Google and TripAdvisor”.
Having said that, he is quick to point out that Wego was not implementing the auction model at the expense of user experience. “We still want people to be able to find the cheapest prices on our site and not get results based on partner bidding.”
He is of course watching TripAdvisor’s move into meta search with pundits suggesting that the review site will become a formidable competitor in this space – meta search layered with reviews and Facebook integration.
“I think people will go to them for the reviews primarily. A lot of the time, people find a price somewhere else and do a last minute validation on TripAdvisor before they book. I am not sure the TripAdvisor meta search is as consumer friendly as it could be. They are pretty aggressive with their auction models and results are based on what travel sites are bidding as opposed to who has the cheapest price – that said, it changes every week so they are obviously doing a lot of testing.”
Wego also recently launched a new audience engagement platform to help its travel clients run smarter data-driven display campaigns on Wego and other networks. However Veitch said core meta search referrals would remain the biggest slice of revenues.
On the trend of meta search going down the purchase path, Veitch said, “We’re in the business of making it easier for consumers to book travel, we don’t want to become an OTA but we are interested in facilitating and making bookings easier for our users.”
As such, with partners such as Expedia and Booking.com, users can book without leaving the Wego site and Veitch said this is especially important with mobile to control the end-to-end experience.
“We’re like the express checkout on Amazon,” he said. “We are fundamentally in the business of making it faster and easier to book travel but we don’t want to get into hotel contracting and negotiating fares with airlines, running payment gateways and handling credit card payments.”
There are sceptics who argue that there is a lack of focus at Wego – it is in two verticals, flights and hotels, as opposed toSkyscanner or Hotelscombined which are in one vertical only – and that it runs 52 websites.
“There are advantages in doing both verticals and we are comfortable with the strategy we’ve executed. And even though we run 52 websites globally because we are getting traffic from all the major markets of the world, where we are seriously focused is the markets across Asia Pacific and Middle East.
“Those are the markets we want to own and we will concentrate our brand building on this area – we want to be the biggest partner for all our travel advertisers and clients in this area.”
And will the US$17 million get it there? “Ask me in 18 months,” he said.
