12/11/99 Bus. Standard 2
1999 WL 28444939
Business Standard
Copyright (c) Business Standard
Saturday, December 11, 1999
The BS Weekend
Booking a seat in the big league
Paran Balakrishnan
How does it feel to be worth almost $ 500 million _ overnight? Ask
UK-based travel agent Dinesh Dhamija. In mid-November, Dhamija's
Internet travel agency, ebookers.com, became the newest darling of the
hi-tech Nasdaq Exchange. After a few hours of frantic trading, ebookers
rocketed to $ 43 from its launch price of $ 18. At that price, Dhamija's
60 per cent stake was worth almost $ 500 million. Ebookers is now fallen
back to around $ 22, but Dhamija's holdings are still worth a whopping $
200 million.
In Silicon Valley, such stories of overnight riches are common. But,
in Europe's bitterly cut-throat travel industry, it is a brand new
phenomenon. Says Dhamija: "My rivals are aghast. But in the Internet
business, you've got to move first ."
Dhamija has always been a fast-moving player in Britain's
highly-competitive travel industry. 16 years ago, he started
Flightbookers which has grown steadily to become one of the United
Kingdom's top travel agencies. But the runaway success of ebookers after
its $ 60 million IPO has put him into an entirely new league.
This year, ebookers will have a enormous adspend of almost $ 30
million to turn itself into a recognisable cyberbrand across Europe.
That isn't all. In the next nine months, the company will also go on an
acquisition
spree and snap up 12 companies in major western European cities.
Already, it has offices in Paris, Bonn, Geneva and Dublin.
Says Dhamija: "We want to buy one company in each country in western
Europe. We need offices that can provide localised customer service and negotiate locally with the airlines."
Dhamija believes that reaching out across Europe will send ebookers'
revenues soaring. The 10 month-old company has already done business
worth $ 18 million. In the next year, Dhamija believes that sales will
rise to 80 million. By 2002, it will have tripled to over 250 million.
"It will go up very quickly," he says confidently.
That isn't bad for a company that was started in 1996 as an in-house
website for Dhamija's more-established company Flightbookers. In
February, ebookers was launched as an independent company with five
employees.
Today, the company has around 100 people in four offices. Over the
next few months, ebookers will be recruiting furiously and it should
have around 230 staffers by end-2000.
Ebookers couldn't have timed its stockmarket arrival better. The
Nasdaq was in the doldrums during summer and almost 70 per cent of the
Internet
stocks had dropped below their issue prices. But, come autumn, the
Nasdaq moved back into overdrive and hit record levels for eight
consecutive days just before ebookers listed on November 11. So, the
company's lead manager J P Morgan hiked the issue price by $ 3.
On November 12, ebookers completed its successful debut by launching
on Frankfurt's Neuer Markt. Says Dhamija: "We knew three days before
the issue that it was going the right way."
Ebookers has ambitious plans for the future. Dhamija wants to return
to the market in one year and raise another $ 100 million-$120 million.
The
money will be funnelled into an intensive marketing campaign to ensure
that ebookers becomes a household name across Europe.
Says Dhamija: "We plan to become one of the leading pan-European
Internet travel agencies _ and stay that way."
The company is already showing impressive growth. In June, it was
getting 104,000 hits monthly. By October, this had risen to 320,000 and,
in November, to 400,000. Similarly, five months ago, it was getting 200
calls daily and this has now risen to 1,000.
That's not bad for a travel agent who started out at the bottom of a
brutally competitive industry, 20 years ago. Dhamija made his first
moves in the business from a rented 80 sq ft booth in Earls Court tube
station in Central London. From there, he learnt how to survive on the
thinnest margins by selling low-price tickets to the Australians who
live in the district.
Today, Dhamija admits that he entered the travel industry by pure
chance. "It could have been any business. When you are desperate, you
will do anything," he says, looking back.
After finishing from Cambridge in the early seventies, he tried his
hand at numerous fields and even went back to India for a short spell.
"I tried to work in India, but somehow I couldn't do anything," says
Dhamija. By 1983, he had accumulated enough capital and started
Flightbookers.
The agency was aimed at the discount tourist trying to see the world
on a shoestring budget. In fact, Flightbookers, which is one of the top
ten
UK travel agencies, has always modelled itself on Trailfinders, which is
the market leader among economy-class travellers. Ebookers will also
cater to travellers who are on the lookout for cheap globe-girdling
flights.
Says Raj Desai, regional manager, Jet Airways: "Dinesh has vision,
sets objectives and then sticks to his plan. He has made his presence
felt in
the trade."
Flightbookers does almost half of its business on the North American
route and Dhamija has been keeping a keen eye on developments in the
industry there. In the US, Internet travel agencies like Xpedia and
Cheap Tickets are competing fiercely. By contrast, Europe is just
figuring out how to use the Net for e-commerce. Says Dhamija: "Europe is
three years behind the US."
Focusing on the North American market has turned out to be one of
Dhamija's best moves. He decided early that he wouldn't compete with the
scores of Asian travel agents who vie with each other for the
sub-continental trade. For a few years, Dhamija represented Royal Nepal Airlines in Europe, but that was his only business link with the
region.Says Dhamija: "I thought that about 4 per cent of Britain's
population are Asians. Why should I exclude 96 per cent of the
population?"
Last year, Dhamija was reckoned to be worth around 15 million (67th
position) in the Asian Rich List which is published by the London-based
Eastern Eye newspaper. This year, however, he will leapfrog and could
easily be in the top ten.
On December 1, the company was valued at around $ 380 million and that
means that Dhamija's stake is worth around $ 200 million. Says Dhamija:
"It is all on paper. If I sell, the share price will tumble. But it is
nice to see it there on paper."
Ebookers has passed two tests that every Internet company faces: It
has entered the market before its rivals. Secondly, it has held a
public issue and raised millions. Now, it must get down to the push
ahead with the nitty-gritty task of selling tickets.
Word Count: 1104
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