Travel

The State of Online Travel Payments in Latin America

The State of Online Travel Payments in Latin America

Global Merchant's Guide To Latin America - March 2022 - Find out why Latin American travelers are turning to digital cashless payment methods

Online travel sales were a mainstay of Latin America’s travel industry before the pandemic, but the sector has also been one of the hardest hit by the crisis. Travel represented about half of Central America’s e-commerce before the pandemic, but it has fallen to just 3% in some countries since 2020. Even though digital payments and e-commerce are booming in Latin America in verticals such as shopping, streaming and gaming, the online travel industry is still struggling to recover. However, research suggests online travel sellers in Latin America are on track for a strong comeback, with sales expected to rebound to pre-pandemic levels this year.

This month, PYMNTS looks at how the online travel and payments industry in Latin America has evolved over the past two years and where the industry is likely to go in the near future.

The Changing Landscape of Digital Travel in Latin America

Tourism has become one of the most important contributors to economic development and job creation in Latin America, with the World Travel and Tourism Council ranking it as the fourth most important tourist region in the world. The pandemic has particularly affected the sector, with a recent study finding that online travel sales in Latin America plunged from a pre-pandemic level of $22 billion to $9 billion after the onset of the health crisis in 2020.

Even at the height of pandemic restrictions, however, online travel agencies were the most popular option for researching and planning trips to major Latin American countries, including Argentina, Brazil and Mexico. . The study found that Mexico had the highest online travel market share at 46%, while Brazil held 31%. Argentinian company Despegar, meanwhile, has become Latin America’s leading online travel agency, controlling up to 10% of the market.

Researchers estimate that the online travel market in Latin America is now on track to return to pre-pandemic sales levels this year, with its value expected to reach $83 billion by 2024.

Some sub-categories of the sector are already tendency towards recovery, particularly in hotel or resort and rental sites, the four main players in the region being Booking, Airbnb, Trivago and Decameron. Airbnb’s financial results in the third quarter of 2021 were the highest on record, up a notable 36% from the third quarter of 2019. Airbnb also outmoded its third-quarter 2020 revenue of $1.3 billion was up nearly 70% year over year. Additionally, revenue growth nearly quadrupled from 10% in Q2 2021 to 36% in Q3 2021, reflecting, in part, strong gains in Latin America.

Of note, although Despegar ended In the third quarter of 2021, with an adjusted profit loss of $10.3 million, the company’s gross bookings increased 34% quarter-over-quarter due to domestic travel demand in Argentina, Brazil and Chile.

Innovative digital payment methods are also shaping the future of the travel industry in the region. Argentinian consumers are turning to cryptocurrencies to pay for their holidays in the face of banking restrictions on credit payments for tickets, accommodation and services abroad. The Travala platform, together with Booking.com, enables cryptocurrency payments for flights, stays and excursions.

Another player is the CryptoAvisos platform, which allows holidaymakers to book and pay for rental accommodation, including chalets and apartments, using only cryptocurrency. In response to the popularity of these services, payment processors Visa and Mastercard have launched prepaid cards funded with digital currencies that can be used around the world to make payments, providing another option for travelers to and from of the region.

With the lifting of health restrictions, Latin American consumers continue to show strong enthusiasm for online travel planning. As travelers in the region begin to hit the road again, digital commerce promises to play a leading role in helping them reach their destinations.