Rategain Travel Technologies Ltd Management Discussions

Growing significance of travel

Travel is seen as one of the most effective means of learning and discovery. It broadens our understanding of diverse cultures, enhances our perspectives, and introduces us to new information. The impulse to travel is deeply rooted in us - its what enables us to walk upright, venture further, and explore new horizons. This innate desire has been instrumental in fostering an industry that contributes significantly to global economic development.

People with increasing disposable incomes often devote a higher portion of their expenditures to travel. This trend is amplified by the widespread availability of affordable internet and the influence of social media, which unite people around the globe through shared interests in travel. The unrelenting pursuit of novel experiences propelled by rising aspirations continues to fuel the expansion of the travel industry.

Travel has made a strong comeback. While CY 2022 saw significant gains and challenges across various countries and sectors, by CY 2023, global travel largely returned to pre-pandemic levels. The travel industrys growth was fueled by rising incomes in Asia-Pacific economies, with many developing Asian countries rapidly joining the ranks of middle-income economies. Furthermore, the opening of tourism in Saudi Arabia and other Middle Eastern economies has marked a significant shift in the regions travel and tourism landscape.

Additionally, the Indian hotel sector witnessed substantial investment growth, with total deal volume reaching USD 401 million in CY 2023, a four-fold increase from CY 2022.

Other factors driving growth include deeper penetration of online booking systems and an enhanced focus on direct bookings, which offer travelers discounts, special perks, and flexible options. Technological advancements have also supported the industrys growth, as search engines like Google provide more information about tourist destinations, and social media continues to influence and inspire travel decisions.

Global growth, estimated at 3.2% in CY 2023, is projected to continue at the same pace in both CY 2024 and CY 2025.

State of global economy

The global economy demonstrated remarkable resilience in the face of unprecedented challenges in CY 2023. Growth was primarily driven by emerging and developing Asian economies, including China and India. The Indian economy expanded by 7.8%, positioning itself as one of the fastest-growing economies, while China maintained resilience with a growth rate of 5.2%. The reopening of Chinas economy post-COVID lockdown in CY 2023 has been a focal point for the government, aiming to revitalize economic growth and attract foreign investment. Additionally, growth was supported by a recovery in the global tourism industry and an expansion in the supply side, which included an unexpected boost in labor force participation.

Global growth, estimated at 3.2% in CY 2023, is projected to continue at the same pace in both CY 2024 and CY 2025. Advanced Economies (AEs) are expected to see an uptick in growth, from 1.6% in CY 2023 to 1.7% in CY 2024 and 1.8% in CY 2025. Growth in Emerging Markets and Developing Economies (EMDEs) is expected to decline from 4.3% in CY 2023 to 4.2% in both CY 2024 and CY 2025.

(Source: IMF World Economic Outlook April 2024)

The economic resilience during the disinflationary period provides a substantial boost to the global travel industry by maintaining consumer spending power and business activity. As economies continue to stabilize and grow, the travel industry is well-positioned to capitalize on the renewed vigor of both leisure and business travel, setting the stage for sustained growth and recovery post-pandemic.

Global travel and tourism industry and outlook

The global travel industry has transitioned from extreme conditions experienced during the pandemic to a more balanced state. Despite short-term economic challenges, the outlook for travel remains optimistic, supported by increased global mobility and the expansion of the middle class in developing countries, particularly India. In CY 2023, India witnessed an influx of 9.2 million foreign tourists. Global inbound tourism demonstrated strong signs of recovery, with arrivals totaling just under 1.3 billion

in CY 2023, compared to 407 million in the previous year. According to the first UNWTO World Tourism Barometer of the year, international tourism reached 88% of pre-pandemic levels by the end of CY 2023, with an estimated 1.3 billion international arrivals.

CY 2024 is expected to see robust growth year for the travel industry, characterized by favorable macroeconomic conditions that support consumer spending and sustained interest in travel, particularly among younger demographics. The travel industry is projected to move from extraordinary double-digit revenue growth to a more stable, high-single-digit growth rate in CY 2024. This slowdown is not a sign of weakness but rather an indicator of the industry stabilizing as it returns to normalcy. Globally, 2,480 hotels opened in CY 2023, with an estimated 2,707 expected to open in CY 2024. In India, the travel and tourism industry is projected to generate revenue of nearly USD 24 billion in CY 2024, with 14,000 rooms being added across 182 hotels in the country.

The online travel sector is re-emerging as a critical competitive arena, with numerous new entrants challenging the existing landscape both locally and globally. These new players are striving to cater to diverse audiences, aiming to grow rapidly to justify their investments and capture market share.

The CY 2023 was characterized by varied travel trends across different countries. While some nations experienced a significant surge in travel activity, others were still grappling with subdued recovery.

North Americas travel sector has shown a robust recovery and sustained growth since achieving complete recovery in April 2022. All travel sectors within the region have been performing at levels above those of CY 2019, demonstrating a steady upward trajectory. Outbound travel from North America has seen the most significant rebound among the regions travel activities. Despite ongoing economic concerns, the intent to travel internationally remains strong among North American travelers. For CY 2024, it is anticipated that international departures from North America will exceed the levels seen in CY 2019.

Latin Americas travel performance reached an all-time high in November 2023, with a regional index of 116, indicating that all travel sectors within the region have consistently outperformed pre-pandemic levels. Mexico was the leading country in terms of travel performance, followed closely by Brazil. While inbound travel to some countries is still recovering, the Dominican Republic has become increasingly popular in CY 2023. Mexico continues to be the top destination in the region due to its highest number of inbound arrivals. Outbound travel from Latin America has also returned to normalcy in CY 2023, and it is expected that international departures will exceed CY 2019 levels by CY 2024.

The Middle East is the only region projected to have fully recovered its international travel volumes by CY 2023. As per the Skift Travel Health Index, both the Middle East and Africa reached their CY 2019 performance levels by February 2023 and have continued the positive trajectory. In terms of specific sectors within the region, airline performance lags with only an 85% recovery rate, whereas other sectors have exceeded pre-pandemic levels. Notably, the vacation rental sector stood out, recording a 39% point increase over CY 2019 levels by November 2023. The growth in the region, particularly driven by Saudi Arabia, is expected to maintain a positive momentum, although the ongoing Israel-Gaza conflict poses significant challenges.

Europes travel performance has room for improvement. High inflation has driven up travel costs, and extreme weather conditions impacted tourism. In CY 2024, growth in the European Union region is expected to be bolstered by major events. Such high-profile international events typically draw significant numbers of visitors, boosting tourism and related industries across the host region. Indias travel sector boomed and remained the strongest in the region. India has emerged as one of the largest inbound markets for the European Union (EU) and the United States (US), a trend that is expected to continue with strong momentum.

Asia-Pacific witnessed significant recovery, following the reopening of China. Domestic travel within China has significantly rebounded from the pandemic lows, with domestic airline seat capacity above the CY 2019 levels. International travel is also showing signs of recovery, nearing pre-pandemic seat capacity.

Cross-Border Travel to Bounce Back by CY 2025

Global international trips are estimated to grow by 39% in CY 2024, accounting for 97% of the total cross-border trips recorded in CY 2019. Asia is expected to witness steady growth by CY 2025 as Chinese outbound travel recovers. International trips from the Middle East and Africa in CY 2023 surpassed the CY 2019 levels. Growth is expected across all regions except Europe which is anticipated to witness moderate growth in CY 2024.

Consumer trends

Blended Travel Boosts Hybrid Hospitality

The emergence of remote work has altered travel habits, increasing the popularity of long stays and ‘workations. Most business travelers from the U.S., UK, Australia, and India work remotely. With greater flexibility around work, the blending of leisure and business travel has become more significant. According to Euromonitor, the global spending by travelers combining business and leisure will more than double by CY 2027 compared to CY 2021. Blended travel presents tremendous opportunities for hotels to transform into quasi-offices. This marks the advent of hybrid hospitality in which hotel operations are intricately linked with the evolving needs of modern travelers.

Preference for Luxury Travel

There is an increasing demand for luxury travel experiences, indicating a shift towards more personalized and high-value travel. Exceptional service and exclusivity are the major elements dominating luxury travel experiences, emphasizing the significance of personalized attention and services in luxury travel. Todays luxury travel offers exceptional comfort, customized activities, and the chance to forge enduring memories that resonate with travelers values and aspirations.

The factors influencing luxury travel experiences include friends and family, travel websites and blogs, and social media. Digital sources dominate trip planning, with online travel agencies (OTAs) and destination websites playing prominent roles. There is a growing demand for adventure in luxury travel, with a strong emphasis on engaging with local cultures and supporting local communities.

Digital dominance in luxury travel market

Driven by domestic demand and the resumption of international travel, the aviation sector seems to be emerging from its recovery phase. Vacation rentals and car rentals continue to be the best-performing sectors.

Online travel significantly surpassed its post-pandemic levels with revenue increasing by 25% in CY 2023 owing to a stronger-than-expected recovery in Asia Pacific. CY 2024 is expected to be a revolutionary year for online booking sites as they explore new technologies, business models, and marketing strategies, including increased use of social media integrations, gamification, and B2B approaches. It is anticipated that online travel agencies will handle approximately USD 670 billion in gross bookings in CY 2024, marking an 11% year-on-year increase and generating revenues of USD 68 billion, up by 44% from CY 2019 levels. Google has established a dominant position at the top of the travel search funnel, benefiting large platforms with its sponsored listings, while also enabling hotels and smaller OTAs to gain market presence through organic search results.

In CY 2023, the global Revenue per Available Room (RevPAR) was 10% higher than the CY 2019 levels. Average Daily Rate (ADR) pricing increases were the key driver of the recovery, although occupancy rates across the majority of regions remained below those of CY 2019. Occupancy rates are expected to increase in CY 2024 while ADR growth will remain robust. Given that the luxury and upper premium hotel categories have experienced the slowest recovery in terms of occupancy, luxury hotels are expected to witness a notable surge in demand in CY 2024. Upper upscale hotels, in particular, are expected to benefit from the resurgence of group and business travel.

Growth in short-term rentals (STRs) is expected to moderate as hotels regain market share, although STRs will retain much of their pandemic gains, with revenue anticipated to reach USD 177 billion by CY 2024. The airline sector resumed operations at pre-pandemic levels in CY 2023, marking a period of substantial growth and recovery for the industry. In CY 2024, revenues for airlines are projected to reach USD 964 billion, driven by strong travel demand and ongoing capacity constraints.

(Source: Skift Research)

Role of AI in travel

According to the Lattice Report, the global travel technology industry has seen consistent growth as the travel sector adopts digital solutions to enhance the travel experience and streamline processes. Technology innovation plays a vital role in the advancement of the travel industry. The growing adoption of SaaS-based models and artificial intelligence is fueling market expansion. Developments such as advanced booking platforms, virtual tours, and personalized recommendations have significantly improved the travel experience. Overall, software capabilities within the travel industry have notably improved, leading to intense competition across various sectors of the industry.

In CY 2022, the market for third-party technology providers (excluding hardware) and digital marketing in the industry reached USD 34 billion and is projected to grow to USD 42.6 billion by CY 2027, representing a compound annual growth rate (CAGR) of 8.6%. The products and services offered by RateGain were part of a serviceable addressable market valued at USD 6.6 billion in CY 2023, which is expected to increase to USD 9.9 billion by CY 2027.

Generative AI has significantly impacted the technology industry, sending waves across various sectors, functions, and disciplines, especially in the post-COVID world. Although AI and Machine Learning have existed for over a decade, it is only recently that these technologies have entered the mainstream and garnered widespread public interest.

The influence of AI on the travel industry is profound, extending from general acceptance to specific preferences for personalized recommendations. The adoption of AI not only enhances the individual travel experience but also opens new pathways for innovation within the industry.

Both millennials and Gen Z travelers show a strong preference for Al-powered services, reinforcing a wider adoption of technological advancements within the travel industry. A significant majority of these younger travelers prefer customized travel recommendations from Al systems that enhance their overall travel experience. This highlights a major opportunity for travel stakeholders to integrate AI more deeply across various aspects of travel planning. The tourism sector can benefit immensely from the rapid analysis of millions of data points using Generative AI and associated technologies, which can yield meaningful insights. By leveraging AI to offer personalized activity and destination suggestions, companies can enhance customer satisfaction and loyalty. However, successfully implementing AI involves identifying appropriate use cases, assessing infrastructure costs, and acquiring the necessary skills and teams to implement these solutions effectively.

AI is poised to revolutionize not just travel planning and performance advertising, but will also transform how people find travel inspiration, leading to improved sales and marketing strategies. Furthermore, the impact of AI will drive widespread improvements across the travel technology sector. Another possible development is the role of AI assistants in streamlining the integration of complex technology systems, thereby enhancing operational efficiency.

How could AI transform travel in the long term?

Given the transformative potential of artificial intelligence, even a slight increase in worker productivity in the travel ecosystem could have a larger impact than all other applications of AI put together. However, implementing AI requires substantial data preparation and modern infrastructure given the travel industrys existing technological debt and widespread use of outdated systems. Despite these challenges, AI promises a new era of smarter, more customized travel. Early adopters are already exploring this potential, and initial successes could drive technological advancements within the industry.

While travel will always be centered around physical destinations and human connections, AI has the potential to revolutionize the travel industry by improving all facets of the customer travel journey - from the initial search and planning stages, through the travel experience itself, and even addressing any challenges that may arise during the trip.

RateGain with its AI-led products is rightly positioned to capitalize on this opportunity and help the industry simplify guest acquisition and improve Return on Investment (ROI).

The evolution of marketing in the age of AI

Marketing technology is crucial for staying competitive in the hospitality industry. Effective marketing not only improves visibility but also significantly influences customer decisions, as indicated by trends towards online booking and digital engagement. It also benefits hotels by enhancing direct bookings, attracting new customers, accelerating response times on social media, and refining content strategies. When effectively implemented, these tools boost team productivity and help marketers manage the complexities of distributing content across multiple channels and targeting the right audiences.

Skift Researchs U.S. TravelTracker Survey shows that online sources are used more than offline sources when planning a trip, rendering digital marketing and advertising crucial for the industry. While larger organizations may develop mature systems relatively quickly, smaller companies might face longer timelines to build robust systems.

Marketing technology (Martech) involves tools and processes that allow marketers to utilize data and analytics for email marketing, social media campaigns, A/B testing, customer relationship management (CRM), and conducting surveys. Advertising technology (Adtech) encompasses the software and processes used by advertisers and agencies to create, execute, and manage online ad campaigns across various external platforms, with a significant focus on audience targeting and personalization using data and analytics.

Utilizing Martech and Adtech will significantly benefit hotels by increasing direct bookings, reducing customer acquisition costs, enhancing social media responsiveness, and accelerating the content publication process.

Both Martech and Adtech play essential roles in managing metasearch channels. The slow shift towards first-party cookies is expected to impact how marketers and advertisers target and personalize their campaigns. The industry appears inadequately prepared for this change, with many organizations still figuring out how to adapt to a future where third-party cookies are no longer a reliable source for tracking user behavior and preferences. This transition demands innovative approaches and technologies to maintain effective marketing and advertising strategies without compromising user privacy and compliance with new regulations.

Company overview

RateGain Travel Technologies Limited (hereafter referred to as ‘RateGain or ‘the Company), founded in 2004 and headquartered in Noida, Uttar Pradesh, India, is a leading global provider of Software as a Service (SaaS) solutions for the travel and hospitality sectors. As one of the worlds leading processors of electronic transactions and pricing data for the travel and hospitality industries, RateGain offers advanced tools that help companies in various sectors - including hotels, airlines, car rentals, online travel agents (OTAs), destination management organizations (DMOs), vacation rentals, travel management companies, and package providers - optimize revenue generation through customer acquisition, retention, and wallet share expansion.

Today, RateGain is trusted by the worlds top 26 of 30 hotel chains and connected to over 1,91,000 hotel properties. Its extensive client base includes 16 Fortune 500 companies, 26 of the top 30 hotel chains, 25 of the top 30 OTAs, and leaders in car rentals, airlines, and cruise lines, helping them to understand demand, engage and retain guests, and enhance key performance indicators to maximize revenue.

RateGain is renowned for its comprehensive travel-intent and pricing platform that processes over 200 billion ARI (Availability, Rates, and Inventory) updates and manages nearly 143 billion data points. The Company collaborates with 700 partners in 100 countries, providing a unified source to understand market demands, target audiences, and enhance conversion rates.

Leveraging artificial intelligence, the Company aggregates real-time information from over 1,100+ sources, offering revenue managers accurate, high-quality data through a user-friendly interface that simplifies market analysis and pricing strategy decisions.

Product offerings

The Company has crafted an extensive portfolio of products for the travel and hospitality technology ecosystem, targeting both enterprise and mid-market clients. These products support various functions including revenue-management-decision support, competitive intelligence, distribution, social media marketing, online reputation management, digital marketing campaign management for direct customer acquisition, and brand engagement. Over the years, RateGain has expanded its operations, enabling global customers to optimize their operations and boost revenues.

The Companys products and services are broadly categorized into three major categories:

Data as a Service (DaaS)

RateGain offers competitive rate intelligence and price parity intelligence to help hotels, OTAs, airlines, cruise liners, car rentals, and vacation rentals to remain competitive and optimize their revenues by leveraging proprietary AI, cloud-enabled technology, and API partnerships to collect and process forward-looking pricing data. RateGain accesses information from over 1,100+ sources in real-time, delivering accurate and high-quality data through a user-friendly interface. This allows revenue managers to easily understand their market position and adjust their pricing strategies.

RateGains other offerings include an automated AI-powered pricing recommendation platform and demand forecasting solution. These cutting-edge solutions use forward-looking data to predict future demand at a city level that will help make the right strategy.

With the recent acquisition of Adara, RateGain enhances its offerings with travel-intent data and forward-looking rate intelligence from diverse sources. This acquisition aligns with RateGains vision of the Integrated RevMax platform and will allow its customers to do guest acquisition, guest engagement and retention, and wallet share expansion. It also enables marketing and revenue teams to collaborate more closely, effectively targeting the right audiences with suitable offers on the most appropriate channels.

Distribution

RateGain addresses a major challenge for hotel commercial teams by facilitating connection to each channel or demand partner which otherwise is time-consuming, cost-intensive, and technically demanding. RateGain connects around 1,91,000+ properties to 400+ channels, which cover most global source markets. This enables hotel chains to tap into new source markets and new OTAs to access large chains.

The Companys platform facilitates the seamless exchange of availability, rates, inventory, and content between accommodation providers, OTAs, and GDAs, processing over 200 billion transactions annually. Supported by a dedicated data center, it ensures zero downtime, making it a highly reliable and scalable solution. Currently, 26 of the top 30 hotel chains and 25 of the top 30 OTAs depend on RateGains distribution platforms, making it one of the largest distribution networks globally.

Martech

With increasing digital penetration in the travel and hospitality industry where most travel searches are online, the majority of hotel bookings are made via smartphones, influenced by social media reviews and content. These channels have become imperative for driving engagement and generating revenue in line with evolving guest expectations.

The cost of acquiring guests is rising as competition intensifies across both traditional and digital advertising spaces, with travelers increasingly turning to digital channels for inspiration, research, booking, and engagement. As the demand for unique and personalized experiences increases, travelers are exploring different brands that offer added value. However, brands currently face challenges in gaining clear insights into traveler preferences. They need a platform to help them adapt to the changing guest expectations.

RateGain offers an end-to-end digital marketing suite that enables hotels to drive higher Return on Ad Spend (RoAS) through enabling guest acquisition and higher retention. The Martech offerings of the Company leverage Al-driven audience identification and activation capabilities, and real-time insights to help hotels, car rentals, airlines, DMOs and other travel segments to enhance their digital marketing strategies to effectively capture visitors from their preferred channels. These offerings allow hotels to target, measure, and optimize campaigns across various audience types, from high-end travelers seeking luxury getaways on social media to value-driven travelers using metasearch engines like Google and TripAdvisor. The Martech platform has 24 billion data elements powering digital marketing, programmatic advertising, campaign measurement, and CRM and retention, helping its customers create better connections to drive more consumer engagement and profitability.

The acquisition of Adara has bolstered RateGains product portfolio by integrating technologies that strengthen their Data-as-a-Service (DaaS) and Marketing Technology (Martech) divisions through the use of travel intent data. This acquisition has broadened the Companys Data as a Service (DaaS) offerings, enabling the provision of travel intent data to support more targeted digital marketing campaigns tailored for travel brands, including Destination Marketing Organizations (DMOs). Additionally, the expansion has enhanced its Marketing Technology (Martech) services, which now include brand engagement, brand monitoring, and paid digital marketing strategies, serving various segments within the travel and hospitality sectors.

The travelers journey consists of six distinct phases, which are as follows:

• Dreaming: In this stage, the traveler doesnt intend to book a trip but is inspired by social media and other platforms.

• Planning: The traveler starts considering specific itineraries, dates, locations, and activities for the trip.

• Discovering: After selecting a destination, the traveler scouts the best offers and tour packages available.

• Booking: The traveler finalizes plans by making reservations through the preferred booking platform.

• Trip and Stay: The traveler embarks on the trip and checks into their accommodation, experiencing what was promised during the booking phase.

• Review and Retention: After the trip, the traveler reflects on their experience, provides feedback, and decides whether they would return to the property in the future.

Based on these six stages, RateGains offerings are bifurcated into three verticals that allow a hotels commercial team to engage with the traveler at each step of their journey and impact them positively to generate higher revenue. With these three segments combined with the six stages mentioned above, RateGain strives to establish an integrated platform for sales, marketing, distribution, and revenue management.

Business strengths & strategies Business Strengths

• Integrated tech stack of SaaS-based solutions for travel and hospitality industry The Company provides a comprehensive suite of industry-specific solutions designed to drive growth, optimize revenue opportunity and monetization. At the heart of its success is a commitment to product and technology innovation. The platform offers interoperable products that integrate seamlessly, enabling customers to maximize revenue and reduce costs. The Company leverages proprietary AI algorithms within its SaaS products to introduce advanced features across its product suite, which includes Navigator, Rate Intelligence for OTAs, AirGain, and CarGain. These products offer competitive pricing intelligence and real-time market insights using an Al-powered data platform.

The Rev.AI product, tailored for the car rental market, aims to replace static pricing with dynamic pricing recommendations, enhancing revenue management with personalized, user-friendly interfaces that provide detailed market rate insights and pricing strategies. Through RateGain Labs, its in-house incubator, the Company develops AI and data science- driven applications for the travel industry. The platforms architecture is scalable and secure, meeting the highest standards of data privacy, including PCI DSS compliance and GDPR requirements. This continuous innovation and strategic technological acquisitions strengthen its competitive edge in the market.

Additionally, the Companys Martech solutions help hotels and travel partners target and convert high-intent travel audiences, enhancing the guest experience through real-time monitoring of inquiries and complaints, thus boosting guest loyalty.

• Diverse and comprehensive portfolio of revenue maximization and business critical solutions The Company has developed a robust product portfolio that serves the technology needs of the hospitality and travel industry, particularly targeting enterprise and mid-market customers. This portfolio includes tools for revenue management decision support, competitive intelligence, distribution, and various facets of marketing including social media, online reputation, brand engagement, and paid digital marketing. Over the years, the Company has expanded its operations globally, enabling customers to streamline their processes and boost revenues. The client base is diverse, covering a wide range of travel and hospitality sectors such as hotels, airlines, OTAs, vacation rentals, and more. Starting with a single price comparison product for hotels, the Company has significantly diversified its offerings to include solutions for revenue optimization, travel intent, and distribution, as well as marketing technology. It now stands as one of the few travel technology firms providing comprehensive end-to-end support, from data handling and decision-making to distribution and marketing.

Notable products like AirGain, CarGain, and FerryGain provide specialized pricing intelligence for the airline, car rental, and cruise industries, respectively, enhancing RateGains suite of pricing insights and competitive intelligence tools. These products are developed in-house by a centralized team of software development, product management, and data science professionals, which the company believes creates high operational leverage.

In the past year, the company launched RateHub, a platform that assists hotels in distributing data to meta-search engines, thereby boosting visibility and increasing direct bookings. Integration with major property management systems (PMS), central reservation systems (CRS), revenue management systems (RMS), and long-tail channels like GDS and OTAs allows the company to access extensive data, creating a strong network effect. The suite of products not only functions individually but also synergistically enhances the capabilities of the entire product suite. Our connectivity platform for Hotels, offers CRS level connectivity, automated currency conversion, productivity reporting, business intelligence, and content management. The Smart Distribution tool and Content.AI help customers discover new demand, automate contracting, optimize content and rates, and effectively distribute across various channels.

RateGain has forged an extensive partnership ecosystem over 15 years, comprising leading OTAs and more than 400+ demand partners.

Content.AI specifically helps hotels improve their content by providing insights into potential gaps and optimizing imagery to increase conversion rates on demand platforms.

Furthermore, the Company develops customized social strategies that align with clients marketing objectives, enhancing engagement and delivering measurable social performance insights. Following the acquisition of Adara, the Company leverages anonymized digital profiles scored on travel intent to enhance its digital marketing solutions, targeting the right audiences and optimizing campaign returns.

• Strong relationships with marquee global customers

RateGain boasts a diverse customer base encompassing over 3,279 clients as of March 31, 2024. This includes 16 Global Fortune 500 Companies and spans various segments such as airlines, hotels, cruise lines, car rental agencies, online travel agencies, DMOs, tour operators, and wholesalers. The Company supports its customers with a global support and implementation team that ensures prompt issue resolution. RateGain has in place robust customer feedback mechanisms including automated NPS (Net Promoter Score) surveys, onboarding customer satisfaction surveys, business reviews, and customer advisory boards across various geographies. RateGain also conducts annual advisory meetings with industry professionals to gather insights and stay aligned with the evolving needs of the travel and hospitality industry.

• Extensive network of integrated partners RateGain has forged an extensive partnership ecosystem over 15 years, comprising leading OTAs and more than 400+ demand partners. Each partnership requires significant technological efforts to establish and maintain, along with continuous business operations. This network has facilitated a seamless connection between RateGain and hotels for development and expansion. Moreover, this ecosystem supports organic growth as it minimizes the need for extensive sales and marketing efforts to forge partnerships between large hotel chains and regional OTAs.

• Robust financial position

RateGain achieved robust performance and growth in FY 2023-24. The Company reported a strong cash position, holding 10,822.0 million as of March 31, 2024. The year also saw RateGains revenues soaring by 69.3% y-o-y, reaching 9,570.3 million, driven by strategic initiatives that significantly expanded its client base to 3,279 and secured substantial contract wins totaling 2,847.8 million - an 115.5% y-o-y increase. RateGains profits experienced an extraordinary growth of 112.6% y-o-y, increasing to 1,453.9 million from 684.0 million in the previous fiscal year. The Companys business model demonstrated resilience with its annual recurring revenue standing at 10,233.0 million and an order pipeline valued at 4,862.0 million, positioning RateGain on a sustained growth trajectory.

• Global and diverse management team with relevant technology and domain expertise and focus on employee welfare

RateGain benefits from the strategic vision and extensive experience of its senior management team. Each member of the senior management team has over a decade of experience contributing to revenue growth in the SaaS, hospitality, and travel sectors, with robust experience in go-to-market strategies and product development. Given the global distribution of the management team across three continents, the Company benefits from a diverse perspective and local engagement in key markets. This geographic diversity facilitates close relationships with enterprise and mid-market customers, enhancing customer relationship management.

Additionally, the Company places a strong emphasis on employee learning and satisfaction. Initiatives such as the ‘Micro MBA, functional training, and leadership development opportunities are part of its commitment to employee growth. The Company has implemented an employee ticketing process to swiftly address queries and conducts structured employee satisfaction surveys. An anonymous chatbot enables direct interactions with the CEO, fostering an open and communicative work environment.

These efforts have culminated in the company being recognized as a ‘Great Place to Work for four consecutive years. It has received multiple accolades, including the Dream Employer of the Year at the World HRD Congress in CY 2021, the Best HR Strategy in line with Business Award at the same congress in CY 2018, and awards for Talent Management by Times Ascent in CY 2022. In CY 2023, it was recognized as Best CEOs for Diversity and Best Company for Career Growth by Comparably, affirming its dedication to creating a supportive and rewarding workplace.

Business strategies

• Strengthen DaaS and Distribution offerings through cross-selling and geographical expansion in existing and adjacent verticals RateGain is strategically planning to extend its solutions into new verticals and geographies. With the recovery in economic activity and increase in travel demand, the Company aims to broaden its existing product range across additional segments of travel and hospitality industries through collaborations with existing revenue management solution providers, enhancing its global footprint. The interoperability of its diverse products enables the Company to consolidate point solutions, providing customers with integrated, bundled options. This approach allows customers to derive detailed information to effectively manage demand fluctuations in their vicinity and for similar categories of hotel rooms.

Furthermore, RateGain intends to leverage improvements in AirGain, a price intelligence tool tailored for the airline sector. Its ability to deliver unique, personalized, and contextually relevant products that address key operational issues for customers is expected to increase its share of wallet among existing clients and reduce customer acquisition costs.

The Company also aims to penetrate adjacent verticals within the travel industry that can utilize the same product set to guide their businesses. Plans include expanding the customer base through the Distribution segment, enhancing and upscaling integrated offerings, and leveraging well-established relationships with existing customers to add new verticals, thereby growing revenues with minimal customer acquisition costs.

In CY 2023, the global car rental market was valued at approximately USD 99 billion and is projected to reach USD 121 billion by CY 2027. This growth presents a significant opportunity for the Companys Rev.AI product in the car rental segment. Rev.AI is designed to replace static pricing mechanisms with dynamic pricing recommendations, optimizing yield, generating demand through cohort promotions, and enhancing utilization through effective inventory management.

New partnerships and customer relationships are expected to drive the Companys growth in the future. The Company intends to expand cost-effectively into adjacent verticals and new geographies through partnerships with brands, offering and recommending its solutions to a broader market.

• Scaling and expanding the footprint of Adara The acquisition of Adara in CY 2023 has enhanced RateGains product portfolio by integrating technologies that strengthen its DaaS and Martech divisions through the use of travel intent data. It has expanded the DaaS operations to include more targeted digital marketing and advertising solutions, and broadened its Martech services to encompass brand engagement, brand monitoring, and paid digital marketing. These services assist clients in the travel and hospitality industry to innovate their digital marketing strategies and optimize visitor engagement from preferred channels.

Plans are in place to scale Adaras contributions by:

• Utilizing the RateGain brand and existing relationships with travel and hospitality brands to enhance Adaras performance

• Enhancing the interoperability of product offerings within the Martech segment, thus strengthening the Companys portfolio, which includes social media management and metasearch marketing

• Expanding Adaras reach into regions such as Europe, Asia-Pacific, and the Middle East

• Broadening data partnerships in these regions to fortify Adaras DaaS solutions and improve the platforms reach and effectiveness

• Harnessing the synergies of Adaras existing tech ecosystem to enhance the combined product offerings

As the significance of social media continues to grow in a digital-first world, the Company envisions increased adoption of its DaaS and Martech products, aimed at capturing customer attention at various stages, from planning through social media engagement to enhancing brand awareness with paid digital marketing campaigns. The Company is actively pursuing additional leads and has a robust pipeline of engagements.

Furthermore, RateGain plans to leverage Adaras Martech and DaaS solutions to tap into the expanding market opportunity, targeting large and mid-size hotel chains, car rental companies, airlines, and cruise customers with more focused ad campaigns to optimize returns. It also intends to extend Adaras offerings to select, high-growth markets in the Asia Pacific, Middle East, Indian Ocean, and parts of Europe.

• Continue to leverage unique data assets to create new and scale existing AI product offerings RateGain is recognized as one of the worlds largest aggregators of travel pricing data for the hospitality and travel industry. It utilizes a comprehensive data lake to store and model travel-related data. Over the years, the Company has successfully leveraged its substantial data assets to provide customers with rate intelligence, cognitive revenue management, and distribution products. The scale of its operations and analytical prowess have been crucial in expanding the Companys operations and monetizing offerings. It plans to continue utilizing its extensive data assets by introducing additional products that incorporate the latest technologies, including artificial intelligence, and by commercializing these APIs for use within the travel ecosystem to address various use cases and enhance the seamlessness of travel experiences.

Recently, the Company introduced specialized offerings like Rev.AI Ferries, a tailored solution for the ferry industry designed to maximize revenue from both foot and car passenger sales. This solution analyzes multiple factors such as passenger demands for foot and car, car sales, frequency of sailings, and inventory to optimize revenue.

Inorganic growth continues to remain a key pillar of the Companys strategy to build a comprehensive revenue maximization solution and propel growth.

To further its product development capabilities, the Company has established RateGain Labs, an in-house incubator that draws on its existing expertise to address current problems in the travel industry using data, proximity to customers, and extensive business experience.

Pursue strategic investment and acquisition opportunities

Inorganic growth continues to remain a key pillar of the Companys strategy to build a comprehensive revenue maximization solution and propel growth. The hospitality and travel technology industrys fragmented nature and evolving macroeconomic environment presents significant inorganic growth opportunities. RateGains proven track record of mergers and acquisitions has been instrumental in driving strong performance across all its previous acquisitions. It intends to selectively pursue strategic acquisitions and investments and other strategic alliance partnerships that are complementary to its growth strategy, particularly those that help enrich offerings, enhance technologies and products, and expand the customer base of the Company.

Over the past few years, the Company has successfully acquired four major companies: DHISCO in CY 2018, BCV in CY 2019, MyHotelShop (MHS) in CY 2021, and Adara in early CY 2023. These acquisitions have enhanced RateGains capabilities and furthered its goal of becoming a unified platform for hoteliers.

The acquisition of DHISCO allowed RateGain to integrate with RezGain, forming one of the worlds largest networks for the distribution of supply and demand. RateGain expanded into the Martech sector with BCV and MHS acquisitions, enabling hotels to engage with potential customers via social media and drive more direct bookings through social media and metasearch websites.

Adara is RateGains fourth acquisition and has significantly enhanced its competencies. It positions the Company as one of the most comprehensive platforms for travel intent and pricing data worldwide, enhancing the return on advertising spend (RoAS) for its clients.

Through these acquisitions, RateGain is developing unique and complementary capabilities across different business segments. These strategic additions will bolster its competitive advantage and enhance its position as the integrated revenue maximization platform for customers.

As part of the inorganic growth measures, RateGain aims to strategically acquire businesses that offer similar products and technologies which will enable the Company to expand its product portfolio and improve the performance of existing products.

Business performance Financial & Operating Performance

(Rs million)

Particulars	FY 2023-24 (consolidated)	FY 2022-23 (consolidated)
Operating Revenue	9,570.3	5,651.3
EBIDTA	1,897.2	846.5
PBT	1,888.7	672.6
PAT	1,453.9	684.0
Net Worth	14,504.7	7,097.4
Return on Net Worth (%)	10.0	9.6
Debt to Equity Ratio	0.01	0.02
Earnings per share ()	13.0	6.3

DaaS: The Company generates revenue on a SaaS-based annual subscription fee model and a Hybrid Fee model, where it charges a minimum annual subscription fee and a pay-per-use model for generating additional data for the client under the Data as a Service (DaaS) division. The Company recorded a revenue of 3,145.6 million in FY 2023-24 as compared to 1,618.4 million in FY 2022-23, marking a growth of 94.4%.

Distribution: Under this segment, the Company generates revenue in two forms viz. a SaaS-based annual subscription model and a transactional model where it generates a fee from bookings made through its platform. Total revenue from this segment stood at 2,117.3 million in FY 2023-24 as compared to 1,942.9 million in FY 2022-23. The annual growth within the Distribution segment stood at 9.0%.

Martech: Under the Martech segment, the Company generates revenue from a SaaS-based annual subscription fee charged to its clients along with campaign-based fee for managing digital marketing campaigns for clients periodically. The total revenue grew by 106.1% to 4,307.4 million in FY 2023-24 compared to 2,089.9 million in FY 2022-23.

The Companys consolidated operational revenue increased by 69.3% from 5,651.3 million in FY 2022-23 to 9,570.4 million in FY 2023-24. Despite the ongoing economic uncertainties, the Company registered well-rounded growth in revenue from its current clients and the addition of new clients during the year.

The annuity-based subscription fee accounted for 23.1% of total revenue, the hybrid fee structure for 37.6%, and the transactional volume constituted 39.3% of total revenue for the year. The Company aims to increase recurring and subscription-based revenue to ensure consistent and reliable revenue sources.

Operating Expenses

The Companys operational expenses grew by 59.7% from 4,804.8 million in FY 2022-23 to 7,673.1 million in FY 2023-24.

Operating Profits and Margins

The Companys Operational Profits surged due to strong revenue growth and normalized employee-related costs. With the globalization of travel and the increasing demand for digitization in the travel and hospitality industries, the Companys solutions gained impressive traction. The EBITDA for FY 2023-24 stood at 1,897.2 million as against 846.5 million in FY 2022-23, registering a 124.0% growth. The EBITDA margin increased from 14.9% in FY 2022-23 to 19.8% in FY 2023-24. The Profit after Tax stood at 1,453.9 million, which is a 112.6% increase from 684.0 million recorded in FY 2022-23.

Earnings per Share

The Companys earnings per share expanded from 6.3 in FY 2022-23 to 13.0 in FY 2023-24 due to its strong financial and operational excellence.

Share Capital & Other Equity

The Companys Equity Share Capital increased from 108.3 million as of March 31, 2023, to 117.8 million as of March 31, 2024. Other Equity increased to 14,386.9 million on March 31, 2024, from 6,989.1 million on March 31, 2023. The Net Worth of the Company increased to 14,504.7 million as of March 31, 2024, from 7,097.4 million as of March 31, 2023.

Investments

Investments consist of government and corporate bonds with excellent credit ratings and low-risk mutual funds. As of March 31, 2024, the total investments of the Company amounted to 1,789.7 million.

Other Bank Balances and Cash and Cash Equivalents

As of March 31, 2024, cash and cash equivalents stood at 10,822.0 million.

Key Financial Ratios - Consolidated Operations

Particulars	FY 2023-24 (consolidated)	FY 2022-23 (consolidated)
Debtors Turnover	5.2	4.3
Inventory Turnover	NA	NA
Interest Coverage Ratio	138.9	56.0
Current Ratio	5.3	2.6
Debt Equity Ratio	0.01	0.02
Operating Profit Margin (%)	19.8	14.9
Net Profit Margin (%)	15.2	12.1
Return on Net Worth (RONW) (%)	10.0	9.6

The Return on Net Worth improved from 9.6% in FY 2022-23 to 10.0% in FY 2023-24, mainly due to increase in Net Worth in the past year with a capital raise completed by the Company in November 2023. Improvement in return on net worth was led by a significant increase in profitability with PAT coming in at 1,453.9 million in FY 2023-24 compared to 684.0 million in FY 2022-23.

Trade Receivables

As of March 31, 2024, trade receivables totaled 2,050.0 million, up from 1,607.8 million as of March 31, 2023. During the year, Debtor Turnover increased from 4.3 times to 5.2 times.

Current Liabilities

Current liabilities include borrowings, accounts payable, lease liabilities, other financial liabilities, short-term provisions, and other current liabilities. Current liabilities as of March 31, 2024, stood at 2,459.8 million as compared to 1,923.0 million as of March 31, 2023.

Cash Flow

Cash flow from operating activities grew to 1,518.1 million in FY 2023-24 from 519.2 million in FY 2022-23. This was driven by improvement in profitability with profit after tax coming in at 1,453.9 million and improved collections achieved during the year.

Human resources

At RateGain, our success is driven by the dedication, creativity, and collaborative spirit of our global teams. Celebrating our fifth consecutive certification as a "Great Place to Work" and our first-time award for being amongst the Top 100 Great Places to Work in India, weve shown our commitment to creating an inclusive workplace where every voice is heard. This year, we relaunched our Core Values to unite our 800+ employees worldwide, fostering a culture where teamwork, ownership, people-first attitude, innovation, and customer obsession thrive.

Our New Core Values are:

• Teamwork (T): We focus on the ‘We and not the ‘Me, harnessing collaborative energy and uniting our strengths to foster creativity and drive unparalleled success together.

• Ownership Mindset (O): We encourage an ownership mindset, creating a space for new ideas to thrive and drive individual growth, promoting a sense of responsibility and achievement that stretches beyond possible.

• People First (P): We commit to empowering and respecting every individual, fostering a supportive environment that thrives on diversity, equity, inclusion, personal growth, and well-being.

• Innovation (I): We propel change by pushing boundaries, creating innovative, intuitive products and processes that redefine standards and exceed expectations.

• Customer Obsession (C): We are dedicated to improving the lives of our customers and helping them succeed.

We have urged our employees to ensure that in our journey to Beyond Possible, let TOPIC be their guide. As TOPIC is the acronym for our 5 core values.

Our commitment to these values yielded tangible results: our lowest-ever attrition rate of 11.2% and high Employee Satisfaction Score (E-NPS) of 42.9. We emphasized well-being through partnerships like Practo, offering comprehensive medical coverage and wellness programs. We conducted learning and development initiatives like RG POLO 2.0, RG She Leads, and RG GOLD, preparing our employees for future challenges and providing them with growth opportunities.

As part of talent acquisition and diversity efforts, we welcomed 249 new hires, maintained a balanced gender ratio (67% male and 33% female employees), and witnessed significant participation in our innovative Hackathon. Our DE&I initiative of #RGforALL has three Employee Resource Groups viz. SHE@RG for all our women employees, RGPRISM for our LGBTQIA+ employees, and ME@RG for the rest of our employees. Our Employee Resource Groups (ERGs) have been pivotal in promoting diversity, equity, and inclusion, making RateGain a place where everyone feels valued and part of our family.

This year, we are enhancing our inclusive and supportive environment with a series of initiatives under all the three ERGs.

SHE@RG: SheLeads - a woman leadership development program which resulted into 3 out of the 12 participants being placed in higher roles and empowering women in Europe with confidence workshops. A comprehensive womens health awareness plan, Leadership talks by successful women leaders/entrepreneurs ‘On lessons on leadership. We hired one woman business leader under our Chairman and MD.

RGPRISM: Our commitment to diversity and inclusion extends to sensitization training for Allies of RG PRISM and partnering with job portals that specialize in hiring diverse candidates. A training session on DE&IB was organized to educate our leaders on creating a diverse and inclusive workplace.

ME@RG focused on providing counseling and coaching. A mental wellness workshop was conducted for all our employees and a revamped leave policy was launched for our largest region APAC based on employee feedback.

Our new competency framework was defined and rolled out for all our Revenue and Technology roles and will integrate with HR processes. The launch of our HRMS system, HROne, will streamline operations and enhance employee experience by being a one-stop solution for all employee needs. We will also enhance the experience through usage of AI bots in the coming days.

As we reflect on our journey of growth and resilience, we remain committed to our people as our greatest asset, driving future success.

Internal controls

RateGain has in place a robust internal control system commensurate with the size, scale, and characteristics of its operations. It has established comprehensive policies and procedures to ensure adherence to relevant regulations and legislations, safeguarding of assets, and timely reporting of financial transactions. The effectiveness and efficiency of the internal controls are regularly audited by an external internal audit firm. The Audit Committee periodically assesses and implements appropriate measures for any discrepancies, observations, or suggestions made by the internal auditors.

Challenges

Cybersecurity

Cybersecurity has become increasingly critical across various sectors, including power, utilities, and governmental bodies. In the travel and hospitality industry, the focus shifts toward preventing data breaches and identity theft. As hospitality and travel companies increasingly adopt digital solutions to streamline operations and manage data, it is imperative that they understand the associated cyber risks.

Talent Availability

The travel and hospitality industry witnessed severe job losses during the pandemic, with the majority of the employees reluctant to return. This has resulted in a talent shortage. In response, many hotels are implementing cost-cutting measures, increasingly relying on automation and software solutions to reduce labor costs and enhance efficiency.

Global Political Instability

The tourism sector is extremely vulnerable to adverse events such as wars, geopolitical conflicts, and political disturbances. These events can impact tourist activities, temporarily affecting the travel industry and hindering broader economic development.

Regulatory Changes and Data Protection

The evolving landscape of data protection regulations, such as GDPR compliance, and the phasing out of third-party cookies present significant challenges. Although Google has delayed the elimination of third-party cookies, which currently underpin most digital marketing campaigns, these regulatory shifts could disrupt established marketing strategies and necessitate major adjustments in data handling practices.

Cautionary statement

The statements in the Management Discussion and Analysis Report that describe your Companys projections, estimates, and expectations are "forward-looking statements". They are within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied depending upon the economic conditions affecting demand/supply, price scenario in the domestic and international markets in which it operates, changes in government regulations, tax laws, and other statutes. Your Company undertakes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.