Exoticca
Pere Valles joined Exoticca as CEO in 2015 and the company has since grown from 50 to 500 employees. Previously he held leadership roles in the software space as well as the chief financial officer position at a Nasdaq-listed telecommunications company.
Exoticca raised €25 million in venture debt earlier this year having raised €60M in a Series D round last year. The Barcelona-based company is on a mission to break down its multi-day tours into modules, infuse AI across the business and drive personalization.
Exoticca was founded in 2013 with a mission to disrupt the traditional travel agency market.
Since then the company has begun making the business into digital, found a way to work with travel agents, now the fastest growing part of the business, and attracted significant funding.
Pere Valles, who joined Exoticca as CEO in 2015, discussed the company’s strategy to be a serious contender in the connected trip space but with multiple components and complex itineraries, the required technology investment and keeping investors happy.
*Interview has been edited for brevity.
Website
httsp://www.exoticca.com
You raised significant funding in the past year, what have you earmarked that for?
We raised €85 million, €60 million in equity and more recently €25 million in venture debt. The objective is really to transition the company from defining ourselves as a next generation tour operator to being a real player in the connected trip space, in particular, with multi-day complex, connected trips. The way we understand the connected is a trip that has multiple components and that has to to meet two criteria. One is that these components need to be arranged in a certain order for the trip to make sense and second and more important, is these different components need to be synchronized, and they need to remain synchronized at all times. We want to be a player in this field and this requires an investment in technology.
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There are three areas in which we invest in technology. One is in modularizing our trips. Our trips are quite monolithic. We have 12-day trips, we subdivide that trip in in two three days modules, so that they can be combined with modules in other countries. In order to facilitate the design of the trips by the customer, we are launching what we call the "AI Crafter," which is an AI agent that assists the customer in building the trip with different modules and personalizing the trip to the customers’ needs. That's the first area of investment in technology, the second area, which is also related to the connected trip has to do with the experience of the customer at the destination. We give the customer an app, we call it the travelers' app which is like a digital assistant that helps the customer within the country and the customer can communicate directly with the provider of each service of the trip.
The third area of investment in technology, also to do with the connected trip, is where you have many different providers because you have many different components and you need to find a way to automate your relationship with all these providers, automation of the services, the management of changes, the management of incidents and the invoicing between us and the providers. We are working on automating all the back office processes with our providers. We can scale the business in an efficient way so really the investment is to reposition the company. We want to evolve from this tour operator concept to something that I think is more relevant today, and this requires significant investment in technology, both in AI and non-AI.
Do you see yourselves more as a TUI or a Booking.com?
We see ourselves as a Booking.com that connects the different verticals within travel. Not just accommodation or flights, but also other verticals, like local services, transfers, activities and the guides that are provided by companies in a destination. We connect all the different components of a trip while Booking, maybe will sell you a hotel, a flight and an activity, and you are the one that is connecting all those components. We’re doing it for you. So we have elements of both because TUI is acting as principal with the customer when they sell package. But the package is very monolithic. So, we have digitalized all that and we are connecting all the components of a trip in a way that basically makes sure that everything is arranged in a certain manner, and everything remains synchronized at all times.
What do you think made you so attractive to investors?
If you listen to companies like Booking or Expedia and listen to their earnings calls, they mention the connected trip as where they want to go. They are very good at selling very specific components of a trip, but where there's real value for the customer is in being able to connect all those components and being able to maintain a seamless experience.
We are already there in some regard, we are already selling packages that had all these components. We are responsible for making sure that the experience is a seamless experience. But now we want to do it at scale, and do it in a fully automated way where everything is digital, everything happens automatically, so that it can be done at scale, which is what differentiates Exoticca from a traditional tour operator where everything is done manually through call centers which makes the scalability of the business very challenging.
How far along would you say you are in your AI journey?
Our approach to AI, I call it a "non-silver bullet approach." We take a more granular approach, we have 14 squads in the technology department, and each squad is responsible for a process in the company, so we have embedded in each one of the squads a person in charge of data and how AI will improve that process either by becoming more efficient or by improving the customer experience. So we have this approach, which means that we have many AI projects running simultaneously maybe each one of them individually is not a game changer, but when you combine all of them, it makes a big change.
How long do you think this whole repositioning of the company is going to take?
I think we are halfway already, because we were already doing some of it. We have a decent level of automation in all the back office processes and all the communication processes that we have with the customers through the travelers’ app. The objective is, by the end of this year, to be able to say we have achieved 90% automation in everything so we are a connected trip player.
Scale-wise, are you thinking a connected trip player of the scale of Booking.com or are you thinking a little more niche?
It’s a good point, wherever you connect more than two components it’s a connected trip. Where I think we are more competitive is when the connected trip is complex. Our niche of a connected trip is a trip that has between 20 and 30 components, it has a different itinerary, where you visit multiple places, where you need multiple hotels, multiple flights, activities, transfers. That's where I think it will be more difficult for companies like Booking ... or they will get there later and we will already be there. That's our expertise. The more complex, the more competitive we can be.
We have a decent level of automation in all the back office processes and all the communication processes that we have with the customers through the travelers’ app. The objective is, by the end of this year, to be able to say we have achieved 90% automation in everything so we are a connected trip player.
Pere Valles
What are your priorities for the company this year?
One word, growth. We are backed by venture capital funds. These are people that want growth. When they call you the number one question they ask you is "how much did you sell?"
We have three growth levers. When Exoticca was created, our objective was to eliminate the traditional travel agency. And we see that traditional travel agencies are more resilient than we expected because of the human element. People are very close to their travel agent, especially in the U.S. and Canada where we work, they trust the travel agent. Three years ago we found a way to partner with traditional travel agencies and instead of giving them a brochure and a telephone number to get a quote, we give them access to a platform where they can create a proposal for customers while they are sitting in front of them. We call it our B2B and it’s already 20% of sales. It's the part of the business that is growing the most. So it's one of the growth levers for 2025.
The second growth lever is geo expansion. We are based in Barcelona but 75% of our customers are from the U.S. and Canada and if you add the U.K. it’s another 15% so, 90% of our business comes from three English speaking markets. Why? Because for our model to work we need to create critical mass of people that speak the same language, because we create groups in each of our destinations and the more people that speak the same language, the more groups we can create, the more departure dates we have and the better the conversion.
We want to replicate the same with Spanish speaking travelers. Spain is already 8% of our sales and we launched in Latin America recently. We opened Mexico, Chile and Colombia and we are launching more countries in the next few months. The third growth lever is something we initiated two years ago in Canada, which is, instead of using massive amounts of money to acquire customers, we want to use a part of our marketing budget to build the brand. We use different channels, like television. We have seen all our metrics improve significantly in Canada. We have brand awareness in Canada of over 60% so we want to replicate that in other markets and obviously the big one is the U.S.
What would you say are your challenges as a CEO of a travel company
Keep the investors happy. I’m not the founder, I joined seven years ago as the CEO. We have a very fragmented cap table because the founder sold his shares to venture capital funds. We have 11 funds as investors. Keeping them happy means growing fast. In any other business if you grow at 20% rate everybody is super happy. In a company that is venture backed it is a failure. The second challenge is how to keep the same culture that we had five years ago when we were 50 people, now that we’re 500. How do we maintain that culture? I mean the entrepreneurial spirit that startups have, the agility, the boldness in making bets and taking risk.
What do you think are the wider challenges for the segment of the industry that you operate in?
It’s super antiquated and it is surprising that there is no digital leader. It’s ultra-fragmented not only in Europe but also in the U.S. and Canada. There are a lot of small to medium sized tour operators that have been around for many years and I think there is a clear opportunity for consolidation in this industry through mergers and acquisitions. We’re thinking of growing through acquisitions and in travel size matters. One quick way to gain that size is by acquiring other businesses and these are businesses that are family owned, have never raised capital, are profitable and have very loyal customers.
But in general I think the tour operation model is antiquated. It’s based on a very simple premise which is first I'm going to take capacity and taking capacity means I’m going to pre-buy rooms in hotels and charter flights. And, when I have the capacity I’m going to look for demand which I think is completely wrong.
If you could change one thing about Exoticca, what would it be?
I might change the location. We are really a North American company when you look at the sales. We need to be closer to the market but what we’ve done in Barcelona would cost us two or three times more in the Silicon Valley. We are moving part of the executive team to the U.S. to be closer to the customers.
If you weren’t leading Exoticca, what would you be doing?
I have an expensive hobby which is to invest small checks in startups. I really enjoy it, it allows me to meet entrepreneurs, I’ve made 30 to 40 investments but I might try to do it professionally.