Agoda: Perpetual disruption and post-acquisition challenges

• Main Authors: GOH, Kenneth T., BHATTACHARYA, Lipika, CHAN, Chi Wei
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Post-Acquisition Challenges; Short term Strategy Planning; Business Model Canvas; High Growth Start-up Strategy; Online travel business model; Disruptions in Online travel; Strategic Management Policy; Technology and Innovation; Tourism and Travel
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/244; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-18-Batch [PDF-Pic]/SMU-18-0037 [Agoda]/SMU-18-0037 [Agoda].pdf
• Institution: Singapore Management University

Rob Rosenstein, the co-founder of Agoda.com, had a difficult task ahead of him. Agoda had been acquired by a global online travel giant – the Priceline group in 2007. The terms of the acquisition were based on a three year earn-out period following which Priceline would pay Agoda the bulk of the acquisition pay-out. However, by 2008, Agoda was in dire need to improve its revenue figures, and the Priceline Group’s board was pessimistic of Agoda’s chances of hitting its earn-out targets. The general assumption was that the Asia based start-up’s assets would be gobbled up and integrated into the group as part of its much larger and profitable western brand. Rosenstein, however, believed in the strengths of his company - a venture he had co-founded with Michael Kenny in 2005 in Singapore. Agoda.com was one of the first online travel platforms in Asia to build its business globally and attract travellers from all parts of the world. By the late 2000’s however, Agoda had lost its dominance in Asia, with the emergence of global players in the market and rising competition from Chinese online travel agencies (OTA’s). Other challenges like technology disruption, a fragmented and diversified Asian market, unstable political environment in Thailand (Agoda’s largest office was in Bangkok at the time) and difficulty in attracting the right talent, obstructed its growth path as well. In December 2009, heightened concerns over the future of Agoda prompted Rosenstein to sit with his team and formulate a strategy to enable Agoda to hit its earn-out targets within the stipulated three year period ending in 2010. How could Agoda grow its business and revenue? How could it improve on its marketing strategy, further build its supply and attract more consumers to make bookings on its website? How could Rosenstein make the acquisition work? The case allows students to understand the importance of a focused growth strategy of a company over a short period. Students will also learn about the nuances of building specific strategies to drive revenues and meet organisation level targets. After working through the case and teaching notes, students will also be able to gain an understanding of post-acquisition challenges in high growth start-ups and usage of Business Model Canvas (BMC) to analyse the business model of OTAs. This case can be taught in undergraduate, graduate and executive education classes.