Latin American Technology for Latin American NeedsWed, 05/08/2019 - 10:18
Q: As a Latin American company, what is Argo Solutions proposal for the Mexican market?
A: Argo is Latin American technology for Latin American countries. Thirteen years ago, when the company was founded in Brazil, we decided to take advantage of something called New Distribution Capability (NDC), which was in vogue with local airlines. NDC allows airlines to open up their inventories to companies so they no longer have to pay commissions to third-party distributors, such as global distribution systems or travel agencies. Argo offers the Mexican market this disintermediation between airlines and the tourism and corporate markets. So far, we have 45 direct connections, meaning that 45 airlines or hotel aggregators provide us with a connection through their own APIs so we can distribute their inventory across all of Latin America.
Argo Solutions’ business model is divided into two segments: travel, in which we sell franchised licenses to significant players such as American Express, CWT or BCD. This means that they take our technology, implement it and become a search engine and management of corporate travel. We also have a travel expense management segment, through which we sell our solution directly to businesses. The Latin American market, which includes all the countries outside Brazil, represents between 12 and 14 percent of Argo’s income. Our goal is that in five years this market will represent 50 percent.
Q: What opportunities did Argo observe in the Mexican market that led the company to establish operations here?
A: Argo is a leader in the Brazilian market, with over 60 percent market share, but the company realized that if it wanted to grow it needed to participate in other Latin American markets, such as Mexico, Colombia and Argentina, where demand existed. Technology that comes from the US or Europe is geared toward the Anglo-Saxon market and does not meet the needs of the Latin American segment. That is how the expansion project began.
Markets like Argentina and Colombia were obvious expansion choices because of geography. However, Argo took the decision to open offices in Mexico because the country is the second-largest economy in the region and has similar complexities to those we experienced in the Brazilian market. One of our greatest added values is that we are a platform that understands the complexities of the Latin American market.
Q: How does Argo differentiate its services from those offered by traditional players like Sabre?
A: It is precisely our knowledge and expertise of the Latin American market that differentiates us. Argo not only offers travel reservations but everything related to travel expense management. We understand the needs of the market and have created specific technology for markets like Mexico, Colombia and Argentina. That is our strength. For Argo, Latin America is 100 percent of its market, while for other companies like Sabre, Latin America represents a very small percentage of their global market. For us, Latin America is everything, which is why we strive to create solutions specific to the region.
Q: How does Argo Solutions overcome reluctance from businesses to implement new technologies?
A: It is a big challenge since Mexicans tend to be wary by nature. We have found that Mexican corporate travelers like to send an email to travel agencies indicating flight dates and their preferences. Travel agencies send the available options. The problem is that there is no guarantee that the rate that the travel agency offers will hold up, which means that companies do not actually save money. This is where technology comes in with all its benefits.
What we are doing is implementing best practices, working with our resellers, educating travel agencies and businesses about the benefits of automating their processes. The advantage we see is that once Mexicans learn and adopt these technologies, they do not let go of them.