I believe Mondee Holdings, Inc.NASDAQ: MOND) is worth $9.43, representing a ~24% upside from writing (Oct 19, 2022). With a portfolio of leisure and travel brands known all over the world, MOND is a company that works in travel technology and market The company stands out from the competition thanks to its technological platform, which facilitates easier transactions, easier access on mobile devices, and uses cutting-edge marketing and Fintech tools.
MOND is a travel and marketing technology company with a portfolio of globally recognized leisure and corporate travel brands. It provides state-of-the-art technologies, operating systems, and unattended services to enable travel transactions. These technology-driven platforms can access global travel inventory and handle extensive travel content. Combined with MOND’s distribution network, these platforms enable the modern travel market.
Assisted and federated consumer travel early disruption
Before the covid-19 pandemic, travel and tourism were the most important and fastest growing sectors of the global economy. According to S-1 MOND, in 2019, these sectors represented about 10% of the total GDP of the world. Global travel spending equaled $1.9 trillion, and the annual growth was 6% before the coronavirus pandemic.
Assisted and federated Consumer Travel includes inventory sold to travelers by affiliates and agents, such as travel agents, TMCs, corporations, call centers, associations, and other members of affiliated organizations. With the help of third parties, end consumers have access to airline and hotel reservations, car reservations, and other accommodations that are configured for specific travel or experience requirements and at the best prices. MOND reports that Consumer Travel Assist and affiliates accounted for $1 trillion in revenue in 2019. This segment focuses on the travel booking market, which is proliferating. According to filing MOND-S-1, the global travel market is expected to grow at a CAGR of 9% from 2021 to 2025, while the travel market is expected to grow by 11% during the same period.
Many of the traditional agents providing Assistants and Consumer Tours are still dependent on legacy distribution networks and old operating systems and rely on conventional booking methods, failing to align with modern consumers’ booking preferences and lifestyle requirements. Those tablets and operating systems are often lacking in keeping up with the current technology and business operations of the consumer in order to keep up with the emerging consumer cohorts.
These groups of people are not sufficiently significant segments of the fast-paced economic travel market, including SMEs, thus creating significant emerging market opportunities. In the Assisted and Federated Consumer Travel segment, the MOND platforms provide complete solutions and a modern market for both leisure and business travelers.
The MOND ecosystem is disrupting incumbent travel platforms by modernizing an industry still relying on legacy technology infrastructure. The company’s technology platform increases business efficiency, provides great mobility, and incorporates modern tools for hunting and Fintech. For example, TripPro is the top gig economy solution in the travel market. It gives gig workers the tools they need to build a successful e-business or travel group.
The MOND platform provides access to a wide range of content and features
MOND’s distribution network connects over 50,000 travel partners and operators with over 500 airlines and over one million hotel and hospitality accommodations. The distribution network allows it to provide a wide-ranging segment of content travelers with access to its Global Content Hub (GUB) inventory. User-friendly TripPro, Rocketrip, TripPlanet, and UnPub platforms are then used to assist travelers in target markets using GCH’s inventory.
The agency aims to expand its broader flight content to differentiate itself from competitors by working with all the arcs that need to be filled with planes quickly as the COVID-19 pandemic subsides. Most airlines as flights and capacity are reduced to a significant reduction in passenger traffic, partially offset by a rapid decrease in load factors, and steep increases in losses. As the travel market recovers and these airlines close their routes and restore capacity, they will need additional support to fill seats and increase load factors.
Outside of flight content, hotel bookings have recently been added to the MOND platform and will soon account for less than 10% of its bookings. Hotel bookings are an area where MOND plans to focus its efforts, as the company builds relationships with other hotels and other accommodation providers. MOND believes its UnPub subscription-based product will appeal to hoteliers hoping to fill last-minute hotel inventory. The company plans to use its strength in airfare content to boost hotel bookings by offering hotel bookings or as part of a package with most air transactions.
MOND will also prioritize adding new types of travel content, such as cruises, dynamic packages, and entertainment, both organically and through acquisitions. Travel partners are starting to book more cruises through offline channels and specialized distributors. It can leverage its strong relationships with travel partners and its position with emerging gig operators around the world to enhance its cruise relationships and content.
Strong distribution of resources
MOND today maintains a distribution network that includes over 50,000 travel partners and agents, corporate enterprise clients, and direct route partners for travelers. The management plans the following actions to strengthen its distribution network around the world;
- The company plans to expand its presence globally to become the leading operating system for global travel accommodations. As such, international expansion is a priority in 2022 and moving forward.
- MOND expands with TripPro’s new “Travel Solutions in a Box” offering, transforming gig workers into 21st century providers. The company expects this new pool of gig work to exponentially grow the provider’s travel market. These gig workers rely on the MOND platform to carry out this task, reinforcing the competitive advantage of the company’s legacy vis-a-vis providers. I believe that the new travel gig economy will also encourage travel suppliers who want to sell their travel content through new travel travel providers to use MOND’s marketplace, which will strengthen its content and distribution network.
- Expand SME Travel Market Share. Traditionally, only great efforts have come to value pricing, better service and reporting. However, with TripPlanet, MOND plans to manage this model more effectively for SMEs, non-profits, and other organizations. TripPlanet already brings a high number of travel benefits, and the company plans to grow this business in small business and non-business organizations. MOND plans to add more services, such as new benefits for employees and members of these businesses who want to travel through fun.
M&A to further boost growth
The company has a strong track record of successfully integrating and growing its acquired businesses. MOND plans to seek strategic opportunities to improve its platforms, expand and deepen its content, and improve its infrastructure to distribute its content.
MOND plans to expand its dynamic packaging capabilities with even greater content offerings, and is evaluating candidates with this expertise to enhance these functions on its platform. The company expanded its international footprint by acquiring distributors, aggregators and platforms based in Europe and other global markets. In particular, MOND has sought ways to expand its selection of hotels and other places to stay for cruises and tours.
I believe MOND will be worth USD $9.43 in FY23 representing a 24% upside from the given note.
This value is taken from my model based on the following assumptions;
- Results will follow management guidance in FY22 and FY23, which is supported by organic growth and M&A.
- I’m different from the market and I believe NOTE deserves a much higher market share than we do today compared to other major players in the travel space, such as Booking ( BKNG ) and Expedia ( EXPE ). I believe that MOND is trading in a similar way to EXPE of similarity in the business model set out above. EXPE has historically traded at around 11x forward EBITDA before COVID happened, and I expect MOND to eventually trade at similar levels when the world fully recovers from COVID.
Travel services is a competitive industry. MOND’s competitors may have access to significant financial resources, greater name recognition, and well-established customer bases in their target user segments. This could make it more difficult for MOND to attract new customers. For its part, MOND competes on the travel services market in multiple market segments, with different models, technology, and other technologies, and in different parts of the world. This may make it more difficult for MOND to find new customers.
Repeated lockdowns hurt MOND
These government orders have had a significant negative impact on the travel industry and many of the suppliers on which our business relies, as well as on our services, operations and customers. Travel restrictions are beginning to be eased by European and US governments, but there is still much uncertainty about the impact of new variants of COVID-19. Concerns have also been raised about how well existing vaccines will work against these new variants and when they will be distributed and delivered around the world.
Leveraged balance sheet
If COVID or another major outbreak occurs again, MOND could experience liquidity issues given its high debt level. MOND, as it needs financing through equity financing, undertakes additional financing to dilute the investor.
MOND is now discounted at its current share price as of this writing. MOND is a marketing and technology supplier to the tourism industry, and its client list includes many well-known names. The company distinguishes itself from competitors with a cutting-edge technological platform that allows for faster transactions, is mobile-friendly, and uses Fintech trading technologies. I feel that current value offers the best investment opportunity to earn moderate income in the next year.