Polish private equity fund MCI Management has teamed up with the European Bank for Reconstruction and Development (EBRD) to inject $7 million into Travelata.ru, a Russian online reseller of package tours. The amount invested by each of the two investors has not been disclosed.

The funds will be used “to enhance further Travelata’s online services and unique customer experience as well as for expansion across Russia’s regions,” the company stated.

The market in Russia for package tours is huge, Travelata’s CEO Alex Zaretsky told East-West Digital News, citing estimates of $15 billion in 2013 with just 2% generated online.

According to the government agency Rostourism, Russians travelled abroad 47.8 million times in 2012, including 15 million times for touristic purposes, with Egypt and Turkey being the most popular destinations. The average price for package tours reached $1,800-$2,000.

 

Competition is fierce indeed. Not only does Travalata compete with offline travel agencies, which are ubiquitous in Russia, and, in a certain sense, with tour operators themselves, but online tour offers have also developed dramatically over the past few years.

“We feel that our biggest competitor now is the mom-n-pop travel agency around the corner,” Zaretsky said. “People are used to purchasing package tours offline, so any online player educates the market and thus eventually helps us.”

When it launched in late 2011, Travelata focused on last minute offers. In order to diffentiate itself, however, the startup decided to concentrate on weekend tours. It then began to sell all sorts of tours – the most popular and most demanded by Russian tourists.

Travelata initially raised $50,000 from Bas Godska, a Western e-marketing expert and angel investor operating in Russia and Ukraine. In November 2012, the startup secured a $500,000 investment from Igor Ryabenkiy’s Altair and Invia.

In June 2013 the startup raised $5 million in a Series A round from Polish private equity fund MCI Management. The capital injection went through Invia.cz, one of MCI’s portfolio companies, which sells package tours online in the Czech Republic and four other Eastern and Central European countries.

In Russia, MCI has also invested in KupiVIP, the leading flash sales site.

EBRD’s Russian portfolio includes such high-tech companies as Russian Towers, a telecom tower operator, Trivon AG, an Internet broadband provider, and Maykor, a leading IT outsourcing company.