“EconomyBookings” Co-Founder Alen Baibekov
Each month, the platform “EconomyBookings,” developed in Latvia, attracts 2.2 million customers who plan to book a car for their holidays and business trips. Over time, the company aims to reach 10 million visits per month.
The origins of the “Booking Group” platform “EconomyBookings” are typical of a classic startup – it all started in a garage. The company’s founders, Alen Baibekov and Igor Demchakov, initially rented out their own cars, but around 2008, they realized that there was greater potential in creating a platform where people could book cars. They started in Russia, but now they operate globally and collaborate with 850 car rental companies. In an interview with “Labs of Latvia,” A. Baibekov talks more about the beginnings of “Booking Group” and their future plans.
The industry has known for many years that “EconomyBookings” is one of Latvia’s largest startups. However, you have always been relatively quiet. Recently, we’ve seen your first press releases and invitations to interviews. What has changed? What does this indicate?
We want people in Latvia to know that there is such a company. This also helps in attracting talent – publicity helps people learn about us. Of course, we have other long-term goals related to becoming more public, but we don’t want to talk about them just yet.
Companies usually become more vocal when they plan to attract investments or sell the company.
There are no plans to sell for now. If we do attract investments, it might be in a slightly different way than people are used to.
The “EconomyBookings” logo, like “Printful,” immediately catches your eye when driving to or from the airport. People have heard much more about “Printful” than “EconomyBookings.” What exactly does your company do?
We work with car rental companies worldwide. We have a technological connection with many companies’ systems, allowing a customer from anywhere in the world to visit our website, enter a destination, such as Miami International Airport, and see car rental offers from around 30 to 40 rental companies. Our partners offer us good prices because we provide them with many bookings.
We collaborate with 850 different car rental brands, with whom we maintain constant communication and who are part of our system. The largest of these are “Avis,” “Sixt,” and “Europcar,” but each country has many other rental companies. For example, here in Latvia, there are 200 car rental companies. Many of them offer just five cars – just like we did at the start of our business.
What is the reason someone wouldn’t just go to the “Sixt” website and look for their rental car there?
We are closer to the customer. We speak their language. When someone goes to “Sixt,” they see only 15 cars. But with us, there are 300 to 400 cars available, and we offer a much wider range of rental companies. Customers also see ratings and the best prices. When they visit a rental company’s site, they see a limited offer and can’t tell whether it’s cheap or expensive. That’s why customers come to us.
Another important factor is that we provide customer service. For example, if someone travels to an exotic destination, books a car there, and something goes wrong, it’s not easy to solve the problem. Each customer is very important to us; we speak their language – our website is available in 16 languages. Our reputation is important to us because now anyone can write anything on the internet.
What’s the benefit for your partners if their cars are cheaper with you?
At one point, they really wanted to work with companies like ours, but then we grew, and they limited collaboration.
Now they can’t do without us because we have significant traffic – customers no longer go to their sites.
Thirty-five to forty percent of customers use companies like ours – aggregators that collect all the information in one system, do it smartly, and thus surpass them. Times are changing – you have to cooperate. You can no longer be alone.
Similar to hotels and booking.com?
Yes, exactly. We try to be friendly with our partners; we respect them greatly. We don’t want to impose anything on anyone; we respect their business. They have a lot of work – washing cars, repairs, deliveries at the airport, etc. We help with customer acquisition. That’s how we cooperate.
What about the name? How unhappy is booking.com about the similarity between your two companies’ names? I assume people who don’t know the details might think it’s the same company.
Our legal name is “Booking Group,” but publicly we only use “EconomyBookings.” When we thought about the name, I was, of course, aware of booking.com. In 2008, they were still a fairly new Dutch company. We already had plans for airline tickets and hotels back then, so we decided to name ourselves “Booking Group.” When we thought about the website name, we chose “EconomyBookings” because we represent the economy segment.
We haven’t had any conflicts, but there was a moment when they wanted to buy our domain bookinggroup.com. They did this through an intermediary, initially offering 200 euros. When we refused, they immediately offered 50,000 euros. I called a colleague, and we raised the stakes to nearly a million when we realized what was at stake. They planned to go public under the name “Booking Group,” but in the end, they stuck with “Booking Holding.” Although our domain bookinggroup.com is not publicly visible anywhere, it’s connected to our email addresses, various systems, etc. We couldn’t manage to sort all these things out by the deadline they needed, so nothing came of it. That’s our story about the deal that never happened.
So – you don’t own any cars yourself; people book other companies’ cars on your website?
Yes, we are an internet technology company, and the internet economy is developing very rapidly. Last year, Latvia’s economic growth was 2%, consisting of two parts – traditional businesses and the internet economy. Here you have technology, sustainability – whatever happens, we continue to work. For example, in our office, the workday ends at six in the evening, but the call center operates until around two in the morning.
In essence, we stop working after six, but we continue to receive orders, and in fact, we receive the most bookings in the evening and overnight. Everything works automatically.
We are in a better position than car rental companies, who have to buy cars and repair them. They do that, but we do something completely different. Doing two things at once is almost impossible. By the number of bookings, we are larger than “Sixt.” We couldn’t even imagine that before.
Who are your competitors?
Our biggest competitor is “Rental Cars” from “Booking Holdings.” In America, there’s “Expedia,” which offers car rental services as well as hotels. These are our main competitors.
What were the beginnings of the company? How did you come up with this idea?
Everything started as it’s written in books – from a garage, this time quite literally. We used to rent out cars ourselves – both our own and those of our friends. Sometimes it happened that I would call my wife and tell her that her car was rented out, and she would be without a car that day. When we got the first small capital, we started buying cars on lease.
That’s how we came to the idea that the main business isn’t in the hands of the car renter but in the place where reservations are made. At that time, there were two or three such companies. One of them is “Auto Europe,” whose founders were also former car renters who later created a platform where American customers could rent a car when traveling to Europe. We had a similar idea – we created a website for our eastern neighbors because at that time, Russia was one of the largest countries whose residents wanted to travel a lot, and they had no place to book cars.
We created the startup “Booking Group,” with the platform eavtoprokat.ru for booking cars. Russian travelers were very happy, and we had a diverse clientele – both typical tourists and oligarchs who wanted to rent a “Ferrari” for their girlfriend. We worked like this for two years until we realized that Russia wouldn’t be enough, and we wanted to expand. Then we created the “EconomyBookings” website with the idea of later offering not only cars but also hotels and airline tickets. But for now, it’s just car reservations – that’s what we do best.
There were years when we had significant growth, and there were years when development slowed. There’s always some crisis – the Icelandic volcano, the global economic crisis, the pandemic. You can’t say that we’ve ever had a smooth ride – the company always needs to be kept on course for growth.
You started with business in Russia. What is happening in that market now?
Nothing. European car rental companies don’t serve customers from Russia, and Russian bank cards don’t work in Europe. Essentially, the Russian market has collapsed and no longer exists. If business were still happening in Russia, last year’s turnover would have been even higher. I think we lost 25% of our business.
During the pandemic, all borders were closed, and at the beginning of last year, there were already good signals that borders were opening, and Russians were starting to travel to France, Italy, etc. And then, in February, it all ended.
Last year, the company’s turnover was 133 million euros – mostly customer money that flows through your platform. What about profit?
Our DNA is already in the company name – “EconomyBookings.” This means that we offer the service cheaper than we would like. We want to be friendly to the customer; we don’t want to make a 25% profit at their expense. Therefore, our profit margin is around 7–8%. In this type of business, that’s normal, but for this reason, we can’t borrow money from the bank if the loan costs 5–6%. If we want to borrow, with this business model, the money needs to be very cheap.
How complex is the technical system underneath all this, which customers don’t see?
The system is very complex. It’s scalable, handles heavy loads, and works quickly. Even for me as a co-owner, it’s sometimes difficult to understand how it all works because I don’t have technical knowledge.
On average, we receive three to four thousand orders a day. On average, 2.2 million customers per month search for cars on the platform and want to book them. In summer, the number of site visitors can reach three to four million per month. But every day, there are many more people on the site searching for a car for their trip. They are only interested in things working quickly – being able to search on 10 screens at once, moving back and forth. It’s a heavy load, so we process millions of requests on the site every day.
How many employees work at “EconomyBookings”?
Currently, the company has about 70 employees. We also own a marketing company where 20 people work, and we have an IT service provider with 16 employees.
How widely is the company represented, and where is it doing best?
Very widely. The largest turnover comes from business in the US and Canada. Things are also going well in all European countries, and we are now also in Australia.
Which markets interest you the most?
It’s hard to say. We are interested in all markets where people need car rentals. The dynamics are very changeable.
There are always fluctuations in some market, but working globally allows us not to suffer too much from market changes. We’re already immune to crises because business is only possible if we operate globally.
Problems worldwide are rare – even the pandemic didn’t hit all countries simultaneously, and the restrictions varied in each location. We didn’t have a single day when the business completely stopped. Before the pandemic, we had grown to 1,000 to 1,500 bookings a day, but during the worst days of the pandemic, there were about 100 bookings. We sat at our computers, wondering what to do, whether we would survive, and how long we could continue with such a small number of bookings.
In the startup world, a typical development path involves attracting investment. You have grown without external investments so far. How did you manage that?
In 2008, when we approached the bank, they looked at our business plan and said we had a strange business – a website, car reservations. Now they think differently.
The secret is never to relax financially and never think you can afford everything. You can’t take money out of the company for your pleasures and throw it around – you need to have strong discipline and a clear understanding of how much you’re willing to take out in dividends. We have these things clearly defined – even when times were tough, we stuck to these principles.
And what about when things are going very well?
Even when things are going very well, you need to know how much you’re willing to take out in dividends. We always keep at least 50% for the company’s development. Of course, I want shareholders to get their money because otherwise – why are we working at all? We started the business when my partner and I were 30 years old – we had young families and apartments at the time. Of course, we wanted new cars, houses, and other things. We’re not just working because we like to work; we also want to reward ourselves. That’s why we decided to stick to the principle of paying out 50% in dividends and reinvesting 50% back into the company.
The main thing is discipline and not taking unnecessary risks. For example, during the pandemic, many invested in the stock market, currencies – easy money. We don’t look in that direction at all. My partner Igor and I had previous experience trading oil futures, so now we’re ready to only be in real business. We know what it’s like to watch charts that go in an unknown direction, which you can’t influence in any way. We’ve had times when we went to make tea, and by the time we came back, everything had changed. We’d watch the news – an oil pipeline had been blown up, and the price of oil had gone in the opposite direction. You can’t influence such things.
You’re a former athlete, and you have a background in sports pedagogy and law. How did cars come into your life?
You know, it probably all comes from childhood – every time I went to the department store with my mother, I would ask her to buy me at least one toy car. They were expensive, so my mom didn’t buy them.
But seriously, my partner once told me about a car rental owner who was willing to pay a commission if we delivered cars to him. I had a friend who worked at the “Volkswagen” center, so we could get cars from his lot. We rented cars from my friend and delivered them to the car rental owner. One day he was ready to sell his business and offered it to us. I started thinking about where to get the money. I had already found an investor in my circle who was ready to lend me money, but when I looked at all the documents, it turned out that they were only offering to sell me three cars. I realized that I could do it myself, and exactly the way I wanted. Of course, I chose to start my own business – I created the car rental company “Silver.”
At first, I had four cars. I really wanted to work at Riga Airport, where “Europcar” and other international companies were already present. I got into the airport, but there were no customers. Then I accidentally found out that there were companies that supplied customers, and that’s how I turned to “Booking Group.”
You’re part of the IT industry. How would you describe this sector and the startup scene in Latvia?
I think it could look better. Somewhere we’ve lost direction. From 2012 until the pandemic, there were many fintech startups, and there was movement. Now I don’t see that. But there are many successful companies, especially in the fintech sector, such as Aigars Kesenfelds’ companies.
This example is from another field, but I’m pleased to see how “airBaltic” is developing – despite all the criticism the company receives, it does a lot of good. It brings people to Latvia who spend their money here.
How does your business feel about car-sharing services?
It’s a niche product. When “Bolt” and “Uber” first appeared, it seemed like they would take away some of our business, but that hasn’t happened. More significant changes will come with the emergence of autonomous cars. The question is whether car rental companies will be able to change with the times.
Another trend is electric cars. Although rentals offer these cars, and everyone says it’s the future, customers don’t choose them. They don’t want to drive 250 kilometers during their trip in Greece, not knowing if there will be a place to charge the car. Also, they are very expensive – if a regular Volkswagen costs 25 euros a day, the customer doesn’t see the need to pay 60 euros for an electric car.
What are the company’s future plans?
It’s hard to define them – the main thing is that we have them. We work according to a system that sets ambitious goals, almost impossible to achieve. We introduced this system in 2016 when we had 400 orders per day. Then we set a goal to reach 2,000 orders per day. At that time, no one on the team could see how to achieve it. And then, in March last year, we reached that goal.
Now we have 3,000 orders per day, and we aim to reach 10,000 bookings per day. That’s a huge number – three million orders per year. At that point, we will be a very large and valuable company operating globally from Latvia.
In your conference room, one of the big goals mentioned on the wall is going public.
We are exploring this possibility, ensuring it would be interesting for those who buy shares, not just about attracting capital and trading shares.
Another goal is to be among the top 10 largest Latvian companies. How long will it take to achieve that?
We’ll see. In three to four years, with hard work, we can reach a billion euros in turnover. It depends on how the economy develops. It’s not our ultimate goal.
