To an outsider, it might seem that the international car rental market has long been divided, with major international giants each having claimed their market share, leaving no room for new entrants. However, some Latvian entrepreneurs think otherwise.
The Latvian company “Booking Group” was founded quite some time ago – in 2008.
It was established by Alen Baibekov together with his partner Igor Demchakov. Both are former athletes, rowers, who know each other from their active sports careers.
Both had previously worked in the car rental industry, renting cars to both foreigners and local clients in Latvia – this initial company was established even earlier, in 2004, and operated under the name “Autonoma Silver.”
In 2004, upon hearing about the sale of a car rental company, they considered buying it, but after reviewing the documents, decided against it and opted to establish a new company. This marked the beginning of their “real” business – recalls the current chairman of “Booking Group Corporation,” A. Baibekov.
Through Thorns
“We began delving into the business, studying how many foreigners, who were the main car rental customers at the time, were coming to Latvia. We quickly realized that the market was small and the only valuable clients at that time were tourists. Local clients were very risky back then, with widespread issues like non-payment and drunk driving, which often ended in accidents.
We envied the airport, where major car rental companies like “Sixt” and “Avis” had their offices, with clients paying by credit card.
Our daily routine involved cash payments at the register, and when a client returned a scratched car, it was very difficult to claim damages. However, the main thing we understood at that time was related to the question – where do the major car rental companies get their reservations from?
Another step forward – and we realized that somewhere on the internet there were large broker companies that somehow, in a way unknown to us at the time, found clients and delivered them to the major car rental companies.
We also wanted to collaborate with such companies and receive clients. We started writing to one, then another, and another, asking questions. As a result, it quickly became clear that we were of no interest to anyone – the market was small and we had no recognizable brand. However, we did not give up, and we managed to become a franchisee of the US car rental company “Dollar & Thrifty.”
Currently, this company no longer exists, as it was bought and merged with “Hertz” a few years ago, but at that time it was a big victory for us.
Now we had a brand, and our negotiating position with the major car rental brokers improved – gradually they also started giving us clients. Out of joy, we leased a lot of cars and an office at the airport – and almost went bankrupt. We had 30 leased cars shining at the airport, lease payments to be made every month, but no clients.
Well, maybe not none at all, but far too few. The brokers had commitments with the major car rental companies and gave us only the leftovers. We survived that tourist season by a thread – investing all personal funds and savings to pay salaries and lease payments.
Something started to change for the better only when I went to a conference in London and met broker representatives in person. Our situation was so bad that I was ready to offer them the lowest possible price to survive.
It worked, we signed contracts, and clients started coming – at times there was a queue of 30 people at the car rental.
Only then did we really understand the power of brokers in our business,” says Baibekov.
A Leap into the Depths of the Internet
The car rental operated by the two partners worked in this mode for a year, studying broker operations, and then decided that they needed to create an internet broker themselves. “We didn’t really understand what and how to do, but we were confident we could – we knew where to get an IT system, where to find the necessary employees who could build the needed internet platform for us, and we understood how to buy a domain.
Thus, in 2008, “Booking Group” was born.
Our first goal was to serve clients from Russia, Ukraine, and Belarus, many of whom had started traveling abroad and often did not understand how to book cars. We used our language knowledge advantage – the call center phone was hot, and we often sat by it ourselves.
Gradually, relationships formed with global car rental companies, to whom we could now offer the most valuable thing – clients. We were no longer their competitors; we were valuable partners – we had access to clients and a market they had not yet sufficiently tapped into!” says Baibekov. “To expand our client base, we started advertising on Google and Yandex.”
However, the market of clients from CIS countries was not enough for both partners.
To enter Western markets, the domain “EconomyBookings.com” was registered, and the European market expansion began.
“Maybe from what I’ve told, it seems that everything has come to us relatively easily, but that’s a deceptive impression,” admits Baibekov. “In reality, everything we’ve achieved has come through hard daily work – we’ve been in the industry for 15 years, and we still don’t feel like we’re finally “flying.” We used to rejoice at one order a day; last year, the number of orders through our platform approached a million, but the feeling of ease is still not there.
There have been many moments when you start losing faith that you will succeed. And the recipe in such moments is one – grit your teeth, go to work every day, do routine things, and work, work, work.”
Main Market – North America and Australia
In recent years, the pandemic has also caused major problems, dealing a heavy blow to tourism.
“At first, it seemed that we wouldn’t survive at all. We had to review all costs, carefully evaluate how necessary this or that employee was. State support also helped – it was, in my opinion, organized incorrectly because employees were required to stay home and not work, even though they could have been allowed to work a little. However, this support came at the right time and helped us survive.
It also helped a lot that we had become a global company, as the pandemic restrictions didn’t come into effect simultaneously worldwide – when everything was closed in Europe, restrictions were already being lifted in America and Australia.
And unexpectedly, we were also helped by the fact that public transport – buses and trains – was very limited in many places. People still needed to move, visit relatives, and take care of other things, and this greatly helped car rentals because we offered disinfected cars,” says Baibekov.
Gradually, the company’s main market has become North America, Australia, and New Zealand. Rapid development in Europe is hindered by the fragmentation of these markets. In 2022, the number of cars rented through “Economy Bookings” exceeded half a million, and the company’s turnover reached 135 million euros.
Despite global operations, Baibekovs is firmly convinced that he will continue to work from Latvia because, in his opinion, the conditions for business formation here are favorable – there is still a sufficient number of talents available at a reasonable cost, which is the main development factor in his business.
THE ESSENCE OF THE VIOLATION
Seed
In 2004, Alens Baibekovs and Igor Demchakov founded “Autonoma Silver” and started renting out cars. The beginning was not easy at all – the company had no clients and was hanging by a thread.
Sprout
They managed to become a franchisee of the US car rental company “Dollar & Thrifty,” making the first connections with car rental brokers – they succeeded in signing a cooperation agreement with them. The first successes – serving clients from Russia, Ukraine, and Belarus. An online platform “EconomyBookings.com” was established to conquer the Western market.
Fruits
“Economy Bookings” provides car reservation services in Europe, North America and South America, Asia, as well as Australia and Oceania. The company offers services in more than 20,000 rental locations in 180 countries worldwide, using the website.
It has more than 800 partners worldwide, including the world’s largest car rental companies – “Sixt,” “Europcar,” “Hertz,” “Enterprise Holdings.” The company’s turnover in 2022 exceeded 133 million euros, employing 65 people.
The year 2022 was also record-breaking in terms of the number of clients and reservations handled, as more than 500,000 reservations were made through the online car booking platform.
