Russian hotel booking service Ostrovok.ru, which has been generously funded by Western and Russian investors since its launch in 2010, has laid off about a third of its staff in order to optimize operations and secure more investments. The company’s co-founder Serge Faguet made the move public in a corporate blog post published yesterday in Russian.
“The reason is that we want to make the company profitable,” Faguet explained in the post. “In 2013, Ostrovok’s brand visibility reached 20%… As a next step, making the company profitable will help us attract significant additional investments to create the most recognizable online travel brand in Russia.”
Among other things, Faguet praised the people leaving the company and explained why the changes have been made public. “Our priority now is to help our colleagues and friends to find new jobs; that’s why we have decided to speak publicly and attract attention,” he wrote.
“Our strategy remains the same as before,” he continued. “We will just work harder, smarter, and be more focused.”
Ostrovok’s co-founder also mentioned some statistics surrounding the company’s development. According to Faguet, earlier this year the service sailed past 100,000 bookings and grew more than 50% quarterly. He expects new hires will take place in the future; however, the staff growth process will be much slower than previously.
Sink or swim
Working on the fast-growing segment of online hotel booking – which has been estimated by Data Insight at $900 million in 2012 – Ostrovok faces fierce competition. Among the other local players are Oktogo.ru, which also raised significant amounts from venture funds, and Ozon Travel, the specialized arm of e-commerce leader Ozon.ru, a leading Russian e-commerce player, not to mention Booking.com and some other foreign players, which have also gained strong traction in Russia.
Ostrovok has not been the only company on the Russian Internet scene to lay off staff. For example, Molotok.ru, a major B2C online marketplace, and serial startup developer Fastlane Ventures also had to go through such hardship last year.
- RUSSIAN E-COMMERCE REPORT – The total volume of Russian online retail reached approximately $13 billion in 2012, up 27% from the previous year, not including cross border sales. EWDN, in partnership with leading universities and consultancies, has published an in-depth research on this industry. To receive free insights or to order the full version (2013 edition), please contact us at [email protected].
