Given its new lofty valuation of more than $1 billion, Klook has become too expensive for most online travel companies to justify as an acquisition. But would a possible IPO within a few years be successful?
Sequoia China, Matrix Partners, Goldman Sachs, Boyu Capital, TCV, and other investors participated in the round. The Hong Kong-based startup has raised $300 million to date. The current infusion gives Klook an estimated valuation of more than $1 billion, the company said.
Klook was founded in 2014 by CEO Ethan Lin, a former investment banker at Standard Chartered and Citibank; Eric Gnock Fah, chief operating officer, who was previously a banking analyst at Morgan Stanley and Atlantis; and Bernie Xiong, chief technology officer, who had previously been an engineer at MPayMe.
Will Klook embrace TV brand advertising? “We are open to using a mix of channels that yield the best results in terms of engaging travelers,” Anita Ngai, chief revenue officer, said. “We always make sure that our mix is adapted to different markets, based on how consumers spend their media time and the maturity for the online travel landscape.”
Klook has succeeded in Asia Pacific. But Western markets may have nuances in how they book differently. It remains to be seen how Klook will tailor its approach to its expansion in the U.S.
That said, Asia Pacific is not one region but a collection of more than 20 markets and currencies, and even more cultures and sets of consumer preferences. So the company has experience with localizing.
The U.S. is a much more mature market in terms of online travel compared to Asia, on average and speaking generally. Familiarity and trust with online travel platforms, credit card, and high-speed mobile data penetration, etc. all contribute to the forming the differences in traveler booking preferences. This means the marketing channels that are most effective in activating and building trust with travelers will be different, and the focus and formats of Klook’s messages that will be most successful in engaging customers will also be different.
Ngai said, “Domestic travel is important for many markets, but particularly in the U.S. The proximity between the US and other countries differ quite a bit compared to most markets in Asian, so whereas the average Asian traveler from a higher income country may be traveling more than 3 or 4 times average in a year, the average American traveler will likely be focused on their one big trip per year. This will have all kinds of implications for booking preferences, such as how early they start planning for the trip, average booking value, etc.”
Given its Hong Kong origin, the startup has its strongest inventory in Asia Pacific. Unlike most tours-and-activities services, Klook’s mobile app often includes local transit ticketing and has a broader range of inventory at major theme parks.
It also focuses on using QR code e-vouchers to match the Asia-Pacific preference for that method of ticketing. It also offers instant booking, instead of requiring users to book more than a day in advance — as is more common among its rivals.
Klook’s new funding will enable it to expand its inventory in North America further. Beginning in spring 2018, the company began offering more diverse offerings in the U.S. to Asian customers. The company believes that it can also gain an edge among U.S. travelers headed to Asia with its direct and occasionally exclusive partnerships with local suppliers.
That will cause it to rub shoulders increasingly with rivals like Airbnb Experiences, TripAdvisor-owned Viator, and Expedia. Booking.com appears to be increasing its activities inventory from a low base after its April acquisition of FareHarbor, an activities distribution startup with commercial relationships with many operators in North America.
Klook claimed to be on track to hit $1 billion in gross bookings processed this calendar year, but it didn’t disclose its revenue. It drives some of those sales through partnerships rather than strictly consumer-facing marketing. That’s important because the cost of marketing to acquire customers can be high.
Is the company’s goal to list as a public company on a stock exchange? “We are always preparing and ready for potential listing,” said Anita Ngai, chief revenue officer. “What we are prioritizing at this moment is user experiences and continuing with robust growth.”
Photo credit: Shown here are the executive team members of Klook, a Hong Kong-based tours and activities booking agency, which has raised $200 million in funding in a historic round for the sector. (From left to right) David Liu, chief product officer; Bernie Xiong, chief technology officer and co-founder; Anita Ngai, chief revenue officer; Eric Gnock Fah, chief operating officer and co-founder; Ethan Lin, CEO and co-founder. Klook