The Largest IPO in History Just Happened and It Has a Huge Travel Angle

Online Travel This Week

Airbnb who? While analysts estimate that Airbnb could raise $3 billion in an initial public offering in the next few months, Jack Ma’s Ant Group, which is affiliated with his Alibaba e-commerce giant, just raised $34 billion in Hong Kong and Shanghai in the largest IPO in history.

While it may not have drawn sufficient attention, the Ant Group IPO has a major travel angle in that its claim to fame is Alipay, the leading digital payments platform in China. Alipay is the market leader in its competition with number two, Tencent’s WeChat Pay. 

But the implications go way beyond China.

A key component of Alipay’s expansion strategy is cross-border payments, meaning facilitating merchant payments for online travel sellers, hotels, airlines, or other stores high on shopping bucket lists when Chinese citizens travel abroad. In addition to payments, Alipay also offers services such as currency exchange, duty free, ride-hailing, and food delivery.

It is an important strategy element for companies such as Booking Holdings, when they try to capture the business of Chinese traveling abroad, to offer Alipay, as well as WeChat Pay and India’s Paytm, as payment options. That’s because many travelers around the world don’t have credit cards, and they may exclusively use Alipay or another digital payment method.

But Ant Group’s Alipay — and its hearty expansion goals — have been under duress because of pandemic-induced lockdowns, travel restrictions, and Chinese travelers shunning foreign destinations and opting for domestic trips instead. Alipay counted more than 1 billion annual active users, and more than 80 million monthly active merchants as of June 30.

The company’s international total payment volume transacted was RMB622 billion, or around $92 billion, in the 12 months ending June 30.

But increasing global tensions and fragmentation could deter Alipay’s expansion, and therefore the ability of travel companies and merchants to service much-sought Chinese travelers, when they start traveling abroad again.

Ant Group is concerned about U.S.-China governmental tensions. In its IPO papers, the company noted that President Trump in August issued executive orders barring Americans from TikTok and WeChat transactions, and issued restrictions on the processing and storage of U.S. citizens’ data “on cloud-based systems accessible to certain Chinese companies, including Alibaba.”

Alipay noted that when the U.S. government cracks down in these ways, then other countries tend to follow the U.S. lead.

All of these tensions could inhibit the expansion of Alipay — and WeChat and myriad other digital payment platforms — making the elusive “connected trip” for travel businesses and travelers all that more elusive.

In Brief

Booking.com Downsizing Will Be Costlier Than Anticipated

Booking.com still expects to reduce its employee rolls 25 percent by the end of the year, but the costs could be substantially higher than initially estimated. In September, Booking.com figured that termination costs would run $50 million to $55 million, But Booking.com, including its Rentalcars.com unit, in the interim offered a “voluntary leaver” plan in the UK and the Netherlands, that could up costs an additional $60 million to $70 million. Securities and Exchange Commission

Airbnb Stock Split and Nasdaq Ambitions

Airbnb carried out a pre-IPO stock split that likely reflects a higher valuation because of its summer booking rebound, and would make it easier for mom, pop, and millennial investors to buy shares if and when Airbnb goes public. And, yes, that debut is expected to be on Nasdaq. Skift

Oyo Claimed Its Room Count Dropped Only 16 Percent

Despite Covid-19 ravaging the hotel industry in India, China, Southeast Asia, Europe and the United States, Oyo founder and CEO Ritesh Agarwal maintained that its room count fell only 16 percent to about 1 million since January, and the only diminished room numbers were in China. He claimed reports of fake listings are a tech glitch. Skift

MakeMyTrip Sees a Surge in Homestay Demand

Alternative accommodations are still a small part of MakeMyTrip’s business, but the Indian online travel agency is seeing a surge in demand for villas, cottages, and private homes. This could be a long-term opportunity, but for now demand is exceeding supply, the company reported about its September 30 earnings. Skift

Booking.com Partnered With Etraveli for U.S. Flight Bookings

Booking.com’s U.S. users now see a flights tab prominently displayed on its homepage, and Etraveli Group powers the service. Booking.com and sister company Agoda have been testing various flight services in Europe and Southeast Asia over the last year to complement existing services from Kayak and Priceline. Phocuswire