Klook is winning investor confidence during the pandemic. The online agency is tapping into domestic leisure spending in several Asian markets while aspiring to copy some moves from Chinese superapp Meituan by providing more business-to-business services, too.
Klook, an online travel agency focused on experiences and attractions, has raised $200 million in funding.
Aspex Management led the round, with existing investors, such as Sequoia Capital China, Softbank Vision Fund 1, Matrix Partners China, and Boyu Capital, also taking part. The Hong Kong-based startup has now raised more than $720 million since its founding in 2014. A spokesperson didn’t disclose the valuation this round placed on the company.
Klook has been surviving thanks to domestic leisure spending and domestic tourism in select markets.
“In many months in the second half of last year, in China, Taiwan, Singapore, and Hong Kong, we have seen domestic rebounds of anywhere between 70 percent to 80 percent of pre-Covid levels,” said Eric Gnock Fah, chief operating officer and co-founder.
Yet the true growth engine of international tourism has been all but shut down. The disruption affected Klook in several ways. Some of the extras it had been selling, such as SIM cards and Wi-Fi access for international travelers, have stopped. Many of its partnerships with airlines to reach customers have dried up, too.
The pandemic has brought to a halt the once soaring growth in the tours and activities sector. Yet once the pandemic fades, the companies face many opportunities to shift offline bookings to online channels. When Airbnb went public late last year, it estimated the total “addressable market” for experiences in the markets it serves today was $239 billion. Yet visitors made only 17 percent of bookings online in 2019, either through the sites of online travel agencies or by booking directly, according to Arival.
Many people want to tackle a trend driven by demographic shifts. A survey by data intelligence company Morning Consult showed that more than half of consumers in several major countries worldwide would prefer to buy experiences rather than physical goods.
In the meantime, though, all of Klook’s rivals, including Airbnb Experiences, Expedia, GetYourGuide, KKday, Musement (owned by TUI), Tiqets (backed by Airbnb), Tourscanner (a metasearch site based in Hamburg), Trip.com, Viator (and its parent company TripAdvisor), and Buddyz, saw their rapid growth rates falter.
Klook said a majority of its bookings continue to come through its mobile app.
“We continue to see the Klook app as becoming someday a superapp for experiences,” Gnock Fah said. Yet when it comes to other acquisitions of customers, Klook has had to adjust tactics. The airline partnerships it used to have aren’t delivering. It has instead leaned into partnerships with providers of digital wallets and e-commerce platforms.
Klook’s campaigns with destination marketing organizations have also helped. For instance, Klook recently launched a $1.5 million ($2 million Singaporean) partnership with Singapore Tourism Board, where it touts promotions for products and experiences, helps develop marketing content, and uses digital marketing to boost domestic spending at hotels, attractions, tour operators, and dining establishments.
Using Tech to Appeal to Experiences ProvidersKlook aims to stand somewhat apart from the main competitors in its key markets by doing more to digitize supply. It aspires to make it easier for operators to list their services online, selling not only on Klook’s site and app but also via third-party channels such as the Grab superapp in Southeast Asia or Alibaba in China.
“In Asia, we’ve been not only a B2C [consumer-facing] platform, but we’ve also been offering digital solutions to merchants to help them manage their online distribution generally,” Gnock Fah said. “We’re now expanding those tools.”
Klook isn’t the only player aiming to help experiences providers tap into online channels. Other players include Sherpa, an effort by travel technology player Amadeus, which aims to let operators connect with hotel guests at a destination while avoiding middlemen like online travel agencies.
Yet Klook believes it is providing a missing puzzle piece for online sales in Asia’s experiences sector. Many merchants already have their own site but perhaps lack a booking engine that syncs with their inventory’s live availability. Or they may have a social media presence with a wide following but not a way to let consumers quickly click to buy and receive a ticket with a barcode or QR-code. Klook is now striving to plug that gap.
In other words, some merchants are quite savvy on social media, but can’t capture bookings yet. This is partly a problem with platforms like TikTok and Instagram not offering enough monetization tools. Klook aims to have ways to help merchants monetize their social audiences.
During the last few months, Klook expanded its solutions to enable merchants to set up a white-label digital storefront similar to e-commerce services like Shopify. (Here’s a Shopify explainer.) Klook is offering this toolkit at “no upfront cost” to merchants.
The experiences sector globally has been behind retail and other parts of travel when it comes to digital distribution tools for smaller players. Some analysts say that many smaller experience operators in the Asia Pacific region are more behind on this score than in North America and Europe. This is in sharp contrast to mobile adoption, where consumers in Asia Pacific lead the world.
“We’re also developing a more advanced solution,” Gnock Fah said. “We’ll provide the offline POS [point-of-sale, or cash register, tech] hardware and ticketing hardware to large and mid-size attractions. That will come with an additional charge.”
The fresh funding will help with this effort. Acquiring merchants to the marketplace is a bit more costly than consumer acquisition right now, the company said. It has a team of about 200 salespeople trying to sign up merchants worldwide. The company has also experimented with social media platforms like LinkedIn and other forms of business-to-business marketing.
“I really hope that this [fundraising] brings some hope to the industry,” Gnock Fah said. “We think merchants need new tools and solutions for them to cope with this new normal, and we would plan to invest the investors’ money in building those tools and solutions for the sector’s long-term growth. We’re offering them at no upfront costs, et cetera. So that’s almost like a give back to the community for the fact that we are blessed to have raised additional funding.”
Some parts of the technical puzzle may still need solving. If an experiences operator also accepts offline payment, how does that integrate into a Klook point-of-sale system? Klook has so far offered a redemption point-of-sale system for tickets already booked online, rather than a payment-accepting point-of-sale system.
Gnock Fah said his company is working on trying to find sophisticated solutions to that problem.
Meituan as a Model for Klook
So what’s Klook’s long-term business strategy?
“We’re still going to be a supermarket rather than a very niche place,” Gnock Fah said. “The way you should look at it is, to use an example from China, is Meituan.”
“In markets like Taiwan, or Southeast Asia, or even Korea, e-commerce has been more about logistics and distribution, but not services,” Gnock Fah said. “The services category is what we’ve always been in. We’re going to become more and more similar to the Meituan model.”
This strategy means thinking beyond what are typically considered travel-related categories in the West.
“Even pre-Covid, 95 percent of the food and dining segment has been very local,” Gnock Fah said. “For beauty, in many destinations in Asia, it might be 40 percent travelers buying. So when that comes back, we want to enable sales of that.”
Like Meituan, Klook has an advantage in customer acquisition in the sense that Western platform players like Google and Apple that often act as gateways to the internet for consumers don’t yet have strong presences in much of Asia Pacific. It’s partly a language barrier issue and partly about how Asian internet users tend to consume information differently, often with a preference for social media-style communication.
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Photo credit: Sentosa is an island with resort and attractions in Singapore. Sentosa attractions can be booked via Klook, an online travel agency focused on experiences. Sentosa Development Corp.