KKday
Travel was the worst-hit sector by the COVID-19 pandemic. Unable to survive, many travel-related startups, including online travel agencies (OTA), bring the curtain down on their businesses.
KKday, an e-commerce platform for tours, experiences and activities, was among the travel startups that came successfully out of the crisis. At the pandemic’s peak, KKday raised US$75 million (in September 2020), which provided it with the war chest to tide over the uncertain period. The Taiwanese firm has just secured an undisclosed sum led by TGVest Capital to bring its total Series C round to US$95 million. The firm posted good performance amid the crisis prompting investors to inject capital.
In this interview, Founder and CEO Ming Chen shares how the company survived the pandemic to post good results.
Edited excerpts:
Travel was one of the worst-affected sectors globally due to the pandemic. How did KKday survive the onslaught when many of your peers and travel companies either shut down or scaled down their operations? What was the secret sauce?
At the pandemic’s start, we actively controlled costs and suspended most marketing campaigns. We reduced our marketing spend while acquiring new customers by developing new products, significantly lowering acquisition costs and more efficient customer engagement.
We also successfully focused on domestic travel — staycations, outdoor, and watersport activities. Our product offerings more than doubled during 2020 as we expanded into staycation opportunities and souvenirs. The revenue growth from both these areas grew more than 10x.
For example, in Hong Kong and Southeast Asia, where many countries were on stricter lockdowns then, we promoted souvenirs, online experiences, and food delivery vouchers to encourage consumption.
Today domestic travel has resumed, and we’re firing on all cylinders with customers purchasing through KKday ticketing products, activities-related products, especially with the summer seasonality, water sports activities, and outdoor activities products. We are seeing growth in many different product categories.
Lastly, we accelerated our development of rezio, KKday’s SaaS solution that works with local merchants to manage bookings and inventory on multiple channels). We wanted to move swiftly to support our local merchants and help them digitise while expanding their customer base, in addition to managing overall inventory at a time when there were several changes to border restrictions. We also offered rezio complimentary to merchants during this period.
Did you go austere during the pandemic and cut the headcounts?
We planned for the worst, so we remained highly disciplined in managing our cash flow and balance sheet. The largest cut was in lowering our marketing spending, where the team has worked hard to acquire users through different channels and unique products.
KKday Founder and CEO Chen Ming-ming
We reduced some of our headcounts during the pandemic. However, the headcount is now at the pre-COVID-19 levels, and we’re planning to increase this by more than 40 per cent. We were fortunate to raise additional capital during this uncertain period, and as a result, we could largely maintain our headcount across the region.
You said in a statement that you have plans to deepen your footprints in Taiwan, Japan, Hong Kong, South Korea, and Southeast Asia. Did all these markets recover from the clutches of the pandemic? How do you compare each of these markets pre- and post-COVID-19?
Pre-COVID-19, most of the revenues from our markets were derived mainly from international travellers. At the start of the pandemic, we quickly pivoted to domestic business. With the borders reopening, we expect domestic and international travellers to accelerate. Both domestic and international businesses (our dual engines) will drive our growth.
COVID-19, in some ways, was a blessing in disguise; it forced us to pivot to domestic travel as borders shut down. As a result, we acquired many users at significantly lower costs for domestic travel. They exhibited much higher engagement levels and more bookings than international travellers.
Now that borders are opening up and international travel is resuming, we’re leveraging our domestic travel base to cross-sell global travel products.
Hong Kong, Korea, Japan, and Singapore exceeded pre-COVID-19 levels primarily driven by the domestic business during the crisis.
Do you see any drastic changes in how people view travelling post-COVID-19? Are there any behavioural changes and changes to the consumption pattern?
As travel restrictions are lifted, we will see (and are seeing) a surge in overall travel domestically and internationally. We see a couple of trends: 1) an increase of digital travellers: they are becoming savvier and using tools like KKday to plan their trip itineraries and save costs, and 2) travellers are also looking for more curated experiences when they travel (and travelling for longer). With this in mind, we plan to relaunch our signature tours to give travellers memorable experiences.
Over the last 12 months, more markets have opened up, and domestic travel has been a strong driver of our growth. While staycations remained popular, there was also a surging appetite for local domestic tours, activities, and attractions. We added 200,000 more experiences and activities across Asia Pacific during COVID-19.
In Japan alone, we added 35,000 new activities (some of the activities are part of our Activity Japan acquisition which focuses on outdoor activities).
We also expect domestic travel to be an important growth driver for us. Our domestic business has acquired many more users at significantly lower costs. They also show higher engagement levels, booking more on our platform than international travellers.
This is partly due to domestic travellers travelling at least 2-3x more than international travellers. As borders open up, we plan to cross-sell experiences and activities for domestic and international travellers. We see this as complementary.
You also mentioned in a press release that “hyper localisation and digitisation will be our north star for scaling and building our user and merchant base”. Can you elaborate on this quote? What exactly do you mean by hyper-localisation?
KKday has always been focused on going deep into local Asia markets to provide travellers with the best, most authentic, curated experiences. Today’s travellers, whether local or visiting from overseas, are more digitally savvy and are very interested in finding activities and experiences beyond the usual go-to spots for tourists, “off the beaten track” experiences.
It’s pivotal for us to curate these experiences via our local merchants and our KKday signature tours that we are relaunching. It is also vital for us to support the overall Asia ecosystem of local merchants in its digital transformation to empower them to be more operational and cost-efficient and expand their customer base.
Can you share more details about rezio? How does it work?
rezio is our SaaS all-in-one platform that provides a suite of services, including a simple setup for a powerful online store, real-time inventory management across different booking channels, customised vouchers for various booking scenarios, and integration with local payment gateways.
All features can also be accessed on any mobile device, allowing travel and experience providers to manage bookings on the go. rezio also provides real-time inventory across a merchant’s multiple channels. The platform reduces operational costs and increases efficiencies for merchants.
We have over 1,600 merchants, reaching 2.7 million travellers globally.
With an influx of domestic and international travellers expecting to return, many local activity providers have adopted rezio to help digitise and scale their businesses and get access to manage their bookings on multiple OTAs.
With the new funding, we plan to scale and build new rezio features to automate and streamline solutions for merchants. For example, KKday has partnered with Nami Island, a popular attraction in South Korea with millions of annual visitors, to integrate its software rezio with the attraction’s hardware (e.g. e-gate, kiosk, POS system).
Also Read: 3 learnings from KKday CEO and Founder on how his travel startup overcame the pandemic
Similarly, Asahiyama Zoo, one of the major zoo attractions in Japan, has just signed a multi-year contract with us to implement rezio’s solutions. These theme parks have millions of visitors, and we’re partners with these theme parks to help them sell and manage these visitors online.
rezio also has partnered with major OTAs, such as Viator, to deepen our global merchants’ channels and footprint. The partnership with Viator allows rezio to integrate its API to enable merchants to manage their products on Viator and Tripadvisor on top of its existing sales channels. We see overall increased appetite from larger OTAs.
KKday also plans to relaunch its in-demand owned and operated signature tours that provide travellers with curated quality local experiences as borders reopen.
Another crisis is on our doorstep as late-stage funding has drained globally due to several macroeconomic factors. How do you look at this crisis? Will it affect the travel industry in general and KKday in particular?
It has been difficult, and valuation comps (comparable company analysis) are significantly lower than four months ago. However, we do see that the travel industry is on an uptrend. We remain optimistic that travel is bucking the macro trends and is on an upswing, especially with borders opening up and international travel resuming. So there will be a lot of growth opportunities from my perspective. We’re exceeding comparable periods of pre-COVID-19 levels while international travel is just at the cusp of resuming in Asia.
In the last two and a half years since COVID-19 struck, we’ve also managed our business more disciplined way. As mentioned earlier, we’ve significantly lowered user acquisition cost by more than half of what it was versus pre-pandemic levels. We see increased engagement levels and more experiences and activities being booked by users.
Companies that demonstrate good growth, sustainable growth and a path to profitability can stand out more in these uncertain macroeconomic times.
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