The KKday team
The story of KKday is one of grit and determination. The travel experiences platform, launched in 2014, navigated many challenges- the most significant being the COVID-19 pandemic- to become a key player not only in Taiwan but also Asia. The company stood out when most travel-tech companies either shut down or underwent a massive scale-down.
Today, KKday — backed by Cool Japan Fund, National Development Fund, and Monk’s Hill Ventures — has millions of users and provides over 300,000 unique experiences in 550+ cities and 92 countries.
The firm is now going through some new challenges, but with the solid foundation it has laid over the years and the experiences it has gained by tiding over the bottlenecks thrown by the pandemic, the company is now confident of taking its next big leap.
In this interview, KKday Founder and CEO Ming Chen shares his experiences traversing the tumultuous period and how the firm addresses the new challenges brought by the global economic slowdown.
Excerpts
How has been the past two to three years for the company from a business growth perspective?
KKday grew fast before COVID-19 as we focused on further digitalising the local experience supply chain, user acquisition, product innovation, expanding to new markets, and M&A opportunities.
Our biggest challenge before the pandemic was delivering stable yet fast growth while taking advantage of market conditions in a competitive market. The business was also anchored on international outbound travel.
The pandemic essentially wiped out any cross-border travel — business or leisure. We were significantly impacted as the travel industry faced unprecedented headwinds from travel controls globally. Our revenues plunged.
By March 2020, many of our numbers were negative as customers cancelled bookings. At the same time, there was a lot of uncertainty and fluctuations in domestic and international travel, with some of our key markets, like Hong Kong and South Korea, experiencing multiple waves of infections.
Lastly, our suppliers, mainly small and independent travel operators and activity providers, got hit hard. For most suppliers, total revenues were significantly down compared to pre-COVID-19.
In a time when real-time inventory was critical, given increased safety measures and crowd limitations during COVID-19, suppliers were still using outdated tools and Excel sheets. Suppliers were struggling to keep up.
At the onset of COVID-19, we cut our marketing expenses by 90 per cent. Senior management either forewent salaries or took significant pay cuts to weather COVID-19. For our suppliers, we quickly offered and renegotiated better payment terms. While we expected short-term loss, it was more important for long-term relationships with the suppliers.
On the business side, we swiftly redesigned our organisational structure — a key change was combining our marketing and merchant business development teams to answer a key question: What is the right product for our customers now?
The team came together with a plan of attack 1) Rezio product development for our suppliers to reduce operational costs and inefficiencies, 2) pivot to domestic travel as markets like Taiwan and Hong Kong began reopening towards the middle of last year, and 3) souvenirs and virtual travel experiences to recreate an international travel experience as much as possible.
As a result, we saw our business in markets that have managed COVID-19 better achieve near pre-COVID levels solely on domestic travel products alone. As domestic travel bounced back, we closed our Series C+ round in July 2022.
Also Read: How KKday saved for a rainy day when many travel startups called it a day during COVID-19
Post-pandemic, our burn rate has reduced by over 50 per cent (actually lower than pre-COVID-19), and we are almost recovered to pre-COVID levels during peak seasons in 2020. Unit economics per new user materially improved due to lower user acquisition costs. Our revenue growth increased 10x during the pandemic from the staycation and souvenir segments.
Rezio — a booking, payment, and customer management platform for suppliers in the experience sector — reduced the revenue haemorrhaging many of our suppliers were experiencing. In just six months from the release, over 500 providers adopted the platform from our initial rollout in March 2020.
KKday Founder and CEO Ming Chen
We pivoted all products from cross-border to domestic customers, focusing on high-margin products. This included staycation packages, local island hopping tours, workshops, and glamping experiences. We quickly saw an uptick in local users buying our tours and experiences as certain markets opened up.
At the start of this year, we saw record high 2022 revenues globally as borders reopened. Our revenues grew by 100 per cent y-o-y, bolstered by doubling down on domestic and international travel and investing in innovation and digital transformation of the APAC tourism industry. GMV in 2022 surpassed pre-COVID-19 levels driven by increased bookings and domestic and international travel recovery.
Hong Kong, Singapore, and Korean markets have fully recovered and have exceeded their pre-COVID-19 revenues. Our international business has fully recovered and exceeds pre-COVID-19 levels. We continue to see steady growth in the domestic industry.
In the future, we continue to focus on sustainable and profitable growth and positive unit economics. We also remain disciplined and monitor metrics, including reducing customer acquisition cost (CAC) spending.
How is the mindset and cultural shift happening internally since we are in a high-interest-rate environment and funding will take more work than before?
The cost of capital has risen significantly in the current environment, underscoring the importance of developing a sustainable and profitable business model.
Unlike succumbing to a growth-at-all-costs mindset driven by readily available capital, we have prioritised sustainable growth and exercised discipline in our sales and marketing strategies. This includes how we look at user acquisition, our strategy for discount subsidies, and targeting the suitable user base.
KKday’s previous fundraising rounds have brought substantial business improvements, and we are well-positioned for continued growth. This ranges from attracting industry talents to strategic acquisitions such as the prominent Japanese local travel experience OTA, Activity Japan.
Additionally, we have dedicated resources to developing our in-house proprietary SaaS booking system Rezio. This has helped us strengthen our resilience amid the challenges posed by the pandemic. We have increased operational efficiency, deepened our footprint, and increased supplier loyalty.
Investor expectations have evolved beyond a singular focus on topline scale and growth. Sustainable growth that can lead to profitable growth has taken centre stage. So today, we must drive growth, scale, and profits.
Have you noticed any changes in customer behaviour or demand, and how have you responded?
International and cross-border travel is back in full force as borders reopen. We saw approximately a 25 per cent increase in searches on the website q-o-q and over 100 per cent in bookings on our platform y-o-y for domestic and international experiences. The platform’s travel experiences have grown by 100 per cent to 300,000. We also increased the number of merchants to 14,000 (30 per cent increase y-o-y) to support the demand.
The rise of digital-first travellers is driving the growth of digitalisation across the APAC tourism industry. As a result, we have seen a more than 110 per cent increase in merchant adoption of Rezio. We also focus on onboarding more suppliers to Rezio to meet the demand.
More travellers are seeking hyperlocal experiences. Hyperlocal travel experiences are in demand as travellers seek unique experiences as borders reopen. We have created KKday’s owned signature tours and are rolling them out to our markets. We’ve seen an uptick in bookings for KKday’s owned signature tours in markets such as Japan, Taiwan, and Korea.
New technology will focus on providing travellers with seamless experiences. We’ve seen 100 per cent more bookings on our platform y-o-y as more travellers shift to booking experiences online. We are also working with our merchants to integrate tech-enabled solutions for travellers, including utilising QR codes and mobile check-ins. For example, KKday 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).
How has your financial strategy changed in light of the current market conditions, and what measures have you taken to ensure long-term sustainability?
At KKday, operational efficiency and sustainability have been fundamental principles. We prioritise unit economics and regularly ask ourselves important questions to ensure we are on the right track. We often ask ourselves: what is the value we provide users? Are we targeting the right users? How long does it take to start generating profits from each user? Are we retaining these users? Can we increase the contribution margins on each order for each user? And we’ll review this market by market.
As an internet-based business, how we acquire users and sales & marketing efficiency is super important.
We understand the importance of finding ways to operate more efficiently and sustainably while still delivering high-quality experiences to our customers. We continuously seek ways to innovate and optimise our operations, leveraging our strengths in technology, data analytics, and customer insights to drive improvements across our business. By staying true to our values and focusing on long-term sustainability, we are confident that we can continue to deliver value to our customers and partners for years to come.
Can you discuss any cost-cutting measures you’ve implemented and how those measures have impacted your business operations?
During COVID-19, we implemented a few cost-cutting measures. Today, our primary focus is finding more cost-efficient ways of doing business in support of our dedicated business development and internal analysis teams; we have successfully reduced our advertising expenses by over 50 per cent, all while maintaining and even improving our level of exposure.
This strategic approach has enabled us to retain our existing user base and increase our gross merchandise volume (GMV).
Have you adjusted your growth projections or other key performance indicators?
We are currently exceeding our growth projections. Our year-to-date performance is higher than previously projected. We will continue to look for potential strategic partnerships that may support the business, such as our recent acquisition of Activity Japan to increase our Japan inventory. We will continue to work with suppliers and expand our supplier base to deepen our footprint in our respective markets.
Also Read: Travel experiences, activities platform KKday extends Series C round to US$95M for domestic expansion
How do you balance the need for short-term financial stability with the long-term goals of your business?
KKday understands the importance of balancing short-term financial stability with the business’s long-term goals. We believe that short-term financial stability is necessary for the company’s survival, but it should not come at the expense of long-term goals.
To achieve this balance, KKday has implemented several strategies. Firstly, we have diversified our product offerings and expanded our geographical reach across 90+ countries. This allows us to tap into multiple revenue streams and hedge against market volatility.
Secondly, we have shifted to a more cost-efficient way of doing business, especially in terms of marketing efficiency, proven by consecutive months of high returns on ad spend (ROAS) and positive unit economics.
Can you discuss your plans for diversifying your revenue streams or expanding into new markets in light of the current economic climate?
There is significant untapped potential in the travel experience industry’s total addressable market. The in-destination travel spends addressable market is over US$100 billion in Asia Pacific alone. Yet, only 20 per cent of tourism in Asia is digitalised.
At KKday, we recognise our strengths in operating in the travel experience sector throughout the APAC region. With a team of industry experts and deep market knowledge, we are well-equipped to operate efficiently and effectively in this industry.
We remain focused on our core competencies and aim to expand our market share in areas with a competitive advantage. By dedicating our resources to the field that we excel in, we can continue to provide our customers with the highest quality travel experiences and services, ultimately driving growth and profitability for our business.
How have you maintained a strong company culture and motivated your team during these challenging times?
We remain committed to maintaining an open, transparent culture with entrepreneurial DNA. In a post-pandemic era, we have also embraced hybrid work arrangements, fostering a flexible work environment.
At the same time, we have regular town halls and all-hands meetings to keep our team engaged and foster a sense of belonging and community. Our flat organisational structure supports open communication and dialogue among teams, enabling us to drive innovation.
What challenges does a late-stage startup face compared to an early-growth-stage startup?
As KKday expands, a key challenge is managing a rapidly growing workforce. This challenge becomes even more complex as we operate in a multi-market international business with 12 markets across APAC and nearly 1,000 people. Given we take a localised approach to our markets, how to find and to retain the right talent requires a balance that requires intention, concerted effort, and overcommunication. We understand the importance of striking this balance while preserving our entrepreneurial culture.
Another challenge is understanding and exceeding investor expectations in our growth stage and this climate. There are more dimensions, and expectations have evolved beyond mere top-line growth. Sustainable growth that can lead to profitable growth has taken centre stage. So today, we must drive growth, scale, and profits. We’ve been operating with a sustainable growth mindset since day one. This mindset has enabled us to raise two funding rounds amid the pandemic successfully.
What learnings can early or growth-stage companies make from late-stage companies?
Prioritise innovation: We have placed innovation at the forefront since its inception. We recognised the potential in the nascent travel experience market. This commitment to innovation has driven our expansion into over 90 countries and the development of Rezio, our SaaS business. At every turn, an innovation mindset fuels everything we do.
Forge enduring partnerships: We owe part of our success to building solid partnerships – from travellers to suppliers to investors. They have been critical to our success in reaching 12 markets and offering over 300,000 experiences. These partnerships are an invaluable asset to the company, and we continuously allocate resources to nurturing and maintaining them.
Cultivate a robust company culture: Aligning our culture with our mission and values is essential. At KKday, we have invested in creating a solid company culture that fosters innovation, collaboration, and customer-centricity.
Also Read: Experts on how SEA companies can survive and thrive in a high interest-rate environment
We understand the significance of exceptional customer service and support, so we have also dedicated substantial resources to our customer relations and quality control teams.
How are startups tackling talent issues? Is that an issue in this market?
Despite the challenges posed by the pandemic, we are grateful that our talent acquisition plan remained largely unaffected. KKday boasts a diverse team of nearly 1,000 employees across 12 offices in Asia, including Taiwan, Hong Kong, Singapore, Korea, Japan, Malaysia, Thailand, the Philippines, Indonesia, Vietnam, Shanghai, and Australia.
For startups aiming to thrive in the global marketplace, embracing international talents and fostering a multicultural environment is paramount. At KKday, we prioritise this by adopting a strategic approach to international market expansion. Our initial step involves hiring dedicated, full-time local HR professionals in each target market. These HR experts know countries’ laws, regulations, and recruitment norms in-depth. With a solid understanding of the unique attributes of each market and aligning them with our business goals and mission, the HR team takes charge of talent recruitment efforts.
By leveraging the expertise of our local HR teams and promoting multiculturalism, KKday is able to build a diverse workforce that brings together different perspectives, experiences, and talents. This approach strengthens our ability to operate effectively in various markets and cater to our global customer base’s diverse needs and preferences.
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