Think we should mention instead of listing them in our slides: Number of investments – 34 investments Revenues generated in SEA – about usd90m revenue from the investments made in the last two years in SEA No. of jobs created – supporting about 1.3k jobs
Our effort over the last two years have earned ourselves some bragging rights. We have supported many female entrepreneurs and 15 founders of our portfolio have also been recognised internationally, being a part of the Fobers Asia 30 under 30. And out of the 15, 3 of them are actually from our travel companies – Travelio from Indonesia, Tripfez from Malaysia and Triip.me from Vietnam.
So you might be wondering, who is this guy on stage, why would he invest in travel startups and what does he know about tourism. So here is my CV to justify my worth standing here today. And I have to say, I love the travel industry. Because it is what enabled me to do what I do, to be able to be there for my founders when I am needed.
Why do I love the travel industry? Because you will never stop traveling once you started it. Some boring yet essential stats to know – the travel industry will be a US$11 trillion dollar industry and over 30% of world population will be traveling internationally. Everyone who is in this industry knows and should know this numbers, what this means is that there will be more and more entrepreneurs jumping on the bandwagon which means more and more competition for everyone in the room. Which is why it is important to know and be able to act on key trends such as (next slide):
….the fact that most of the middle class population will be in Asia and these pool of people grows larger over time. As Asian economies grow whilst its population is still young, it means that young people will have more money to spend and it is in their DNA to want to explore the world and experience what it is like to not be in an environment that they are familiar with. The world is changing and so are the consumers in the way they pick an item or a service; or the way they move around. From owning a bike or a car to taking uber or grab everyday. Change is always trendy. Which is why, I think an investable travel startup needs to (next slide).
Doesn’t matter how it used to be – technology and information is changing how we behave and how we move around. 4 years ago in Malaysia, parents would insist on driving instead of taking a cab because cabs were considered more dangerous. Fast forwarding to the present, most people have Grab app on their mobile and traditional Singaporean families are traveling along with their personal tour guides that they hired on Triip, who are actually students but knows their way through local attraction. So the winner will be the one who figure out the pattern and being able to act on it. All journey start with an emotion or a thought – you plan for your long weekend getaways because you want to spend time with your family or friends, that’s an emotion that is derived from having a heart; you decide to go on a holiday when you are swamped by work, that is an emotion of frustration, of wanting to see a refreshing view beyond just the piles of paper at your desk. Only a team that is passionate about travel can under what goes through the mind of someone who is looking to explore. We all love to travel – if someone tells you that they don’t like to travel, they probably are just saying that they don’t like to live their life, which is sad if that is true. The point is, you never stop traveling, which makes it more important for a travel startup to be able to build a long lasting relationship with your travelers. What that translates into is that you need to be able to get your travelers to use you again and again and as often as possible. You want your travelers to rely on you for inspirations of destinations, you want your travelers to go to you when they need a specific service or product that only you can provide, build your niche. You want your travelers to be able to feel like they are socializing with you and the people that they meet along their way because travel is social. Once you are able to connect with travelers such way, they will be your best marketeers because travel is social. And if they come back again and again, it means you make enough money to make more travelers happy. To most travelers, a tour to any new destination is an adventure. They probably have done research on what to expect but most of the time experiencing it themselves gives them a very different perspective. So if you are in the travel industry, your role is to make any new exposure a great adventure for the travelers. To make every impression long lasting. That is why travel startups, to me, are seem to be more creative and refreshing. That’s why I think it is important for travel startups to be the trend setter in terms of what travelers should see and feel or try out in every trip they make.
The travel industry as we know brings about significant impact to economies. What most travellers see as the first transaction is the transaction between them and the immediate service providers like airlines, hotels, train, restaurants. But what is not visible is that these service providers have their own service providers that they engage as well. For example restaurants would have to purchase raw material from their suppliers, hotel operators would have to engage training firms in hiring good quality hospitality staffs. The point is really that opportunities exist in any segment of the whole travel industry and the each region operates in different time zone in terms of market maturity. That’s why I break these maturity stages down into 5 main phases.
The digital economy for travel industry started when the manual handling of ticketing and booking became overwhelming and difficult to handle. People needed to rely on a more scalable method to be able to smoothen the process. And it was in the 80’s that internet was officially born. I should be proud because I am a 80’s baby as well. So here comes the computer reservation systems, also known as global distribution system. The key players that are still around after decades are guys like Sabre and of coz Amadeus, which was founded on 17 June 1987, also a 80’s baby. That was the first integration between traditional mediums and the internet. This was the era where content was being successfully digitized for the first time. In the next decade, it was the age of the OTAs. Companies like Expedia, born in 1996, began building their inventory through partnerships with airlines and hotel. In the 80’s, the focus was really to figure out how to bring all these information onto the net and the next decade was really about pushing for more digitization and you start to see the convergence of different type of inventory. For example, Travelocity and Expedia are platforms where you can book your flight and accommodation without having to switch websites. This is the age of consumption of content. 2000 onwards, as travellers become more sophisticated, consumers start to look at differentiated content. Tripadvisor focuses on reviews; from destination reviews to now basically any sort of reviews. You see fare aggregators like Kayak, comparison sites like Skyscanner – having their own unique differentiated use case. And of course, people eventually got bored of staying in 5 star hotels and decided to move into someone else’s house – Airbnb. Even in China we saw an emergence of outbound travel activity where Chinese tourists were getting more excited about the world beyond the great wall, the scenery beyond the shopping malls in Hong Kong. That’s when the top tier OTAs in China like Ctrip and Tuniu started looking at differentiated content – inventories that their competitors wouldn’t be able to get, which is tours outside of China.
Finally, getting to where we are right now, the decade that we are most familiar with. I call this the era of UX, user experience. Travel has become an essential part of our life. Just as how we are always looking for good food, we are always looking for better travel experience. When Indonesia opened up, Traveloka took the opportunity to provide for the emerging middle income Indonesians. These are people who were looking for an adventure and experience that they can’t get locally or not through a tour group. This is why startups like Triip appeared. To provide for travellers who want to travel like a local, and who wants to find the happiest way to travel. Startups started focusing on the different segments of a trip. Most of the travel companies in the market caters for the pre-trip experience, meaning they help you get prepared for your travel. There are also startups that focuses on recording your post travel experience, this is where reviews come in. But there is also an emerging group of startups that are looking to help you navigate around when you are traveling. So this is a window of opportunity that many entrepreneurs are eyeing at. Of course there are also special needs companies like HotelQuickly that offers quick and last minute hotel booking. So what’s next? Would it be a company that is based on IBM Watson’s AI? Or, a travel experience relying on VR integration or simply just a travel app that provides instant access to a team of real human travel experts who will take care of your every travel need like Lola? Whoever figures that out or able to fill up the current gap in the age of UX, I would say would stand a chanc
We are in the region of opportunity, with a target audience of not just ASEAN but also the likes of China, Japan and Korea as Asia converges. So some key take away for startups who want to survive, not just being investable, is to be able to differentiate, localize and serve the mass.