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Tours and activities: a category to be reckoned with
Watch out Europe and the US, here comes Klook, an Asian provider of in-destination products and services, with a multi-million pound investment
Klook, the fast-growing Asian in-destination services provider is not trying to be the Airbnb of the tours and activities sector.
Chief operating officer and co-founder Eric Gnock Fah says tours and activities is a standalone category, and Klook’s recent “meaningful funding round” further proves that it can no longer be viewed as niche.
This week the company announced that it had secured an additional $200 million in Series D financing from firms that include Goldman Sachs, Sequoia China and Boyu Capital, an Asian-based sovereign wealth fund. The latest round takes Klook’s total financing to $300 million, and will be used in part for expansion into Europe and the US.
Niche the sector it is not. Tours and activities is predicted to be worth $183 million by 2020, a fact that has not been missed by industry heavyweights like Airbnb, Expedia and Booking Holdings. Indeed, Booking has openly stated that they are looking to widen their gamut of products and services to include tours and activities, and the recent acquisition of FareHarbor is an indication of how much value it attaches to the segment. Speaking recently at EyeforTravel Europe, Todd Henrich, SVP Corporate Development, Booking Holdings, said: “We used to talk about taking friction out the booking process. Now it’s about functionality in the entire travel process [including activities]…We are creating a hub where customers can get what they need, taking that friction out of the travel experience.”
A multi-product offering
While smaller tours and activities fry might see moves by Airbnb, Expedia and Booking.com to control the entire trip as a threat, the Klook team is not worried. For one, they argues that the booking of tours and activities happens at a very distinct time in the journey - predominantly in destination. In this, Klook's mobile first approach gives it an edge. Secondly, big players like Airbnb and Booking.com are only recently entering the sector.
“We have been in the market for 3.5 years now and with this funding and this year’s revenue - a billion dollars by the end of 2018 - we are the clear leader in this space,” says Gnock Fah, one of Klook’s three founders, who in 2017 was named one of Forbes 30 under 30 in the consumer technology category.
Klook already offers a whole lot more in the way of experiences – some 50,000 activities and services from over 5,000 travel service operators at 200+ destinations worldwide.
“We have multi-category product offerings that take care of every single need the traveller will have in destination,” says Gnock Fah. These include everything from professional tour guides to offers from established companies like Disney and Universal Studios, local pre-arranged transfers from the airport to a destination, between destination car trips that might involve a local guide, local rail journeys and food experiences. According to Gnock Fah, getting, for example, the entire Japanese railway system onto the platform requires a very different type of specialisation and integration to deliver a seamless and intuitive experience for the consumer. “It is lot more convoluted to sell those multi category products versus selling flights and hotels,” he says.
Another advantage, according to Gnock Fah, is that Klook believes it has conquered the toughest market first – Asia. “We have a really good understanding of the multimarket. In Asia, there are many different cultures, languages and currencies,” says Gnock Fah, adding that while it is true that Europe too is culturally diverse, it does have the concept of the euro, which makes it more homogenous than Asia.
So, the Asia first firm is now ready to expand its presence in Europe and the US, where it sees significant opportunity for growth. “There is extremely high demand from European travellers for travel to Asia which is a dynamic travel destination that will play host to major events like the upcoming 2020 Tokyo Olympics,” Gnock Fah says. There is also an opportunity to widen its product offering for the fast-growing numbers of international outbound Asian customers.
Firms like Airbnb, Expedia and Booking.com have certainly proved that travel is a business that can be replicated across different geographies. However, while part of this new funding will go towards geographic expansion, the company will also be investing further in technology and innovation to help supplier partners improve the booking process.
Payment, and the challenges that come with the multitude of ways to pay globally, is an integral part of that, and a major focus for a company, which already supports 36 currencies in eight languages.