Amongst the handful of Southeast Asian technology companies looking to go public recently, one of the most notable names is Traveloka.
There have been rumours since early April of a de-SPAC with Bridgetown Holdings, backed by Peter Thiel. That would reportedly value the company at US$5 billion, up from the US$2.75 billion it was valued at in early 2020.
This would be a remarkable outcome, capping off an 8 year journey of Southeast Asia’s largest online travel booking platform.
Preparing for take off
In 2012, Ferry Unardi, a student of Harvard Business School, was looking to fly home to Padang, a city in West Sumatra, Indonesia.
The process was far more complicated than it needed to be – to head home, Unardi booked flights to take him from Boston to Jakarta, and only then could he figure out tickets for Padang.
Multiple instances of suffering this frustration helped him take the leap to drop out of Harvard and solve this pain point. He teamed up with his school friend Albert, and former colleague Derianto Kusuma, together formally establishing Traveloka. It means travel + the Sanskrit word for “universe”.
In the early days, Traveloka started off as a basic flight search and comparison site for consumers. This was previously performed in a fragmented manner by travel agents who consumers had to pay hefty commissions.
While people liked this idea, it wasn’t long before the team realised that people wanted more than basic search. What they wanted was a complete end to end experience, where they could also actually book flights and pay for their tickets on the website itself.
This led to Traveloka then aiming to be the one-stop solution for flight bookings in Indonesia.
Market timing could not have been better. Indonesia was going through rapid online adoption, and mobile usage was seeing unprecedented growth.
This firmly set the stage for the company to supercharge growth.
After successfully mastering the online ticketing vertical/platform, Traveloka visioned a more end to end solutions approach.
To make it an all-in-one booking app, it launched a hotel booking and mobility service. Launch of its mobile application further aided in more happy users.
With the fuel of strong partnerships and customer service it further expanded into Southeast Asia countries beyond Indonesia including Thailand, Vietnam, Malaysia, Singapore, and Philippines. Learning from failed experiences of other big players like Uber allowed it to localise and contextualise its offerings by understanding pain points and customs of each country.
A prime example of this was its foray into fintech.
When Traveloka realised that its customers waited for their last salary day to make bookings it spearheaded a new offering of ‘Buy now, Pay later’ services in Indonesia.
With the backing of capital, it focused heavily on product and service rollouts, including 24*7 customer services, 40+ payment options and various rewards.
This led to funding from tier-1 investors including Expedia (which many regarded as its closest Western comparable), giving Traveloka the coveted ‘unicorn’ tag.
At the time, this was the quickest time frame in which a start-up achieved that tag in Indonesia.
This truly cemented Traveloka’s rapid ascent from a travel aggregator platform to a travel related “super app” of sorts. It seemed like smooth sailing, with strong growth expected in 2020 and the coming decade.
Strong turbulence in the form of COVID-19
Like most start-ups, Traveloka did have its fair share of turbulence
The CTO of the company at the time made an exit citing personal differences, and Air Asia delisted itself from the platform.
However, these issues paled in comparison to the COVID-19 pandemic and the onslaught of challenges it brought with it. Revenues froze due to travel bans, and the company had to refund close to US$100 million dollars to customers.
With no end in sight, the outlook seemed bleak.
However, the company persevered through a number of new initiatives. Apart from the unfortunate necessary cost cutting exercises, it relied on operational innovation to tide through.
These included extending a ‘Pay Now, Stay Later’ option on hotels with discounted vouchers, food delivery through Traveloka Eats, and participation in the organization of COVID testing and vaccination drives.
As domestic and regional travel rebounded, staycations and a boost in local tourism helped the company get back on its feet. With the gradual easing of restrictions, business reached 100% Pre-COVID levels in Vietnam, 75% in Thailand, and 50% in Indonesia.
The true mettle of enduring companies is proven when they are put through the test of toughest times. With a business model whose success relies on the overall travel industry, it is safe to say Traveloka had that hard moment and then some in the form of COVID-19.
However, through these initiatives, it persevered.
It emerged with additional capital and more importantly, profitability.
It then laid its eyes on an IPO.
Heading towards a safe landing
Once the early months of 2020 seemed like a distant memory, the now profitable Traveloka was being courted by SPACs to go public.
The most notable of these was the Bridgetown SPAC, backed by Peter Thiel. The reported valuation was in the region of ~US$5.0 billion, far higher than the US$3.2 billion it was valued at during its last fundraise.
While a deal has not been announced, it looks like interest remains plenty.
While many questioned the valuation, others argued that its virtues – management handling of a crisis, a business model that can (and is) profitable, a clear market leader in its segment in Southeast, and multiple new ambitious bets make this a palatable valuation.
While valuations can and will be always debated, it cannot be denied that Traveloka has had a remarkable journey.
From simple beginnings close to a decade ago to Southeast Asia’s large online travel agency platform through COVID-19, it has been quite a journey.
Story by Armaan and Kavya