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Traveloka will funnel the funding toward strengthening its product offerings
Indonesian travel and tourism unicorn Traveloka has raised US$250 million in a funding round from undisclosed investors, the company announced in a statement yesterday.
The round was led by a “global financial institution” with participation from the startup’s existing investors, such as the venture capital affiliate of East Ventures, EV Growth, the company’s official statement said.
The funding will be used to bolster Traveloka’s capital position, and supplement its ‘Travel & Lifestyle’ portfolio and financial solutions offerings, the company said. The company had last raised $420 million in a private equity round from Singapore’s sovereign wealth fund GIC and EV Growth. Traveloka is valued at $2 billion.
Traveloka’s Co-founder and CEO Ferry Unardi said in the statement that the company has seen its lowest business activity yet since its inception, on account of the COVID-19 pandemic.
“However, we always believed that the company will prevail by rapidly adjusting our strategy, working with our industry and ecosystem partners, as well as continuing to innovate for our users, our ultimate focus,” he noted.
The company mentioned in the statement that its partners spanning transport, hotels and accommodation, events, and dining, have also been deeply affected by the pandemic, and some have had to temporarily close, with low demand in the transportation and hospitality sectors.
The company launched a slew of initiatives to combat the slump in business, including ‘Online Xperience’ digital events, and a Buy Now Stay Later offering for hotels, it said in the statement.
It added that Traveloka is seeing business revive, with bookings for short travels and activities picking up in Indonesia, Thailand and Vietnam, it said in the statement. However, this development should be viewed with cautious optimism, as reports of a possible second wave emerge in Vietnam and Indonesia.
Ferry noted in the statement that Traveloka’s business in Vietnam is approaching pre-pandemic levels, and business in Thailand is “on its way to surpass 50%.”
Ferry also said that the Indonesian and Malaysian markets are only starting to pick up but show “strong week-to-week improvement”, especially with an emerging preference for shorter hotel staycations.
“We acknowledge that the sector may go through further turbulence as it navigates new waves, but we feel we are prepared to take on the challenge and emerge on the right side of it,” he added.
The travel industry is an economic heavyweight for Southeast Asian countries, contributing to an average of 12.6% to Association of Southeast Asian Nations (ASEAN) economies in 2018, with 129 million visitors.
The industry is one of the worst hit due to the COVID-19 pandemic, with subsequent lockdowns and travel restrictions in the region.
For instance, air traffic in Cambodia, where travel accounted for 32.8% of the GDP in 2018, saw a drop of 67.5% in the first half of 2020, while Malaysia’s aviation sector may be plunging toward an RM 13 billion (US$3 billion) loss this year.
Moreover, hotel occupancy in the Asia Pacific regions registered a drop of 27% in March (as compared to 9% in February), with hotels in the region witnessing a decline of anywhere between 40% to 60% in revenue per available room.
“This virus crisis is a crisis of our generation, both for economy and humanity,” Managing Partner of EV Growth Willson Cuaca said in the statement. “It is a game reset that has forced businesses to rethink their plans, strategy and the model. Travel industry is facing unprecedented times, including Traveloka.”
“The leadership team has taken difficult yet commendable measures including restructuring and optimization to minimize financial health risks. We are confident that the company will emerge even stronger after this crisis,” Cuaca added.
Header image courtesy of Traveloka