Hong Kong online travel agency Klook has raised a record follow-on $225 million Series D funding led by SoftBank Vision Fund, as it intends to deepen its investments in Japan.
Other investors in the round for the company, which is now valued at more than $1 billion, include Sequoia Capital China, Matrix Partners China, TCV and OurCrowd.
Founded in 2014, Klook is an online travel agency that offers a local tourism service for 270 destinations globally. Customers just need to type in the destination of the trip and can then book local tour guides online.
Online travel agencies (OTA) are evolving. Old OTAs such as Ctrip and Expedia are focused on hotels and flights, but provide fewer local travel services. As living standards have improved, people have begun to demand more refined services during their trips.
The global travel activity market - which excludes accommodation and tickets - is expected to grow from $135 billion in 2016 to $183 billion by 2020, according to travel industry research group Phocuswright.
SoftBank is not the only investor targetting this increasing demand. In November last year, Alibaba and LINE Ventures invested in Taiwan-based OTA KKday, which also provides in-destination tour services. A similar German website called GetYourGuide raised $75 million Series D funding in 2017 from KKR and Battery Ventures.
But SoftBank Vision Fund has come to Klook with a much bigger investment. Its chief executive Masayoshi Son has a global expansion plan for Klook, with the first stop in Japan. “Klook plans to strengthen its investment [in Japan] ahead of the 2020 Tokyo Summer Olympics,” wrote Eric Gnock Fah, co-founder and COO of Klook, in an email. “Klook will leverage the support to grow our local team in Japan.”
Gnock Fah said that about 75% of its bookings are made on mobile telephones, and the group has been using a mobile-first approach to bring a more seamless experience for travellers.
One of the key factors as OTA’s expand globally is how to localise their operations and services to fit the target market. Traditional companies like Ctrip have chosen the old-fashioned way via acquisition. The Nasdaq-listed OTA bought Europe-based Skyscanner in 2016, invested in India’s MakeMyTrip in the same year, and acquired US OTA Trip.com in 2017. But the cost and time involved to integrate these newly acquired businesses have exceeded its expectations.
Klook, on the other hand, has chosen to build local operations. It has set up offices in 20 different countries and regions and has hired local talent to expand service suppliers. The startup now has more than 1,000 employees worldwide.
Klook raised $200 million from Sequoia, Boyu Capital, Goldman Sachs, Matrix Partners China and TVC in August last year which makes the total for its Series D funding $425 million. The company has said that it does not yet have a timeline for IPO yet as its focus is still on developing its userbase and markets.