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| Kim Jong-yoon, chief executive at Yanolja, Korea's top travel technology startup, poses during a recent interview with The Korea Times at its headquarters in Samseong-dong, southern Seoul. Korea Times photo by Choi Won-suk |
Korea's top travel tech unicorn in no rush for IPO, pursues go-to-market strategy via M&As
By Kim Yoo-chul
Steady enhancements in technology are accelerating growth and some degree of innovation in the leisure industry. During the ongoing COVID-19 pandemic, a robust digitalization strategy is what is needed by the industry, with the adoption of platform-oriented business models defining the shape of the travel and tourism industry's recovery.
In today's digital era, where bookings and reservations are easily and simply confirmed in a few seconds and an entire trip schedule can also be checked just with a few taps of the finger, it's just impossible to imagine life back in the old days. Because of technology, travelling is more accessible and affordable. That also means that digitalization has left no segment of the travel ecosystem untouched.
The chief executive at Yanolja, the country's top travel technology startup and unicorn, the value of which is estimated at more than $1 billion, believes technology is pervading every area of tourism as the travel industry has been at the forefront of digital innovation and continues to be transformed at an exponential rate, globally. As the travel industry is one of huge demand and constant changes, the CEO's focus is on how better to digitalize and automate "spaces," which include restaurants, hotels, commercial buildings, residential homes and even golf courses using cloud computing technology.
"As industries are recovering, cloud computing is just a powerful technology available at their disposal to accelerate transformation plans. As a way to tackle COVID-19's challenges, industries created customer-oriented technological solutions, and that also illustrates the renewed relationships with customers.
Within that context, cloud technology is the right and necessary tool in terms of offering personalized experiences to travelers," Yanolja CEO Kim Jong-yoon told The Korea Times in a recent interview at its head office in Samseong-dong, southern Seoul.
In the hotel-booking segment, for example, because hotels have data flowing and stored across multiple clouds, it can personalize the customer experience across multiple spaces. Yanolja, which means, "Hey, let's play," in Korean, is specifically focusing on constructing a demand-side platform, as doing that allows its corporate clients programmatically to purchase online ads to reach both existing and new customers.
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Its cloud service is available for numerous hotels across the globe. The top executive said that because it is seeing both steady and increased requests for its cloud service focusing on Southeast Asia, India, Africa and Japan ― the countries and regions which the company identified as strategic markets ― it is aiming to ink strategic partnerships with major hotel chain operators in the United States, considered a mature market.
"In the tourism industry, major decisions come via online. This is why a provision of digitized data regarding the patterns of customer behaviors and customer journeys via the utilization of data stored in the cloud system matters a lot. Yanolja is aiming to become a 'space-as-a-service company.' Based on data accumulated through our cloud system, we can digitalize all occupied static spaces, and I would say Google and Facebook took similar steps and view this standpoint as Web 3.0 in the tourism industry," said the chief executive, adding that its cloud service is available in 170 countries with 60 different languages.
This move is a major shift for the company, as it began as a mere online search portal for cheaper hotels and guesthouse rooms on its website at prices ranging from 50,000 won to 200,000 won. Founded in 2005 by hotel housekeeper Lee Su-jin, Yanolja emerged as the biggest beneficiary of the country's "smartphone boom" because its mobile-available booking service allowed couples and budget tourists seeking short-term accommodation, who previously had to find such accommodation on-site, to book affordable hotels easily.
'Not situated to raise cash from imminent bourse listing': CEO
The gradual recovery of tourism will continue throughout this year as more destinations ease travel restrictions and pent-up demand is unleashed, according to an assessment by the World Tourism Organization. In Asia, Yanolja's key target market, an increasing number of destinations have started to ease travel restrictions.
With its successful outreach to the cloud business, analysts say that such investors' sense of optimism in the market could help Yanolja remain financially competitive throughout this year. In 2021, it reported 374.8 billion won in revenue, up 29.8 percent, year-on-year, after the company swung to a profit in 2020. Its operating profit last year came in at 53.6 billion won, rising from 10.9 billion won the previous year, it said in a regulatory filing to the Korea Exchange (KRX), the country's top bourse operator.
Investors' primary focus is the timing and the location of Yanolja's planned initial public offering (IPO), after the venture capital investment of SoftBank, through SoftBank Vision Fund's decision to invest $1.7 billion in it, the Japanese bank's second-largest investment in a South Korean company after Coupang. Coupang had received about $3 billion from SoftBank before its U.S. IPO. Plus, Yanolja received financial funding from other Korean companies including KT. It secured reaching a corporate valuation of between 9 trillion won and 10 trillion won, according to estimates by local investment banks.
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| The domestic terminal of Gimpo International Airport in Seoul, taken July 6, is crowded with people going on their summer holidays. Yonhap |
The CEO said that while it is watching to time its IPO because its cash-burn rate ― the rate at which a company uses up its cash reserves or cash balance ― isn't at an alarming level, it's not necessary to raise cash from its bourse listing immediately.
"We will conduct an IPO eventually. Yes, it's possible. However, we are not in a hurry because the company isn't in the situation of worrying about its cash holdings. We will pursue a bourse listing if necessary. However, the IPO plan could only happen based on our decisions," according to the chief executive. "Our business categories are expanding and because we've reached 'economies of a scale' in our core businesses, the thing we should focus on is how to leverage our business strengths to others."
Kim agreed on the necessity of scaling up its overseas businesses as he said the company is very keen to strengthen its global presence. "Yes, we will continue to pursue an 'inorganic' growth strategy by scaling up the company's business sizes via mergers and acquisitions (M&As) as Yanolja wants to broaden the company's customer base in target markets throughout acquisition deals."
Backed by the Singaporean sovereign wealth fund GIC and Booking Holdings, Yanolja has been expanding its business to include leisure activities and transport along with hotel bookings. It recently acquired a 70-percent stake in listed Korean e-commerce operator Interpark for $250 million in an attempt to incorporate more lifestyle services that Interpark has built up in the previous years, focusing on the sectors of live performances, shopping and travel tickets, alongside Yanolja's services. In 2019, it picked up the country's Dailyhotel and Indian lodging management platform, eZee Technosys, and in 2018 it acquired Southeast Asia-based hotel chain Zen Rooms.
Regarding concerns and legal challenges it may face from its deep-dive into the cloud business because of data privacy and possible legal ramifications, the chief executive said he was hoping to see loosened regulations for the handling of data and data governance in Korea. "Yanolja is keeping an eye on the latest developments of regulatory issues in international markets and how the company should address such concerns via active collaboration with peers in the industry. Investors are reassessing their thoughts on Yanolja's cloud business."
"The travel industry is the sector that has huge growth potential and that we can change a lot. We want to be repositioned as a global travel technology company. The continued hiring of research and development (R&D) employees represents Yanolja's plan to broaden our categories of service offerings through technology such as the Internet of Things (IoT) and artificial intelligence (AI)," said Kim, formerly of Alphabet's Google.
