INTERVIEW Korea's hospitality tech industry attracts investor interest
ONDA founder and CEO Oh Hyun-seok answers questions during a recent interview with The Korea Times at its head office in Samseong-dong, southern Seoul. ONDA is Korea's largest hotel-booking solution provider. Korea Times photo by Choi Won-suk
ONDA CEO says company close to securing additional $30 million funding, eyeing joint venture in UAE
By Kim Yoo-chul
Clearly, the COVID-19 pandemic affected all industrial sectors across the globe and unsurprisingly, the hotel and leisure industries were among the hardest hit. A full recovery to pre-pandemic levels appears to be in progress and will likely occur within this year or soon thereafter.
Investors are providing mixed views about the hospitality industry's prospects, as previously seen in the not-that-impressive performance of lodging real investment trusts, or REITs. After seeing severe revenue declines as a result of the pandemic in the last few years, the entire hospitability and travel ecosystems are at their respective turning points. This means that there is an increased possibility of hospitality companies experiencing both subtle and substantial shifts in the post-COVID-19 era.
But core questions for leaders of hospitality companies are about how their businesses will be affected and what they should do next for business continuity because the pandemic has brought changes in consumer behavior ― short-term bookings and the importance of reliable benchmarks in hotels and restaurants ― and led to the wider usage of both data-driven and data-sharing technologies amid the rising cost of operation.
There is no question that travel will fully normalize. However, what's certain in the post-pandemic era is that it will feature structural shifts, specifically around customer expectations for greater flexibility. This trend will help hospitality tech companies build their resilience as hospitality technology is more about data-sharing attitudes such as cloud computing and big data with the goal to address business problems for entities in the various hospitality business fields.
Speaking to The Korea Times, the founder and chief executive at ONDA, the country's largest hotel booking solution provider, said that because the focus on customer experience has intensified, in reaction to the rising expectations of Korean travelers, its online booking platform and property management methods are attracting investors.
“ONDA is very near to raising an additional $30 million in funding and we plan to invest the money for ONDA's overseas expansion such as the equity acquisition of companies in our target markets and the establishment of a joint venture in the UAE,” ONDA founder and CEO Oh Hyun-seok told The Korea Times in a recent interview at its head office in Samseong-dong, southern Seoul.
The Korea-based hospitality technology startup, which helps customers and clients connect hotel owners with global online travel agencies including Google Hotel, provides tools that allow hotels to receive online payments and manage their guests, bookings and properties. Since its establishment in 2016, ONDA, led by the tech-heavy Kosdaq-listed domestic venture capital firm TS Investment, has so far raised some $25.5 million.
ONDA founder and CEO Oh Hyun-seok poses during a recent interview with The Korea Times at its head office in Samseong-dong, southern Seoul. Korea Times photo by Choi Won-suk
Its most recent round of fundraising was in December last year, when it received $10 million in series B funding. Its key investors include the Industrial Bank of Korea (IBK) and other Korean investment companies such as NAU IB Capital, Square Ventures, K Bridge Ventures and Breeze Investment.
Regardless of type, hospitality companies ― restaurants, hotels and even senior living services ― are shifting to the digital side of things with a greater use in data-sharing and the leveraging of technology playing a more significant role across the entire hospitality industry in the post-pandemic era, Oh said.
“This also means that we have to be informed regarding industry trends and pursuing product advancement with the help of technology. We have to understand customer behavior, make sure our technical capabilities are up to scratch and set both applicable and measurable strategies.”
Focus on Thailand, joint venture plan in UAE
Citing its efforts to promote its booking platform via the company's partner channels including Google, Meta and Kakao's hotel partners, the chief executive said ONDA is eyeing the U.S. hospitality market. However, he stressed there won't be any immediate actions regarding its direct or indirect equity investment in hotel-booking management startups in the U.S.
“ONDA has a great interest in advancing in the U.S. market. Specifically, we are keeping an eye on Hilton's hotel brands. But ONDA's top priority is how to increase the company's chances of receiving a very favorable review of our accommodation-booking technology and in-house property management systems based on solid references. We are focusing on the Southeast Asian market, specifically Thailand,” the CEO said.
It operates “ONDA HUB,” an online booking solution, “Hotel Plus,” a hotel software-as-a-service (SaaS) solution specialized in room sales, and DIVE, a SaaS-based management system for hotels. ONDA recently made its strategic investment into Thailand's Hoteliers Guru. Established in 2013, Hoteliers Guru has continued offering its booking management technology to hotels and resorts across the country.
As Hoteliers Guru is working with some 700 operators there, ONDA's strategic investment will help it boost its online sales revenue thanks to the connection of Hotelier Guru's partner hotels and resorts to ONDA's network.
Travelers wait to check in at John F. Kennedy International Airport in New York City, April 6. Reuters-Yonhap
“Thailand is aiming to create its own significance as a premier leisure destination and premier tourism center in the world. Additionally, given the greater openness and availability in hospitality infrastructure, there is no doubt that Thailand is the right fit for ONDA,” Oh said.
He went on to say that ONDA is in discussions with a hospitality technology company in the United Arab Emirates (UAE) for a joint venture there. “I can't elaborate further about the discussions we're involved in. However, we're in the stage of fixing key terms of conditions.”
Like Thailand, the UAE government is heavily driving its initiatives in implementing proactive policies to stimulate travel demand and even to increase the growth of tourism by easing its visa regulations. The UAE's leisure facilities, for example, have become a critical source of its economic diversification strategy and are helping it attract world-class hospitality companies such as Marriott International, Hyatt and Hilton.
“As the UAE is a key country in the Gulf region, which has hugely been contributing a major share to the hospitality industry, ONDA plans to penetrate the UAE market quite quickly,” Oh said. Regarding questions over the company's readiness for an initial public offering (IPO), Oh said, “An IPO isn't a top priority as of now.”
In its last earnings report, ONDA reported a gross merchandise value (GMV) of some 200 billion won ($154 million), last year, and the company expects to see at least 75 percent GMV growth this year. GMV is the sum of all merchandise sold across a specified period ― most tracked by tech-driven e-commerce companies.