All start-ups dream of getting angel investors but what happens if they turn out to be guardian angels, too? Travel booking service Vidi hit that jackpot last year when the AirAsia Group decided to take a 50 percent stake in the company.
Vidi joins a growing group comprising TripAdvisor, Klook and KKDay, vying to capture the travel booking industry. While the airline and hotel booking applications segments are saturated and have clear market leaders, these companies are going off the beaten track and instead are targeting tourist activities and services.
Unlike flight and hotel booking applications where the product class is almost homogenous, the activities market is considerably more complex. Attractions and tour providers may range from small mom-and-pop operations offering walking tours to large companies that handle large numbers of people. The services offered also vary from restaurants to spas. A travel booking company must negotiate deals and accommodate all of them and repeat the process in multiple markets.
In mature markets such as Australia, deals can often be set up with operators via email. However, in countries such as Vietnam and Cambodia, a more hands-on approach may be required. “There is a technological learning curve,” said Aaron Sarma, CEO of Vidi.
“We get merchants and operators onboard by doing everything for them: write-ups, pictures and videos. They only have to agree to the deal structure and approve the final preview,” he explained.
Vidi was initially launched as Touristly in June 2015. Drawn by a desire to work with the AirAsia Group, it approached Tune Labs for collaboration and investment.
Start-ups typically go through several rounds of fund raising, spending a large portion of the money on customer acquisition. As their customer base grows, the start-ups’ valuation rises even if they do not show immediate profits. Given time and a large enough base, these companies may reach valuations in excess of US$1 billion, making them “unicorns.”
AirAsia took a 50 percent stake in Touristly and also injected the web portal of its Travel360 travel magazine into the company. Sarma said most start-ups have to focus on product development and customer acquisition. With AirAsia onboard, the latter half of the equation was addressed.
The AirAsia Group reported 95 million unique users on its mobile app and 184 million for its website in the first half of 2018. It also registered three million new members for its Big Loyalty customer loyalty program.
Source: Vidi and AirAsia
In the pipeline is an app that offers trip booking services augmented by user-generated video clips. “We call this visual discovery and travellers share their videos. Other travellers can see what to expect instead of reading thousands of words. They can swipe up and make a booking if they like it,” he explained.
The Vidi app is available for download though it is still at prelaunch. The company is building up a bank of videos and already has more than 5,000.
Touristly was initially a business-to-business proposition. It works in the back-end as a search-and-book widget for travel websites and tracks and pays commissions on bookings made through these sites. Its tie-up with AirAsia and its affiliated sites such as AirAsia Go, AirAsia Big and Travel360 only broadens its reach. The Vidi app provides a business-to-consumer face to the same engine.
Sarma still aspires to reach unicorn status.
“Of course, we would love to be a billion-dollar company. Every company wants to be huge. But we also want to build a sustainable business. We do not want to be a billion-dollar company with million-dollar debts and burning people’s money.
“Start-ups are expected to lose money to acquire market share but at some point, they must start making money. We are on track for that. We are generating revenue and growing from a large potential customer base. I think, to a lot of investors, that is very exciting,” he said.