Southeast Asia’s largest online travel app Traveloka is poised to break even and potentially become profitable in 2021 if the travel industry in its covered markets across Southeast Asia could recover to about 50 per cent of pre-COVID levels by the end of this year.
Traveloka, one of Indonesia’s five unicorns valued at over $1 billion, has seen its revenue regain about 80-90 per cent of the pre-pandemic number in Vietnam; approximately 50 per cent in Thailand; and 10-15 per cent in Indonesia, said Willson Cuaca, co-founder and managing partner of East Ventures, during a webinar session at ASEAN New Economy Conference 2020 on Thursday.
Indonesia-based East Ventures is an early-stage venture capital firm that had invested in Traveloka in its first year. The unicorn’s other investors include Singapore sovereign wealth fund GIC, US online travel service Expedia, and Chinese e-commerce major JD.com.
“If the travel [industry gets] back to about 50 per cent [of where it was before the coronavirus outbreak] by December, Traveloka will break even and probably be profitable next year,” said Cuaca, referring to what he recently learnt from the portfolio firm.
Traveloka did not immediately respond to DealStreetAsia’s requests for comment on its timetable for profitability.
The breakeven ambition came after Traveloka just pulled through one of the toughest times for a Southeast Asia-focused online travel booking service, after the region’s travel industry entered into a near standstill months ago due to travel restrictions and city lockdowns imposed to combat the pandemic.
The eight-year-old firm saw its revenue start dropping around February and March, and then hit the bottom in March when “a billion-dollar company had zero revenue,” said Cuaca. He said that Traveloka had tried to restructure the firm to focus on core businesses and to cut costs “deep enough to survive but not hurting their muscles.”
The firm was forced to lay off over 100 employees at lower rungs this April, multiple sources told DealStreetAsia, in what they referred to as an unsurprising, virus-induced ripple effect across the travel industry.
Since its inception as a flight aggregator in 2012, Traveloka has forayed into neighbouring countries including Thailand, Vietnam, and the Philippines. In February 2019, it expanded outside of Southeast Asia for the first time to cover Australia.
The company announced in late July that it had raised $250 million in a funding round led by an unidentified global financial institution, with participation from EV Growth, a Southeast Asia-focused VC backed by East Ventures. DealStreetAsia had learnt from a source close to the development that Qatar’s sovereign wealth fund Qatar Investment Authority (QIA) was the lead investor of the deal.