Indonesia’s largest online travel company Traveloka has raised $500 million in two rounds of funding from American travel firm Expedia, China’s JD.com, East Ventures, Hillhouse Capital Group, and Sequoia Capital. Expedia provided $350 million while the others supplied the remaining $150 million in a separate round.
The deal values Traveloka at around $2 billion, according to an executive familiar with the development and affiliated with the company, who did not wish to be named.
Traveloka will use part of the proceeds to enhance its focus on R&D projects through artificial intelligence and machine learning capabilities, the company said. It further added that it would focus closely on customer behaviour in each country, leveraging the data to provide them a better online travel experience.
Indonesia is witnessing growing competition in the online travel industry as its biggest players announce their latest manoeuvres.
Just last month, Traveloka’s local competitor Tiket.com was acquired by GDP Venture-backed e-commerce site Blibli.com. The financial terms of the deal were not disclosed. For Blibli, the buyout was a strategic move to maximize revenues. For Tiket, which had never raised VC money since its inception, it was an opportunity to secure funding and long-term commitment from a large corporation.
Now, Traveloka’s move to raise the largest funding since Go-Jek – Tencent is expected to heat things up further.
Ferry Unardi, Co-founder and Chief Executive Officer, Traveloka, said partnering with Expedia will allow the company to focus on growth in the online travel space, meeting its goal of providing travellers the best travel options and highest quality booking experience.
“The expanded partnership gives Traveloka travelers access to a unique and diverse set of international accommodations and we are looking forward to working with Expedia to expand our services in Asia and beyond,” Unardi said.
Expedia owns and operates several international global online travel brands including Expedia.com, Hotels.com, Hotwire.com, Trivago, Venere.com, Travelocity, Orbitz, and HomeAway. The company operates more than 200 travel booking websites in more than 75 countries, and has listings for more than 350,000 hotels and 500 airlines.
For Expedia, which has annual revenues of over $9.1 billion clocking more than $80 billion in bookings year-to-date as of Q1 2017, the deal marks a big step towards getting a foothold in this region that offers massive potential. Regional tourism in and around Asean is set to rise from $75 billion in 2014 to $83 billion by the end of 2017.
“Traveloka is the clear online travel company leader in Indonesia, and is expanding aggressively throughout Southeast Asia. Our partnership will benefit from each side’s expertise and local knowledge, and accelerate our mutual growth,” said Dara Khosrowshahi, President and Chief Executive Officer, Expedia.
“We are incredibly excited to continue to expand our presence in Asia, to learn from the talented Traveloka team and to unlock a more diverse offering of travel choices for Traveloka and Expedia travelers around the globe.”
Increasing Chinese presence
JD.com’s entry into Traveloka marks another instance of Chinese firms’ growing presence in Southeast Asia.
The Chinese firm is in discussions with Tokopedia to lead a funding round that could be worth up to $500 million, sources said. Existing investors SoftBank Group Corp and Sequoia Capital are also expected to participate in the latest round.
Outside of China and India, Indonesia is the hottest e-commerce market in Asia. It is expected to grow from $8 billion in 2016 to $21 billion by 2020. In addition to its presence in the country through Lazada, Alibaba has formed a joint venture with media firm Emtek to crack Indonesia’s biggest pain point – digital payments. Together, the two companies plan to offer mobile payments solutions and other related services.
Traveloka’s funding also marks the second major development in the travel space in Asia over the last few months as US and global players go head-to-head with Chinese majors for a share of the growing online travel market in this region.
Late last year, India’s leading online travel firm MakeMyTrip Ltd had reached a deal to buyout Ibibo Group’s travel business in the country for $720 million in stock. As reported by this portal earlier, that deal had brought all brands of the Nasper and Tencent-backed Ibibo Group such as Goibibo, redBus, Ryde and Rightstay under MakeMyTrip.
Put simply, the deal saw Cape Town-based Naspers Ltd. (through a holding company minority owned by Tencent) combine its India operations with MakeMyTrip Ltd. The deal also made Naspers and Tencent the largest shareholders in MakeMyTrip with a combined 40 per cent stake.