Ten years ago, Ferry Unardi was a student at Harvard Business School. Hailing from Padang, a city in West Sumatra, Unardi encountered difficulties every time he prepared to fly between his hometown and the United States.
The process was byzantine. To head home, Unardi booked flights to take him from Boston to Jakarta. Only after arriving the Indonesian capital could he purchase additional tickets to travel to Padang, he said to Prestige magazine in 2018. It was complicated, time-consuming, and hard to plan ahead.
Frustrated by these problems that he had to contend with as a frequent flyer between the United States and Indonesia for about eight years, Unardi flexed his entrepreneurial muscles and set out to unknot the process on his own, believing that this could become a business. He teamed up with a former colleague named Derianto Kusuma, as well as an old friend from school called Albert (just Albert). Unardi dropped out of Harvard. A year later, the trio formally established Traveloka in Jakarta.
The company’s name is a portmanteau of its main business and loka, a Sanskrit word that means “world” or “universe.” A company spokesperson said Traveloka is meant to be interpreted literally as the “world of travel.”
Fast forward to 2021. Traveloka is now the largest online travel agency in Indonesia. Its app has been downloaded over 60 million times, and the platform has around 40 million monthly active users. The firm also said to have more than 150 airlines partners with a total of 200,000 international and domestic flights routes. Furthermore, over 800,000 hotels, villas, and guesthouse in 100 countries are listed.
Traveloka carries a valuation of USD 3 billion. Unardi has intentions to take Traveloka to the US stock market this year, possibly through a SPAC merger to circumvent the conventional IPO process. Before that happens, here’s everything you need to know about the company.
What does Traveloka do?
Think of Traveloka as the Southeast Asian analogue to Expedia. The site’s listings cover nearly every element of a trip—flights, hotels, attractions, and activities. Users can customize and pay for their entire itinerary on the platform. Its services cover Indonesia, Malaysia, the Philippines, Thailand, Singapore, Vietnam, and Australia.
Traveloka started out as a flight search and comparison site, functionally automating part of the tasks previously performed by the travel agents that Unardi had to commission when he was still at Harvard. With a jolt of cash from East Ventures in 2012—years ahead of Indonesia’s startup boom—the three co-founders built out their site’s functionality. It wasn’t long before they realized that their customers wanted more than just search results. A key component was missing: if people could book flights and pay for their tickets with only a few clicks, then Traveloka could truly become an online travel agency. Unprecedented convenience was key.
That transformation took place in 2013, but the team didn’t stop there. The following year, Traveloka added hotel bookings vertical and launched apps for Android and iOS. This chimed with shifting habits in Indonesia—mobile phones were becoming ubiquitous, and this was how people found their way online. Traveloka was gearing up to serve a young group of customers who were comfortable with making purchases through their personal devices.
But Traveloka has grown well beyond the first two syllables of its name. The company has ventured into fintech, ensuring that its customers had the channels to pay for what Traveloka sells. More fundamentally, this is also crucial for facilitating large transactions at a mass scale on a day to day basis.
The firm reportedly acquired local digital payments company Dimo Pay in 2018, but Traveloka still has not acknowledged whether it had a role in the deal. In any case, Traveloka released its PayLater feature shortly after, developed in conjunction with peer-to-peer lender Danamas. At the time, Traveloka was the first company in Indonesia that did not specialize in fintech to wade into “buy now, pay later” services. The move made sure that Traveloka has the means to draw in new users who aren’t customers of formal, conventional financial institutions.
“We started fintech to facilitate travel bookings by consumers in Indonesia who may not have credit cards or cash to pay for the full upfront costs of the travel booking. As many of our customers use our app for a variety of transactions, we believe that the user insights we obtain through this allow us to appropriately manage our loan offerings,” Traveloka head of corporate communications Reza Juniarshah told KrASIA. The company has already facilitated over 6 million loans through the service, he said. And it hasn’t stopped there: Traveloka formed a partnership with Bank BRI in 2019, and the two released a credit card designed for its registered users. Last year, Traveloka established a similar collaboration with Bank Mandiri.
Why is the company worth so much?
Traveloka hit unicorn status in July 2017, when it bagged a USD 350 million investment from Expedia, which Unardi had initially set out to emulate. Its roster of backers also includes Global Founders Capital, Singapore’s sovereign wealth fund GIC, and the Qatar Investment Authority.
At present, the value of the company is justified by its diversification, but Traveloka has plenty of competitors as it steps into new arenas in fintech. “Traveloka is not unique in attempting to capture the value of the fintech opportunity in Southeast Asia. Every tech giant and traditional financial services company is getting serious about their fintech strategy as the market potential is massive, and we are in the early days of this sector in the region,” said Herston Powers, managing partner of 1982 Ventures, which invests in fintech and travel tech startups.
With that said, these movements may kick off a new phase of consolidation in Southeast Asia. As more firms enter the fintech space, there will be fresh opportunities for fintech startups to form links with established players and seek exits through mergers and acquisitions, Powers said.
New fronts have extended Traveloka’s reach. In 2019, the company’s Traveloka Protect insurance lineup went live. And it developed a shariah-compliant health insurance program called Bebas Handal for Muslim customers alongside Hong Kong-based FWD Group.
Fintech may prove to be a disaster-proof space where Traveloka can grow even deeper roots. Going forward, the company intends to focus on this sector. In an interview with KrASIA last year, co-founder Albert said Traveloka will expand its fintech offerings “vertically and geographically.” The firm is also said to be preparing localized financial services for Thailand and Vietnam too. It recently formed a joint venture with one of the largest banks in Thailand for new fintech developments, although details are still under wraps.
Further than fintech
As an early investor, East Ventures managing partner Willson Cuaca is optimistic about Traveloka’s status as a multi-vertical company that is emerging as a multinational corporation. “Traveloka introduced ‘buy now, pay later,’ credit card products, and digital payments to their customers since two years ago. The platform is mature and pretty advanced, hence it is a good time to expand the financial services to Vietnam and Thailand,” Cuaca said.
Besides fintech, Traveloka has also cruised into lifestyle and entertainment services. It launched a page for restaurant directory, Traveloka Eats, in 2018. Them, a sub-brand called Xperience went live in 2019. It lists around 15,000 activities in over 60 countries, spanning events, films, as well as specialty classes and workshops.
And like other major platforms that have made it convenient to order food with just a few taps in an app, Traveloka Eats now offers delivery services for some locations, although it hasn’t quite taken a bite out of the market shares of Grab Food and Gojek’s GoFood, both of which are popular in Southeast Asia. However, Traveloka is edging toward becoming an all-encompassing app for travel and lifestyle services in the region, and the company’s adroit pivots gave it the swiftness to pull through cratered international travel in 2020.
Part 2 covers Traveloka’s flight through a turbulent year that paved the way for a listing in the United States.