No plans for consumer superapp outside South Korea, focus is on building next-gen travel platform “beyond OTA”, says CEO Jongyoon Kim
WHEN news broke of SoftBank Vision Fund’s US$1.7b investment in Yanolja last week staff of the South Korean travel unicorn were working from home due to tightened restrictions in Seoul, thus there was no big party to celebrate in the office but internal work chats erupted in joy.
“There was nobody in the building,” said CEO of Yanolja and Yanolja Cloud, Jongyoon Kim, “so we could not feel the celebration in person. But on Slack and internal chats, many employees expressed their happiness. They know they can expect growth from now on.
“I also announced the reason for the investment – that we were building a global tech platform and it was the global expansion plans that excited many employees. Everyone wants to go outside Korea.”
He also announced to staff that Yanolja would add 300 more people to the tech team in South Korea, set up another R&D centre in Asia, in addition to the two it has in Vietnam and India, and recruit another 100 people in the region. Currently, of the 1,600 staff, 40% are in tech. Within the next couple of years, Jongyoon expects the ratio to go to 70% as Yanolja ramps up its tech.
The good news was also celebrated by industry peers – Jongyoon said he received hundreds of messages from trade colleagues. “They see it as a big motivation for the industry, that investors such as Softbank believe in the future despite the difficult times we are going through.”
Clearly, SoftBank was excited by Yanolja’s vision to build what he says will be the next-level travel platform “beyond an OTA”. “We do not want to be an OTA, there is no added value to the industry. To add value, we want to build a platform that will transform the travel and hospitality industry.”
Building a meta platform, using Amazon as model
To understand what Yanolja is trying to do you have to go back in time. The company started about 17 years ago as an aggregator of small and medium-sized accommodation in South Korea.
Jongyoon, who previously worked at Google and McKinsey, joined the company six years ago to launch “Yanolja Restart” to reinvent the business. He likes to use his “runner and car maker” analogy. “Seventeen years ago, we competed with other runners as a runner. Six years ago, looking at the trend, we realised there would be big innovation and transformation of the travel and hospitality industry. We decided to give up all existing assets and redefined the business model. We became a car maker so we don’t have to compete with runners. As a car maker, all you have to do is build a good car.”
It set its eye on the Amazon model. “What we want to do is integrate B2C, B2B and online-offline data to build a meta platform similar to Amazon,” said Jongyoon. “The difference is Amazon is tangible product, Yanolja is intangible service. With ecommerce, you send product through logistics, with travel, people have to leave their home to consume the product. The idea of the platform is the same but the technology is totally different.
“If you look at the ecommerce market in Korea, there are two main players, Coupang and eBay. Both have similar transaction volumes but Coupang’s valuation is 20x bigger than eBay. The market recognises that the agency model cannot survive, you have to become a meta platform.”
It started work on building a consumer travel superapp in South Korea. It aggregated small, independent hotels, then broadened and deepened its hotel content and in the last 18 months, amid Covid, it intensified the building out of its supply chain which now includes leisure activities, tickets, restaurants and transportation including trains and buses.
“We were already working on incorporating all these travel-related categories. Covid gave us the time to do it even faster. We want to have end-to-end data integration across the value chain,” said Jongyoon.
In tandem, it developed Yanolja Cloud to supply B2B solutions to the South Korean travel industry. In addition to building out its hospitality tech, it developed solutions for leisure activities and facilities, property management solutions for residences and acquired NowWaiting, a restaurant reservation/waiting list service.
“We had been preparing to do all this before Covid. The good thing is, during Covid, we saw big growth from these businesses when the hotel business was down,” he said.
In tandem too, funding flowed in. When it launched Yanolja Restart six years ago, it received US$10m funding. Series B was $20m, Series C was $60m and Series D, $200m. Series E, well, that’s the US$1.7b from SoftBank Vision Group, ahead of an initial public offering.
SoftBank founder Masayoshi Son has been expanding his investments in South Korea – he invested in Coupang Inc which pulled off the country’s largest IPO in more than a decade. According to this Bloomberg report, Yanolja is considering a dual listing in Seoul and overseas.
Backed by Singaporean sovereign wealth fund GIC Pte Ltd and Booking Holdings, Yanolja acquired India’s eZee Technosys in 2019, and claims to be the world’s largest cloud-based hotel management solution provider, after Oracle Corp. Despite Covid-19 lockdowns, it reported a 44% increase in sales and a 16.1 billion won profit for 2020.
“We want to partner with travel brands so they become superapps”
With both its consumer travel superapp and Yanolja Cloud firmly established in South Korea, it felt the time was right to expand globally. Jongyoon said there is no plan to do a B2C superapp outside South Korea, instead it will use Yanolja Cloud as its expansion vehicle to supply its low cost B2B solutions to the industry. “We want to do partnerships with B2C travel brands so they can become superapps.”
As an indication of future plans, it sealed a partnership with Vietnam’s leading travel company, VNTravel, last week. VNTravel is ranked number one in the Vietnamese travel market with more than five million customers. It provides more than 50,000 tour and activity products and offers deals for more than 1.5 million hotels over multiple platforms such as Mytour.vn, Dinogo, Tripi and more than 30 mobile banking applications from Vietnam local banks.
Yanolja currently has 100 clients in Vietnam and Jongyoon expects the number to be accelerated with the partnership. Globally, It has 30,000 clients, majority hotels) across 170 countries, accessing its SaaS services.
It has set up Yanolja Cloud as a separate entity in Singapore. “Currently it is a small office. After Covid, we will hire more employees,” said Jong Yoon. When asked if he would move to Singapore since he is CEO of Yanolja Cloud, he said, “We will wait and see.”
Its expansion plans include South-east Asia, Africa and India, and further afield to US and Europe.
Its differentiation from other B2B solutions providers is “an open platform which suppliers can enjoy at low cost a variety of packaged solutions in the cloud”. “We are providing all the components – operations, IOT, RMS, PMS, IBE, CRS … we have an Inventory Distribution System for OTAs and hotels where they don’t have to worry about contracts and payouts. We develop original features through AI,” he said.
Declining to give details, Jongyoon said Yanolja was currently in discussions with several companies with an eye on acquisitions, in particular, “SaaS companies for travel and space-related businesses”.
Using personalisation, automation to save energy, reduce carbon emissions
Looking towards the future, Jongyoon is looking at three big changes – digital technology (IoT), blockchain (decentralised identification) and AI/big data. “These three trends will change everything in our industry, Covid 19 has accelerated them.”
In addition, he said the industry also needs to look at ESG (Environmental, Social and Governance). “To achieve reduction in energy use and carbon emissions, we need a data platform. We need personalisation and automation. For example, we don’t have to provide all the amenities. If the customer needs a specific item, we provide only that item. We should reduce paper and plastic – paper contracts, key cards.”
He said Yanolja’s research showed that one hotel in its cloud can save 15,000kg of carbon emissions, 100kg of plastic and 1.6 trees. “If we can transform all the systems with cloud solutions for millions of hotels globally, we can do a lot of good.”
In South Korea, Yanolja is working on a pilot project with 300 brand hotels and a local university to measure the savings that can come about through digital transformation. On September 3, he will be addressing an internal APEC workshop on the subject of how technology can help save energy in hospitality.
“We need to accelerate these measures so that we can protect our earth.”
• Featured image credit: Getty Images
