“Local is our DNA, so is DIY,” he says, but can that playbook scale as Traveloka expands
When I asked Caesar Indra how a kid growing up in Bengkulu, a small mountain village on the island of Sumatra, Indonesia ended up being president of Traveloka, Indonesia’s poster child of online travel, he hesitates.
“Hmm, I’ve never been asked that question before,” said Indra, who was the first to get into university in a family of four siblings. He does recall that there were no roads or highways, just a mountain road on which he would have to travel by bus for eight to 12 hours to get to the next town of Lampung, where his parents eventually moved the family to. “It’s the world’s biggest producer of pineapples,” he told me, as an aside.
“I suppose coming from a place like Bengkulu makes me better able to empathise and understand problems that are faced locally by ordinary Indonesians,” he said. “Ferry (Unardi, the CEO and co-founder of Traveloka) and the rest of us – we come from small towns, and that helps us accept imperfections and understand imperfect systems like in Indonesia and Vietnam.”
Going to college and then university in the US, “which was more advanced in technology then”, instilled in him the drive for problem solving. “How can I make the developing world better” was the constant question at the back of his mind as he completed his studies and then returned to Indonesia.
Indra was with Boston Consulting Group when he was approached by Unardi to join Traveloka in 2014, two years after it was founded. He leapt at the opportunity to make travel better in Indonesia.
“I think we can be proud of how we changed the way Indonesians booked flights, and made it easier for Indonesians to travel,” said Indra. “And we also changed the way people paid – in a country where credit is not easily available, we introduced buy now, pay later in 2018. It took us time to educate the market – first to buy a ticket online and second, to pay online as well as buy now pay later.”
Asked why Traveloka chose to build its own BNPL product rather than work with vendors, he said, “We wanted to own the use case, so we can get the data as well as mitigate the risk. Our customers only use it for purchases only on our platform, so we know who the good customers are and we have our own algorithm to create our own credit scores. This way, we manage the risk, own the use case.”
He said that BNPL accounts for less than 10% of transactions on Traveloka “but it’s growing as travel recovers”. It’s only available in Indonesia for now and it is exploring introducing it outside its home market.
In a way, the fact that Traveloka had to solve the payments problem early on has given it an advantage at a time when fintech has become the big problem to solve for the travel industry.
Create your own trends and markets, don’t just wait
Indra is a believer that you have to create your own trends and markets. “For example, during the pandemic, there were thousands of clinics offering Covid tests but people didn’t know how to find them. We brought them online and suddenly Covid testing bookings became popular. Alternatively, we could have stayed within our OTA lane and wait for markets to recover.”
Another example is how it solved the bus ticketing problem in Indonesia. “Buses are a nightmare in Indonesia. You had to go to the terminals to queue and get a ticket. We solved that as well and brought buses online and people can now book buses online.”
This is where he feels Traveloka has the edge – it likes to solve local problems and it does it by building its own tech, rather than acquire. “I suppose it’s in our DNA to do that.”
As it expands across South-east Asia – it is now present in five other markets, Vietnam, Philippines, Thailand, Singapore and Malaysia – it will have to figure out whether that formula – taking the Indonesian playbook and executing it piece by piece in each market – will work at a time of tech acceleration and intensifying competition.
South-east Asia has become the hot spot for competition this year given its earlier opening than North Asia, and well-funded travel brands such as Klook, Trip.com, Hopper and, not to mention, Thailand-based Agoda are competing for a slice of the market. There’s plenty to go around – Google’s latest e-CONOMY SEA report pegs the region’s digital market at $200b this year and could grow to $1 trillion by 2030 – but it’s fragmented and complicated and Indra believes the ones who localise best and deepest will have the edge.
And that’s Traveloka’s sweet spot – in all the markets it operates in (with the exception of Singapore with its small domestic base), it has a strong domestic market. “This gave us an advantage during the pandemic when travel became local, it helped us recover faster. We leveraged our business based on our domestic mindset and built stronger relationships with hotels and airlines.”
It also did everything it could to get through the pandemic, including food delivery which it has shut down. “That’s what entrepreneurship is about – adjusting products to changing customer behaviour – and you have to be as quick starting it as shutting it down.”
Indra also believes that Traveloka’s approach to localisation is well, truly, local unlike global platforms who talk about localisation. “We want our local customers to really feel they’re buying from a local product and that we solve local problems with technology. For example, in Indonesia, we use bank transfers, in Thailand, convenience stores like 7-11 and in Vietnam, wallets are preferred. We are willing to localise payment options and our customer service is in local languages.
“We try to understand what products local customers are looking for. For example, in Indonesia, most travel is domestic so we include all the smaller airlines, similar to Thailand and Vietnam.
“We are willing to invest in building tech for suppliers – for example, our inter-city bus product. The challenge was for bus owners to manage their inventory in real time that people can check on, so we built the product for these bus operators.”
He acknowledges this DNA to do-it-yourself in solving problems versus acquiring could impede scaling but said, “The challenge about travel is the plumbing of the supply chain and how what a customer buys is honoured – you have to solve for that.”
New investments give it wings to go deeper and broader across South-east Asia
And given its area of focus remains South-east Asia, it feels confident enough about its ability to execute in these markets close to home. Its recent investment from Thailand’s leading oil and gas company, PTT Or, as well as the $300m financial facility from investors such as Indonesia Investment Authority (INA) and BlackRock also give it a strong foundation to go deeper, as well as broader.
“The funding helped strengthen our balance sheet and gives us security for the future. We can hire more people, we shed quite a bit.”
Asked if acquisitions were on its horizon, Indra said, “We are open to any opportunity in the travel space in Asia Pacific.”
Specifically in tours and activities, he said, “We are very open to more partnerships with companies specialising in this area. Anything that can give us a stronger inventory of products and access to new customer segments is interesting.”
Asked what its partnership with PTT Or, which operates a lifestyle super app in Thailand, could look like, Indra said, “We are exploring things around points and customer loyalty.”
Given Thailand’s dependence on markets such as China and Russia for its 40m arrivals (pre-pandemic), Indra said, “It needs to find new source of travellers. We are working with tourism boards across South-east Asia to bring them travellers from South-east Asia – the intra-South-east Asian market.”
Digital nomads will not stick, sustainability will
Live streaming, a breakout channel during the pandemic, has kept its popularity and tied with flash sales, “people are buying on the spot,” he said, citing a session on August 17, 2020, when it had close to half a million active users viewing its livestream, Traveloka LIVE.
As popular as live streaming and flash sales are, Indra anticipates that “as travel comes back, the marketing spend will go back to pre-pandemic patterns and levels” which means brand marketing as well as spending on search engines such as Google. “But there’s a new generation of travellers emerging and they might have different behaviours, so we have to make sure our acquisition strategy remains relevant.”
Speaking of a new generation of travellers, Indra does not believe that the trend of digital nomads is one that will be sustained enough to become a new market segment in the longterm. “There are polarising views. There are companies that believe in remote work and those that don’t. We believe office work is very important. Productivity plummeted during the pandemic. Collaboration suffered, and we saw the great resignation. It’s hard to build trust between core workers, and the lack of team work led to people leaving.
“The trend is shifting back to offices, even with the tech giants. Most of our staff live in Kost – Indonesia’s version of boarding houses or co-living spaces (to use a new term) – and often there are three to a room. It’s hard for them to work from home.”
But the trend that will be sustained is sustainability. Said Indra, “I didn’t think it would come so fast in South-east Asia but it has. The pandemic reminded me, and all of us at Traveloka, to play a bigger role in influencing the eco-system for good.
Working in partnership with GSTC (Global Sustainable Tourism Council), Traveloka has rolled out sustainable tourism training programmes in Indonesia, and is planning to roll them out in other markets. “To make this change, we need to start with the consumer. The problem is, they don’t know what sustainable looks like, there is no visibility.”
It is also working on GSTC certification for hotels and will roll that out by year end. For measuring carbon emissions on flights, it is working with South Pole, which helps companies “achieve a low-carbon reality”. “We are also looking at our own carbon footprint, replacing lightbulbs to be more energy saving, for example,” he said.
QUOTE: “All travellers care about sustainability because Covid changed that. I thought South-east Asia would be the last to care but our survey proved otherwise.”
Given there’s so much to do, does he feel overwhelmed, I asked. “Yes, there’s a lot to do but it’s important work – all travellers care about sustainability because Covid changed that. I thought South-east Asia would be the last to care but our survey proved otherwise.”
I asked him how he felt about the notion that travellers should pay more when perhaps they should be incentivised and pay less to travel better. “I think hoteliers do not know how to manage a sustainable business – they can save a lot of money if they do it well, so it’s a question of educating the hoteliers on best practices.”
As for what his biggest satisfaction has been, he said, “It’s building something that creates a positive impact in the region, starting with Indonesia, transformation in the lives of consumers through travel. We transformed flights, bus travel and fintech.”
So what’s the next transformation he wants to effect? “To make sustainability part of the main reason customers purchase particular products, perhaps start a new green space in travel.”
As we ended the interview, I was mindful that Indra and I, both from “imperfect” places (me from Malaysia), were having this conversation in a place that comes as close to perfect as can be, Singapore. Indra and key leaders of Traveloka moved to Singapore during the pandemic, to better manage the business and address the South-east Asian region. Which goes to show you often need a blend of both to make things work.
Too much imperfection can drive one insane, as can too much perfection. The key is to stay grounded, and Indra is in no danger of losing that. His Chinese name, as I found it, is Wu Jia Gen – Jia meaning home, and Gen meaning root – which, put together, means grounded – so here’s to the boy with roots in Bengkulu and who found wings in Traveloka.
