Dida expands, gets into flights and tours & activities
The first time you meet Rikin Wu, founder and CEO of Chinese hotel bedbank DidaTravel, you immediately sense his pride in his Teochew roots.
This dialect group, hailing from the Chaoshan region in Guangdong Province, China, is known for its entrepreneurs, counting among them names like Li Ka-shing, the Hong Kong billionaire, as well as prominent hotel owner, Kwek Leng Beng, of City Developments Limited, and Millennium & Copthorne Hotels.
So from an early age, Wu, whose family moved to Shenzen from Jie Yang when he was three, knew “I wanted to run my own business, whatever it was. I am a Teochew and the entrepreneurship spirit is deeply ingrained in my heart.”
Rikin Wu: “It was an important lesson. As Teochew people, we think running a business is like opening a restaurant – all offline. Working in Tencent, I saw the potential for online but I knew nothing about e-commerce and technology. But this lesson showed me that if we can use IT, it’s just like a weapon.”
Wu is relocating to Singapore from Shenzen, where Dida’s tech team is based – among the wave of Chinese entrepreneurs who are putting down roots in the city. A recent report in Business Times highlighted that up to 3,500 high-net-worth individuals (HNWIs) are expected to become Singapore citizens in 2023, with most of them from China.
His entry into travel was by accident. He didn’t know anything about the business but when a friend from Canada (who remains a shareholder to this day) asked if they could do something together, the two friends did some research and “we saw some articles talking about China outbound and domestic business”.
“We saw that it was a growth industry and would be a long-term thing, and we felt we could have a chance,” recalled Wu.
So the two hit on the idea of reselling hotel rooms to offline travel agencies in China. “It was all very manual. I would search the net, book the rooms, mark up a little bit and sell to the travel agencies. My advantage was I could read and speak English and the agents couldn’t.”
The business floundered for the first two years. “We were almost dead. Our whole year turnover was less than half a million yuan at three percent margin.”
From “almost dead” to US$1b annual turnover: How technology turned things around
So how did it go from almost dead to what it is today – Wu says it is profitable with US$1b in annual turnover at two to five percent margin, with 400 staff, 25-30% of whom are based outside China and with big ambitions to expand its business globally and to add flights and tours and activities to its considerable hotel inventory, 40% of which are direct contracts.
Wu puts it down to technology. In 2013, he met his now CTO James Jin, then working with Expedia. “He opened my eyes to what technology could do. I couldn’t afford him then, but we kept the relationship and said, let’s see.”
The breakthrough came in 2014 when Qunar, the travel metasearch site, started to connect suppliers with direct APIs. “We connected one of our suppliers to Qunar and in one day, we saw volume grow to 100,000 yuan. And within a month, we were doing three million yuan a month.
“It was an important lesson. As Teochew people, we think running a business is like opening a restaurant – all offline. Working in Tencent, I saw the potential for online but I knew nothing about e-commerce and technology. But this lesson showed me that if we can use IT, it’s just like a weapon.”
From that moment on, Wu doubled down on technology. Jin came onboard as CTO in August 2014 and the company expanded its tech team. In the bedbank space, it saw a unique position it could occupy – selling global hotels to the Chinese outbound traveller. “Most of the bedbanks were foreign companies – Hotelbeds, GTA – and in China, there was no good bedbank company who knew how to sell global hotels to the Chinese outbound traveller.”
Crash of Chinese outbound: Investing in cloud services to prepare for the uptick
It was a business that held it in good stead until Chinese outbound travel came to a crashing halt during the pandemic. In 2019, 60% of its business came from Chinese agents with an even split between offline and online while 40% came from overseas agents. “China outbound was our primary focus.”
Thus, when the pandemic hit, DidaTravel took a massive blow. Fortunately, it had raised funds from a Shenzen VC in 2018 – 50m yuan – and had some reserve, and in 2021, it raised another 700m yuan from Alibaba. “We were careful with cash flow and controlled the risks as best we could.”
It cut its 300 staff by half, letting go of sales and customer service teams and retaining its IT and operations team. “We invested in our cloud services. It was hard to restructure during the years of growth, but when there was no business, we did the things we hadn’t dared to.”
In the words of CTO Jin, “Dida’s system has been built on the basis of cloud services since the first day. Efficient, stable and high-frequency code release enables us to have very high timeliness and diversity when conducting business, so as to respond to market changes. Over the past few years, we have increased our use of cloud services such as caching services, big data services, and so on. This has saved us a lot of operational and maintenance costs, and our team has been able to focus our R&D resources on the things that matter most. This is one of the reasons why Dida’s technology is leading the industry.”
As other parts of the world started opening up, Dida moved quickly to go after global markets as well as intra-Asia travel. Today, overseas agents contribute more than 70% of its business with Chinese agents accounting for less than 30%. “It’s a good balance to have. One lesson learnt is if you depend too much on one market, it’s a big risk.”
Reopening of China: Offline agents recovering at twice the rate of online
With the reopening of China on January 8, Dida saw strong initial recovery from the online agents but now the traditional travel agents are picking up momentum. “We are seeing them grow at twice the rate of the online agents,” said Wu. “In 2019, we had 25,000 agents in China registered with us. A lot disappeared during the pandemic but now, a lot are coming back. It’s grown really fast in the past month.”
He expects his business to level off at 50/50 overseas (principally Asia) and China by year end. “China is still the largest travel market and its outbound is still recovering. Once it recovers, it will recover well. The population in Asia is also huge and for the next 10 years, it’s an area we will pay more attention to.”
It has also started a new flights business – Dida Flights – and launched its tours and activities consolidator, focusing more on transfers and ticketing of major attractions. “Hotels are still the most important business. Flights are low margins but we want to do packages and we are getting demand from offline agents who want to buy flight packages. We want our clients to stick to our platform and we can do that by giving them more things to sell.”
As Dida aspires to become a global travel company, Wu acknowledges a key factor for success is talent. “People are the most important. We are a young company, and it’s easier for us to accept new concepts and ideas. We are also a tech-driven company and an API document in Malaysia is the same as in Vietnam. We have also learnt a lot from the overseas companies we have worked with. We will build a more global team. One small step is to use English in meetings with our core team.”
Wu is excited about the future of travel technology. “We have more customers going online. The offline business model is changing – from big groups to more tailor-made private tours and small groups.
“I am also excited about ChatGPT, I think that AI will become more powerful than it is now – I don’t know how and when it will happen but it will happen, and if you cannot follow the trend, you will disappear in the future.”
