How Klook at seven came back with higher revenues than pre-Covid and profitability
ERIC Gnock Fah, co-founder and COO of Klook, barely remembers what he was doing when he was seven years old. “It’s all a bit of a blur. I studied hard, got good grades, wasn’t very athletic. My family was trying to make ends meet with their trading business.”
Laughing, he said, “I think I was a typical kid of an immigrant family and the one thing you knew was, you had to study hard and get good grades to get out of Mauritius.” Which he did at 17.
Klook at seven years old this month has had to grow up really fast the past two years so it’s definitely not been a bit of a blur. In fact, Gnock Fah remembers every twist, every turn, every step it’s had to make to pivot from a company that was 100% dependent on cross-border travellers to one turned inwards towards domestic.
“It was one of the biggest hits in my life,” said Gnock Fah. “We were flying, then we fell. But I’ve learnt that the end of the world is not a big thing after all. In Chinese, we would say, we have seen the coffin but there’s always a way back.”
And indeed it found its way back, and more. Its business in Taiwan, Hong Kong, Singapore and China are now enjoying revenues higher than pre-Covid and, wait for this, it’s profitable in some of these markets.
Hong Kong, in particular, is strong, not having had the ups and downs of other markets, and is enjoying 50% growth. Singapore was at 50% growth as well but the yo-yoing of restrictions (this week, back to work from home as default and two for dining) has impacted the market, and dented confidence of both local residents and businesses in the government’s stated policy of “living with Covid”.
“A few markets are now profitable,” said Gnock Fah.
Boots and empowerment on the ground, the first pivotal step
He attributes this turnaround to the reorganisation it did early on. “Two or three months into it, we restructured the entire organisation to empower the local teams. For the first time ever, we initiated a local General Manager structure, all the local teams reporting to one local leader. Having good, stable leadership on the ground was pivotal. Otherwise, we wouldn’t be where we are today.”
In this, he probably took a leaf from how hotels work with a local general manager and all on-ground operations run locally, without having to defer to a remote, centralised structure. “That’s what the world will look like for a few years,” he said.
Going local gave it frequency which made profitability easier to achieve – although of course, the lower cost base given its cost-cutting early on must also have helped.
“Purchases are more frequent now; with staycations, people are buying two or three times a year versus cross-border travel which was less frequent. We also don’t have to reacquire customers again and again, frequency gives you profitability,” said Gnock Fah.
“The local strategy also plays to our strength –
content and social are more relevant than search in domestic. Pre-Covid, a lot
was driven by search – this shift in user acquisition strategy played to our
advantage.”
Covid also took the pressure off chasing high growth, with investors realising
the market was capped. In January this year, it raised Series E
funding of US$200 million.
Building more frequency of app use by adding more O2O services
As far as he sees it, Covid has delayed, but not changed, the company’s ambitions to be the leading global player in the travel/services sector. “Along the way, we have picked up a domestic engine which is here to stay even after travel comes back. Maybe it will be less of a feature in Singapore and Hong Kong, but domestic tourism has always been there in Asia – but it was thought to be uncool, only for the older generation. North Asia has huge domestic markets – Japan, South Korea and China – and we intend to continue on this path.”
Its mobile/app strategy has also played out well at this time. Referencing the Google/Kantar study which shows a consumer shift to apps during Covid, Gnock Fah said, “We have always played in the mobile space, I don’t think the shift in Asia was that big but it was great to see that shift in the West as well. You get a captive ecosystem through apps, it’s about organic and brand, not about search.”
It also means the ability to add more services to sell to a captive audience, and this is what Klook will do as it adds services such as car rental, rail, transportation and staycations onto its platform. “We will focus on O2O services (offline to online), anything we do, you have to step out of the door to do it.”
It has launched high-speed rail in Taiwan and is looking at how to integrate with attractions such as large venues and museums, so that they use Klook as a customer outreach.
This, he believes, will differentiate it from e-commerce giants such as Shoppee or Lazada which sells everything, including travel. “Think Meituan va Taobao, service-led vs delivery-led.”
Could its focus on Asia Pacific be a disadvantage though since the region is a laggard in reopening compared to Europe and the US where its competitors such as GetYourGuide and Viator are based? “I don’t think so. When Asia comes back, perhaps because it lasted so long, we will have less competition,” he said.
Referring to the recent GetYourGuide partnership with Expedia, Gnock-Fah said that while it did work with travel partners, it preferred to work with non-travel brands such as Grab and LINE in Taiwan. “There is opportunity to unlock a bigger potential.”
Similarly, it also works with a new category of content apps such as Douyin and Tiktok where “we own the travel segment in those apps”.
“Asia will have the strongest network effect when open”
Outside Asia Pacific, it has a partnership with Seera Group in the Middle East which is “more about infrastructure building and digitising travel as part of Saudi Arabia’s 2030 vision”. Having said that, Dubai is seeing rapid recovery although he still believes “Asia will have the strongest network effect when open”.
In looking forward to 2022, Gnock-Fah said it would consider a blend of organic and acquisitions to expand. Just as it acquired a car rental firm during Covid, it might consider another to grow in this category.
During Covid, it has also put more resources into building merchant solutions to digitise the industry. “We are going deeper into this area, as it is our commitment to grow the market.”
As for what the next seven years will bring, Gnock Fah said, “Cross-border travel will be our bread and butter, domestic a complementary engine. We will have to battle stronger on that front. Domestic is new and different for us and there are strong incumbents in the markets.”
The silver lining to the pandemic? “That our people, the senior leaders, are still here. It’s a miracle.”
One new skill he’s picked up is mental coaching, which works both way, inwards and outwards. “To be able to get people to stick around is challenging. When you are on a rocket ship, everyone wants to be part of it. Inwardly, I have learnt that you need to understand yourself first, how you react, understand other people’s traits and how to match that.”
Through this, he thinks he’s found a new calling – coaching people and human resource. “I never thought I’d enjoy HR as much as I have.”
As for a book he’d not have read otherwise, he’s just starting Daniel Kahnemann’s “Thinking, Fast And Slow”. And that seems to be the debate of the times – what works best in crisis mode? System 1, which is fast, intuitive, and emotional or System 2, which is slower, more deliberative, and more logical.
Gnock Fah promises he will answer that question when he speaks at WiT Experience Singapore on October 20.
• Sign up here for WiT Experience Singapore 2021
• Featured image credit, Getty Images
