KKDay, a startup from Taiwan that operates a platform that helps travelers find local activities, has raised $10.5 million.
The funding round was led by Japanese travel operator H.I.S. with participation from existing backer MindWorks Ventures, the Hong Kong-based VC.
KKDay is one of a number of services that cater to Asia’s burgeoning regional tourism market. The idea is to allow travelers to find experiences, tours and travel in their destination city, for example, a river cruise, museum visit, or city sightseeing tour. Since we all have a smartphone these days, KKDay lets people browse their options and book their choices ahead of time or on-the-ground while taking a cut of the transaction.
The target is to digitize and then take a slice of the travel tour and activities market that is predicted to grow by one-third to reach $183 billion by 2020, according to travel-focused analyst firm Phocuswright.
To get there, KKDay is turning to a traditional player for help.
H.I.S. was established in 1980 and today it employs close to 17,000 people with offices in over 150 cities in some-80 countries worldwide. The company, which recorded more than $5.5 billion in annual sales, is an old school, bricks and mortar travel firm, whereas three-year-old KKDay is a new, digital entrant that’s predominantly Asia-focused. Hence there is plenty of potential to work together.
“H.I.S. is not just a financial investor, but is valued as a strategic investor. Their product can use our platform and internet channel to expand their business globally,” KKDay CEO Ming Chen told TechCrunch in an interview.
On the reverse side, KKDay benefits by boosting its inventory with H.I.S.’s decades-old business. On the customer support-side, its network of country-based offices and agents can give KKDay customers a physical point of call if they need it, or simply the peace of mind that comes with that.
The match sounds ideal, so why not go the full hog and bring the two companies together? That’s not happening, according to KKDay CFO Weichun Liu.
“We made it very clear that this partnership is a means for both us to do what we are best at. There is no discussion on merger and acquisition so far,” she explained to TechCrunch.
But Liu believes that the relationship is essentially preparation for when large online travel giants enter the travel activity space.
“If a Priceline or Expedia jumps into the market, they have more resources,” she explained. “We will try to get an early start on the finer and more difficult parts to reach first [so that] even when the bigger guys enter the market we are ahead of the game.”
Ahead of the game means taking control of the experiences themselves rather than just selling them. Already, Liu said, KKDay tailors its packages by using its own people — for example as tour guides and by renting buses itself — or works closely with contractors, but H.I.M.’s firepower and presence can supercharge that.
To illustrate the ultimate goal, Liu turns to e-commerce where, she said, consumers are happier to buy products through Amazon rather than direct from retailers.
“Amazon means a certain level of quality and guarantee, that’s our aspiration,” she said.
Longer-term goals aside, KKDay is initially looking to grow its customer numbers in China and among Western markets like Europe and the U.S.. As of now, Hong Kong, Taiwan and Korea are its largest countries, according to CEO Chen, while the H.I.M. alliance is likely to massively boost its Japan-based business.
India, another huge population, isn’t in the plans right now because outbound travel numbers from the country are lower than the likes of Korea and Japan, Liu explained.
China may be a hugely challenging market, but Chen is convinced that there’s potential for travel products if they are presented and done right.
“We can provide very high-quality products. Young Chinese today expect high-quality travel services, not only those that are cheap. They once were price sensitive before but they are now more affluent,” he said.
Beyond more traditional travel services, KKDay’s most direct rival is Klook, a business that is predominantly focused on China. The Hong Kong-based startup has raised over $90 million, including a recent $60 million Series C round in October, from investors that include Goldman Sachs, Sequoia and Matrix Partners.
Klook said it clocked five million bookings in 2016 and its claims to process one million bookings per month. KKDay doesn’t provide booking numbers, but the service claims to host over 10,000 experiences from 500-plus cities in more than 80 countries.