Beyond booking
With new lifestyle and finance offerings, Traveloka aims to be a service that customers can use yearround and not just for holidays.
Traveloka, the Indonesian travel booking and lifestyle platform, has expanded aggressively to enhance the user experience for customers researching and booking trips, with new offerings including credit and installment payment options.
Founded in 2012, the Indonesian company has partnerships with more than 100 airlines and boasts the largest accommodation inventory available for direct booking. One of five “unicorns” — startups with a valuation exceeding US$1 billion — from Indonesia, it has more than 40 million active users monthly.
Traveloka is currently operating in six markets in Asean — Indonesia, Thailand, Vietnam, Malaysia, Singapore and the Philippines — and entered Australia at the beginning of this year.
The company’s original focus was on two “verticals” or business lines — transport including air, train and bus travel and car rentals, and accommodation.
Since 2018, the company has added two new verticals, according to Henry Hendrawan, president of group operations. The first is lifestyle, a service that helps people find local activities and things to do while travelling in and outside cities.
“The goal is to make us relevant not only when people are thinking about leisure and travel, which they do a few times per year,” he told Asia Focus. “We want to be relevant for consumers on a weekly basis when they are looking for something to do.”
The second new vertical is financial services, which started with travel insurance and is expanding into credit related to travel.
“This is an underbanked market where there are only 15 million credit cards but there are 260 million people in Indonesia,” he said.
Mr Hendrawan said the company noticed the gap when it realised that when people booked flights in Indonesia, many waited until two or three days before they intended to travel. Often this is because they pay with cash and want to hang on to that cash for as long as possible.
“Our research shows that this is not because people are being impulsive in terms of their travel plans, it is because people do not have a credit card or other access to credit,” he said.
The company has the ability to assess creditworthiness through its own KYC (know your customer) process and is now working with Bank Rakyat Indonesia to provide credit lines to consumers who want to buy travel products via Traveloka. They can do so with the PayLater Card that was launched in September.
“With the launch of the two new verticals, we are expecting the customers will engage with our platform more and more,” Mr Hendrawan said.
In its latest market, Australia, he sees a lot of demand for travel to Southeast Asian destinations including Bali, Bangkok, Phuket, and increasingly to Vietnam.
According to the Pacific Asia Travel Association, Asia Pacific destinations are expected to receive 728.4 million international arrivals in 2019, about 40 million more than in 2018.
As for dollar receipts, the top four destinations in percentage growth terms this year were Macau, Thailand, the Maldives and China. Thailand is expected to generate $69 billion in tourism-related receipts in 2019, up 13.7% from 2018.
Online travel is the largest and most established sector in the internet economy of Southeast Asia, according to the “e-Conomy SEA 2018” report by Google and Temasek. The sector recorded a 15% compounded annual growth rate between 2015 and 2018 and is on course for a value of $78 billion by 2025.
The growth is impressive, but Mr
Hendrawan says the most important thing is not volume, but improving the user experience.
For example, when Traveloka issues a ticket for an attraction such as a theme park, the focus is on how to enhance the customer experience when someone buys the ticket online instead of at a physical booth. This includes providing a seamless experience so that when they arrive at the park, they don’t have to queue twice: once at the ticket counter and again at the entrance gate.
In terms of new trends, Traveloka found that its consumers are increasingly looking to explore destinations beyond Southeast Asia, so it is aiming to provide useful and easily accessible information for them.
“Consumers in Southeast Asia are at the beginning of their travel and lifestyle journey,” Mr Hendrawan said. “The story about the region is that there is a large middle class and an increasingly affluent population. For Indonesia, GDP is now about $4,000 per capita and they are just about to explore the world and this is an exciting prospect.”
He acknowledges that overtourism is a growing problem in Southeast Asia, saying that Traveloka is trying to help by promoting destinations that are less well-known.
“Overtourism happens because consumers only know about one or two destinations to go to in a country,” he said. “For example, Indonesia is all about Bali so everybody goes to Bali when they visit Indonesia, but there are a lot of beautiful destinations in Indonesia that people do not know about. We can say the same thing about Thailand, we can say the same thing about Vietnam and the Philippines.”
Giving people more information about other destinations can help by creating demand for other places and ease the pressure on infrastructure in areas that are facing overtourism, he said.
A report by the World Travel & Tourism Council and the multinational property services firm JLL identified 20 cities that are becoming the “new face” of overtourism, including Bangkok, Cape Town, Ho Chi Minh City, Istanbul, Jakarta, Mexico City and New Delhi.
The “Destination 2030” report examines the tourism readiness of 50 destinations and divides them into five types. The seven cities mentioned above were grouped into the “emerging performers” category as destinations where infrastructure and tourism momentum are growing along with problems that are associated with more visitors.
Another 13 cities, called “mature performers”, were described as having an established tourism infrastructure and good positioning to manage current growth levels. But, they still face the risk of future strains. They include Auckland, Berlin, Dublin, Las Vegas, Lisbon, London, Los Angeles, Madrid, Miami, New York, Seoul, Seville and Sydney.
Mr Hendrawan acknowledged that when it comes to promoting alternative destinations, it’s vital to make sure the communities are ready for more visitors. This is why Traveloka works with local tourism product suppliers to identify local activities that are “the best representation of local culture”.
Increasing awareness of new destinations within Southeast Asia can also drive more inbound tourism even if the number of Chinese tourists, the region’s main visitor source, continues to slip as it did during September and October.
Siam Commercial Bank forecast in September that the slump in travel from China to Southeast Asia could continue into 2020 if the trade war continues to weigh down the Chinese economy. But Mr Hendrawan prefers to take a longer view.
“We are quite bullish and we are not worried about short-term volatility, if there is any from certain events, where the medium- and long-term outlook is positive,” he said.
Apart from tourists from outside the region, he said Traveloka is also “quite bullish” about outbound demand from within Asean, with people from Indonesia, Thailand and Vietnam increasingly travelling abroad.
“This is an opportunity for us to capture,” he added.
Overtourism happens because consumers only know about one or two destinations to go to in a country HENRY HENDRAWAN
President, Traveloka Group Operations