Millennials are creating big opportunities for online travel investors in SEA

In 2019, Southeast Asia’s online travel sector reached US$34.4 billion in value, up from US$19.4 billion in 2015, according to the e-Conomy SEA 2019 report by Bain & Company, Google, and Temasek.

Online travel was one of the first services to move online and has since attracted a strong user base. The study projects the sectoral value to continue on and hit US$78 billion in 2025.

Photo credit: beer5020 / 123RF

As the tourism and travel sector continues to grow globally, access to travel has never been easier, thanks to online travel agencies (OTAs) such as Expedia, Booking.com, and Agoda.

However, players in the space have evolved from pure OTAs that digitize the ticketing and booking process to platforms and marketplaces for local tour guides offering “experiences” to the more discerning traveler.

Between luxury travelers and backpackers, the middle tier composed of young and tech-savvy millennials are visiting Southeast Asia in droves, searching out experiences and holidays specific to their tastes.

Going beyond e-tickets

Looking toward integrating all stages of the booking process, from marketing to the point of purchase, the online travel sector hopes to expand the pie further by adopting and adapting to the myriad of online payment platforms available.

Traveloka and Tiket.com are the top two OTAs among Indonesian consumers due to their leading services for airline tickets, train tickets, and hotel reservations. Traveloka has extended operations to other major countries in Southeast Asia and has access to more than 40 different local payment options for consumers in Indonesia, Thailand, Vietnam, Malaysia, Singapore, and the Philippines.

The company has also expanded its platform to focus on experience-based travelers, prompting other startups like Klook, a Hong Kong-based destination booking platform, to enter the Indonesian market with competitively priced travel experience packages.

Klook is trying to support local operators by further digitizing operations like booking and redemption, post-experience reviews, and AI-powered voice commands such as Google Assistant.

At the other end of the travel tech spectrum is Pollen, a UK-based invite-only marketplace that lets people bring their friends to the best local experiences and share rewards. The startup closed a series B funding round in October 2019, bringing its total war chest to US$88.5 million.

Regardless of where a company exists on the digital travel value chain, the one thing they will all inevitably have in common is the need for a variety of connected payment methods. This is a big part of why investors believe travel tech is poised to boom for a second time, following the prevalence of fintech in the region.

A marketplace of experiences

Travel experiences bring new meaning to the idea of “once in a lifetime,” as millennial travelers immerse themselves in local cultures rather than just playing bystander.

A 2018 study by travel technology solutions provider Amadeus and pollster YouGov found that targeting millennials’ desire for new experiences is a golden opportunity for travel providers.

Playing to local strengths