Rakuten buys tour marketplace Voyagin to gear up for 2020 Tokyo Olympics travel bonanza

Voyagin founding team (from left): Tushar Khandelwal, Masashi Takahashi, and Hiroyuki Hayashi.

The Tokyo Olympics won’t begin until 2020, but Japanese ecommerce giant Rakuten is already making preparations. With an anticipated tourism boom riding on the Olympics, Rakuten Travel, the company’s travel website, wants to make sure it’s highly visible for travelers heading to Tokyo.

It disclosed one piece of its plan today: it bought a majority share – entirely in cash – in Tokyo-headquartered startup Voyagin, an “offbeat” tours marketplace with activities in Tokyo, Kyoto, Bali, and other Asian cities. While Rakuten Travel has a wide hotel and flight selection, Voyagin complements it with a large inventory of tours.

The acquisition price was not disclosed, but accounting records show that its Singapore entity received US$3.48 million in investment – including from Rakuten – before the acquisition. The actual acquisition amount is well over that number, says Voyagin co-founder Tushar Khandelwal.

It’s loose change for Rakuten, which made US$4.88 billion in revenue in 2014, and probably a reasonable exit for Voyagin given the size of its business. Masashi Takahashi serves as the CEO while Hiroyuki Hayashi is the CTO.

The proceeds from the sale will likely go back to Voyagin’s investors first and foremost. Founders and employees will receive the remainder, though it’s unclear how much they’ll get.

“We chose to go down the acquisition path because of the value-add that a company like Rakuten offers in terms of their understanding of marketplaces- they’re the largest marketplace in Japan – knowledge of the travel space, ability to work with them to drive even more tourists to Japan, and connections for hiring and partnerships,” says Khandelwal.

“It’s also beneficial that we don’t have the distraction of having to fundraise again,” he adds. The founders still own substantial shares in the company though, so they could benefit from its subsequent growth.

Khandelwal says Voyagin was profitable before the acquisition, with 30,000 guests booking tours on the site in the past year. It saw 20 percent month-on-month growth in number of guests in the three months prior to the buyout. The site will continue operating as an independent brand under the same management, although Rakuten will join the board.

The Voyagin acquisition seems like a natural path for tour marketplaces in the region. Given the fragmented marketplace and a business model that needs large transaction volumes to succeed, consolidation is the quickest way to profitability.

For instance, Singapore’s BeMyGuest acquired Indiescapes in 2014. Based on a quick site search, it does appear to surpass Voyagin in number of activities. Voyagin lists over 1,800 things-to-do, mostly in Japan. Based on what I’ve heard, BeMyGuest is also achieving an all-time high in sales, though actual details are scant for now.

It looks like these marketplaces could be of interest to largest travel sites. Players like China’s Tuniu, for example, may want to expand its inventory in Southeast Asia due to a rising hunger of the Chinese to travel, which means absorbing smaller local players could present a way to speed up expansion.