Travel group Yanolja ramps up Southeast Asia presence as it prepares for IPO

South Korean unicorn Yanolja is on a mission to integrate the fragmented hospitality industry. The company operates over 1,200 hotels across the region and is most notably known for reinventing love hotels – short-term accommodation for couples seeking privacy – into an affordable accommodation option for travelers.

Its hotel network is a combination of Yanolja-branded properties that it owns and directly operates, properties that it leases and operates, and franchised hotels run by hotel franchisees – the latter forming the majority of its network of hotels.

Building this network, however, is just the first step for Yanolja. The company also offers software solutions that it claims can save hotel operators up to 50% in labor costs. At present, 70% of hotels in South Korea use Yanolja’s one-stop property management systems, but the startup sees potential to export them on a larger scale worldwide.

Photo credit: Yanolja

Established in 2005, Yanolja – which is Korean for “Hey, let’s play” – claims to be the leading online travel agency (OTA) and leisure-booking platform in its home market. Users can choose from its listings of hotels, small resorts, and guesthouses as well as make bookings for restaurants, theme parks, and sports activities.

Since 2015, Yanolja’s online booking service has grown more than 200% each year and is on track to hit US$1.5 billion in transactional volume this year. In addition, the number of Yanolja-branded hotels has grown over 30% annually from 55 in 2014 to 183 last year.

In June, the firm achieved unicorn status after raising US$120 million in a series D round from investors including Singapore sovereign wealth fund GIC and US travel group Booking Holdings.

Technology has been central to that growth, and hotels are simply a “starting point” for digital transformation, Kim Jong Yoon, CEO for Yanolja’s online business, tells Tech in Asia. Without a hotel network as a touchpoint, it’s hard for customers to experience its other services, he adds.

The startup currently operates more than 250 franchise properties in South Korea and over 1,000 properties in Southeast Asia via regional online hotel chain Zen Rooms, which it recently took a majority stake in.

Yanolja wants to become the leading hotel chain in South Korea and Southeast Asia. “We plan to increase the number [of properties] to more than 3,000 within a couple of years,” shares Kim. Reaching that property count would propel the company into the top five hotel chains worldwide, putting it in the same league as marquee brands like Marriott and Hilton.

That could explain Yanolja’s increased commitment to Zen Rooms, which serves as the Korean firm’s gateway and sole presence in Asia. Kim says that Yanolja could fully acquire the Rocket Internet-backed company, which operates 13,000 rooms in budget to mid-range hotels across its franchises in Singapore, Indonesia, Malaysia, and the Philippines, as soon as next year.

Ramping up in Southeast Asia

Yanolja has been seeking out potential partners in the region via an aggressive M&A spree – its latest investments include Zen Rooms and Indian lodgings management platform eZee Technosys.

“Rather than growing our own business-to-consumer platform, we will grow the Zen Rooms platform as our B2C touchpoint. We’ll mostly co-work with other global no. 1 partners in Southeast Asia like Agoda and Booking.com,” Kim says. Because of Booking’s limited presence in Southeast Asia, Yanolja has also partnered with other OTAs: Ctrip in China and Rakuten in Japan as well as US-based Expedia and hostel-booking platform Hostelworld.

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