Venture boom in the tourism industry: the story about GetYourGuide, Klook, Must2Go.

Venture boom in the tourism industry: the story about GetYourGuide, Klook, Must2Go.

Why are tourism startups great for the venture financing model?

What is the future of this segment of business?

Venture capital investments global market was booming in 2018. Investments grew by 32.2% and reached $ 99 US billion in comparison with 2017 year. The most popular industries for the investment are fintech, artificial intelligence and digital technologies in healthcare.

Another popular industries for investments are E-commerce, education and tourism. The tourism industry is defined as “travel-tech” in many financial publications. These are technology-oriented companies offering travel and tourism related services and products, including booking services, entertainment platforms, review and recommendation websites. Today the market of tourist entertainment and transfers on the global scale is a turnover of more than 125 billion US dollars. The market of the CIS countries is a turnover of 2.5-5 billion US dollars a year.

The history about GetYourGuide  as a discoverer of the industry

GetYourGuide is a German start up, which helps to select and book tours around the world. It has been working since 2009. The company’s history began with the idea of five student friends to create a platform for selling city tours from local students. They understood how imperfect is the system of booking entertainment and excursions and created a B2B platform for suppliers in a year later. All this facts was considered in B2C platform for tourists. GetYourGuide took the course for expansion after its portal concept was tested by public. Start up got their first investment in 2012 from a local company. They grew into a whole network with separate product versions in France, Spain, China, Japan and Mexico.

Now GetYourGuide offers 31k attractions in around 7.3k cities. The company has more than 400 employees in 18 countries of the world.

Recently, the company announced a new round of investment in the amount of 150 million Swiss francs. In fact the company raises investments since 2012. Total amount of investments is $ 320 US million.


Customer-oriented Must2Go

CEO Maxim Zhadobin got the idea of creating a tourist application Must2Go, when he heard that his friends unsuccessfully using online entertainment tickets. Soon he created an online booking service for excursions and entertainment with an integrated virtual assistant based on artificial intelligence technology. In the first year of operation the application has become popular among Russian-speaking travelers in the UAE, Asia and Europe.

Pilot product appeared in 2017.  The founder invested his own funds in a startup. In 2018 a group of investors from the UAE and Saudi Arabia join the project as stakeholders. The company made a bid for 24/7 live customer support in three languages – Russian, English and Arabic. In September 2018 Must2Go launched the first B2B platform. This B2B platform has in its network more than 1000 travel agencies. This 1000 travel agencies got valuable opportunity quickly and without additional investment work with a wide range of entertainment. Nowadays product base has expanded worldwide to 25 countries. It is more than 2,000 tour products, that are available for booking. At this moment the company has its own technological solutions, offices in the UAE, Russia and Ukraine. As well as company strategy is to unite with the local players of the tourist market and local investors and of course to take a dominant position in the local markets.

Keeping looking “Klook”

The investment fund consultant Eric Gnok Fa was traveling around Nepal. He noted that there are almost no tourist services available for booking online in Internet. For example, you need personally meet with the owner to find out the price of renting a scooter. So he decided to create an online platform through which tourists would order all the entertainment online. It happened in a few months later in 2014. The name Klook comes from the abbreviation “keep looking” – “keep looking.”

In the beginning there were offers for attractions in Macau and Hong Kong. During the tourist boom in Asia, the owner of Klook saw a problem that appears to foreigners during trips. Tourists booked only the most popular excursions because they do not know the language. Klook opened the real Asia for tourists. He translated the site into English and several Asian languages, added the ability to select currencies, reviews of tourists with photos and videos.

The company raised $ 5 million from US and Chinese investors a year later. Money spent on the geographical expansion of the network and range of services. Erik Gnok Fa continued to attract tourists through exotic entertainment: parahoking (paragliding with a hand falcon), flying over the sea on a hoverboard – jetpack.

Klook has become the most popular tourist platform in Southeast Asia after one year. At the moment, the company has 16 offices, mainly in Asia. In Europe they offer services most often to Asian tourists. The company’s turnover for 2018 amounted to 1 US billion.

The CEO of the company explains the company’s success as a “glocal” business. That means the company is both global and local at the same time.

Since 2016 the company held four investment rounds. Its investors include Sequoia Capital, Matrix Partners, Goldman Sachs and OurCrowd. In 2018 the company received 200 US million of investments. They intend to spend on expansion to the USA and Europe. The total amount of funding is 296.5 US million.


Should investors and venture companies cooperate with travel startups?

Investment experts say that venture companies, investors and tourist companies should seriously think that travel-tech is now a real chance to win from a deal or to participate in a project. Thus, such companies can become strong local players, and grow into global companies like GetYourGuide, Klook, Must2Go.

They also admit that in such minor capital markets there is no much capital. Market leaders should gather together with travel companies and investors with much smaller investments. All together will be able to create a player who will become the strongest one locally. It will be able to become part of a global company in future or attract one of such companies to its capital. This means that in the next round of investment in 2 years, it will be the amount around of 300-500 million US dollars in one hand. Such a player can potentially qualify for these investments or for their part in a strong project.

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