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Startups

Hong Kong travel activities startup Klook ready to take on Europe

Platform faces off with fellow SoftBank-backed venture GetYourGuide

Klook's app offers 100,000 things to do in more than 270 destinations.

TOKYO/SINGAPORE -- Hong Kong-based travel experience booking platform Klook says it will expand its coverage to match German rival GetYourGuide in every major European city by the end of this year.

Klook's focus on Europe will intensify competition between the two travel startups that are each valued at more than $1 billion, and are both backed by SoftBank Group's Vision Fund.

"We should have, by the end of this year, a matching set of activities, tours and experiences as any other player in all the major gateway cities in Europe [such as Paris or London]," Wilfred Fan, Klook's chief commercial officer, told the Nikkei Asian Review on the sidelines of a travel-tech conference in Tokyo called Web in Travel. "GetYourGuide is growing as well, but we will be able to catch up to them by the end of this year."

The tours and activities business is one of the travel industry's fastest-growing sectors and has yet to be taken over by online travel giants such as Expedia or Booking.com, which now dominate hotels and air ticket sales. The global activities market is expected to grow up to 50% from 2015, to be worth $183 billion in 2020, according to travel research company Phocuswright.

Founded in 2014, Klook offers 100,000 things to do in more than 300 destinations, including skip-the-line tickets to iconic global attractions, as well as activities such as cooking and craft classes. Anchored in Asia, the region accounts for 80% of the company's total users.

GetYourGuide, which was founded in 2009, provides more than 40,000 activities and tours, half of which are in Europe.

Klook has already made strides into Europe, announcing a partnership in January with Rail Europe, which distributes passes and train tickets for over 50 railroads throughout Europe. The tie-up will enable Klook users to access major European attractions as they plan their rail journey.

By focusing first on Asian customers going to Europe, Fan said Klook will mainly cater to its existing customer base. As for European travelers heading to Asia, Fan expects "the competition with players like GetYourGuide would take a little bit of time," although the company has "a winning formula that we want to bring [to Europe] when we target a certain type of customers."

Klook co-founder and Chief Operating Officer Eric Gnock Fah said that while the cash-rich startup has no concrete acquisition plans at the moment, its strong performance in the Asia-Pacific region -- particularly China -- means it will be in a position to consider possible buying opportunities in Europe.

"We want to boost users from Europe," Gnock Fah said. "Currently, many tourists from this region are looking at Klook to book experiences in Europe, so more has to be done to increase the number of Westerners using us for experiences in Asia."

Having recorded $1 billion in sales last year, Gnock Fah said Klook expects triple-digit growth this year, supported by improved performance in key markets. However, the company is still loss-making. 

Klook intends to add an office in San Francisco as it expands its presence in the U.S., where it has a base in Boston. In Europe, it has offices in London, Amsterdam and Barcelona.

"There are still a lot of opportunities for everybody, for us, GetYourGuide and other players in our industry [of tours and activities], where less than 15% is booked online, compared to the hotel industry's over 60%," said Fan. "If someone in our type of industry is not doing a bad job, it should grow."

Klook has raised over $520 million in funding through five financing rounds, making it one of the best-funded companies in the tours and activities sector, close behind GetYourGuide. Its latest Series D+ funding in April, led by the SoftBank Vision Fund, raised $225 million, enhancing its status as a unicorn, or a privately held venture valued at more than $1 billion.

The Vision Fund also led a $484 million funding round for GetYourGuide in May, which lifted the Berlin-based travel activities company to unicorn status. In total, GetYourGuide has raised more than $650 million through several financing rounds. 

Gnock Fah said Klook was open to more financing rounds, although not in the near term, as it remains financially "very, very healthy."

Judging on financial performance alone, Gnock Fah said the company was looking to an IPO in the medium term, saying a public float has yet to be discussed among investors.

Asked during the conference in Tokyo how Klook is spending its seed funding, Fan, the chief commercial officer, said: "We spend it wisely." He added that the company was focused mainly on building its global team, as well as services and marketing tools.

While Klook has faced questions over its strategy of discounting activity tickets at volume, which critics say is burning through too much cash, Fan said the company's rapid growth could not have been achieved without such a bold strategy.

"As a startup with the capital market behind us, if we are too focused on the bottom line immediately, and just thinking about increasing our company margin, we will not be as aggressive and fast as now," Fan said.

"Encouraging people to try our service takes a lot of investment," he said. "Couponing is so frequently used [in other industries] but this is new to this industry, where there has been no good marketing channel in the past to apply it."

When asked about the sustainability of Klook's business, Fan said the company's current transaction volumes meant there was no concern. "Once we acquire customers, the next time when they purchase from us would be standard pricing and we would have a more healthy margin."

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