The travel industry is seeing encouraging signs of recovery as travel restrictions have greatly relaxed all around the world. This is a huge contrast to the international travel lockdown for the past two years.
Minister S. Iswaran said last month during a panel session at the World Economic Forum meeting in Davos that passenger traffic at Changi Airport has already picked up to almost around 50 per cent of pre-pandemic volumes. This was much faster than the authorities had projected.
He further noted that while ongoing inflationary pressures may dampen the tourism industry’s recovery in the near term, the long-term growth potential of the industry remains as there is a hunger among consumers for travel.
When the economic circumstances become more challenging, people still travel, but they opted for more short-haul flights or regional trips, said Iswaran.
For instance, many turned to domestic experiences during the pandemic when borders were closed, which aligns with the new and temporary directions of many travel-related startups in Singapore.
How else have they been adapting to the travel lockdown and innovating to keep themselves relevant?
Klook pioneered the recovery of domestic tourism
“It is undeniable that the travel industry was the hardest hit by the pandemic, and we were no exception,” said Sarah Wan, general manager of Klook Singapore.
When international travel was completely shut down, Klook made use of this downtime to be “agile and shift gears”, focusing on domestic travel with new activities such as local workshops, staycations, cruises and events.
Klook helped lead the way for domestic recovery thanks to its partnership with the Singapore Tourism Board for the SingapoRediscovers campaign.
Despite most markets in Asia under Covid-19 restrictions, the pivot has proven successful. The company surpassed 2019 revenue in 2021 on domestic travel alone, with monthly active users exceeding pre-Covid levels.
We also saw a four times increase in the number of products and services available on our platform, and doubled the number of destinations to over 1,000.
– Sarah Wan, general manager of Klook Singapore
At the height of the pandemic, Klook also completed its Series E round, raising an additional US$200 million, which highlighted their investors’ confidence in their strength, ability to pivot, and the recovery of the travel industry as a whole.
In anticipation of the resumption of international travel, Klook also invested in expanding its services with new offers such as hotels and staycations, car rentals, multi-attraction passes and services, including Covid-19 testing and travel insurance.
“(Our customers) can now discover and book the best of what any destination offers across three categories — play, stay and move,” said Sarah.
She added that with international travel now back on the table, the demand for travel is back and stronger than ever. It has seen strong demand across these categories, with outbound booking growing three times in April compared to February.
The pandemic has clearly proven that domestic tourism is severely untapped and it’s now here to stay. Moving forward, Klook will continue to focus on domestic tourism and international travel — which are their “twin engines of growth”.
“Domestically, we are still seeing sustained demand across verticals such as staycations and cruises. In fact for the June holidays, things-to-do and attractions are leading the way, especially as local restrictions have eased,” observed Sarah.
“On the international travel front, Singaporeans have caught the travel bug and are globetrotting. We’ve seen up to a 2.5 times surge in outbound bookings to destinations such as Malaysia, Thailand and Australia from April to May this year.”
She foresees that the future of travel will be seamless, digitally-enabled and almost contactless from discovery to the experience stages. With that, she stressed the need for merchants to keep pace with digital transformation, or risk falling behind.
Seek Sophie paid out of their own pockets to refund customers
“At the beginning (of the pandemic), it was a disaster. We had just raised money from investors and were growing very fast into Southeast Asia. We had our best week ever in the first week of March, but at the end of March, we went to zero. Each of our markets started closing one after another, with no sign of reopening in the foreseeable future,” lamented Jacinta Lim, co-founder of Seek Sophie.
Despite the gloomy start, the travel startup managed to eventually find its footing. As the saying goes, ‘in every crisis lies an opportunity’, and that’s exactly what the startup did.
During the peak pandemic period of 2020 to 2021, Seek Sophie grew more than 10 times compared to pre-pandemic. They grew six-fold in 2021 alone, and are aiming to grow at least three to four times this year.
The core mission of Seek Sophie is to help build a better world for travellers, local communities and the planet. The Covid-19 pandemic has truly tested their ability to achieve this, especially when there was no end in sight.
When Covid-19 first hit, we were facing a situation where on one side, we had thousands of customers asking for refunds.
And then on the other side, we had our partners — thousands of small local businesses that couldn’t afford the refunds, and that also didn’t know whether they could even survive months or years with no cashflow.
– Jacinta Lim, co-founder of Seek Sophie
Along with fellow co-founder Lina Gedvilaite, the duo wanted to help both sides. They eventually made the tough decision to refund customers out of their own pockets, and told their partners to keep the money owed so they could ride out the crisis. They also didn’t retrench any staff during this period.
“In order to afford these, Lina and I had to take personal loans to make sure that our customers, partners and employees were treated fairly. It was really painful financially, but that was the only way we could stay true to our mission,” she added.
To keep themselves afloat, Jacinta said Seek Sophie literally pivoted every week because of the continually evolving restrictions so they had to also continually seek out new opportunities.
“For example, when Indonesia and Vietnam locked down, we focused on Malaysia. When Malaysia locked down, we entered Singapore. When Singapore locked down, we looked for fun virtual experiences,” she explained.
One of its key innovations in the past year has been Creators Community, which taps on its community of photographers and content creators, allowing them to go on experiences hosted by Seek Sophie’s partners to create content for them. As a result, their partners have seen a 20 to 30 per cent surge in business.
Commenting on the travel landscape in Singapore, Jacinta observed that the travel trend has always been towards unique, authentic, local experiences instead of mass tourism. The pent-up travel demand from the pandemic has only accelerated this trend, shaping the future of travel.
“The fascinating thing that happened during the pandemic is that local businesses became super innovative, and started developing more interesting experiences that locals would enjoy, like private home dining, night kayak fishing and island hopping to hidden islands. These experiences are exactly the kind of authentic, unique experiences that travelers are looking for,” she said.
“Our ultimate goal is that everywhere you go in the world — even in the most touristed of places — you’ll be able to discover cool, unique experiences that even locals love through Seek Sophie. We’re breaking the barriers between locals and travellers, and building a global community of passionate creators, adventurers and local businesses.”
Almost 200 money changers halted business, but not ThinMargin
Nabeel Ghaffar, chief executive of Exchange International, noted that the pandemic has propelled the demand for online services, and this includes exchanging money.
Exchange International is a wholesaler of foreign banknotes for over 35 years, and it has since acquired Thin Margin, Singapore’s first online money changer.
Nabeel admitted that Thin Margin’s transactions has reduced during the pandemic, but it has “never ever went to zero” because some people were still traveling for various reasons.
Moreover, during the pandemic, almost 200 money changers voluntarily stopped trading because they were not able to meet their cost of operations. By default, the small number of money exchange transactions in Singapore got diverted to Thin Margin.
– Nabeel Ghaffar, CEO of Exchange International (owner of Thin Margin)
He added that the worst time for the company was when the whole world went under lockdown at the same time. They ended up burning some cash, but he wasn’t too worried since their “base capital is quite significant”.
They also saw the travel lockdown as a “temporary” thing, and are confident that business would pick up again once the lockdown ended. This is also why they did not pivot to a new business model and stuck to their core business model of delivering foreign cash to the customer’s doorstep at competitive exchange rates.
During the peak of the pandemic, “revenue was down by over 75 per cent”, but it has since bounced back to increased levels than pre-pandemic times.
“The (travel) industry has already started to rebound, and it will continue to keep getting better from this point on. (Furthermore), the Singapore government plans to open more airport terminals, which tells us the travel industry will continue to get stronger,” said Nabeel.
While they will continue to sell foreign currency to outbound travellers, Thin Margin has plans to also start buying foreign currency from inbound travellers. Ultimately, they aim to replicate its success in Singapore and go global.
YouTrip enters the B2B payments space
Last month, homegrown fintech startup YouTrip announced that it has launched its new business product called YouBiz.
This was first announced last November when it raised US$30 million funding in its Series A round. Majority of these funds have been channeled to bolster its suite of payment products, including the development of YouBiz.
Powered by Mastercard, YouBiz is a corporate card for enterprises to earn unlimited one per cent cashback and save with zero foreign exchange fees in more than 150 currencies worldwide.
Beyond payments, YouBiz is also integrating the card with a single hub that brings together multi-currency accounts, local and domestic transfers, corporate expense management and credit features.
The idea to pivot into the B2B space came about during the pandemic when remote working was the norm, and companies were focusing on digitisation and automation in their operations. With that, they were expensing payroll in different currencies and working with suppliers and vendors around the world. Undoubtedly, their foreign currency needs went up.
– Arthur Mak, co-founder and Chief Product Officer of YouTrip
He found that the B2B payments space has a very deep market, but one that is still underserved. Given YouTrip’s track record in the region’s cross-border payments landscape, he felt that it was timely for them to venture into the B2B space and help develop an efficient and cost-effective financial solution for SMEs.
As a company that deals with cross-border payments, the rippling effects of COVID-19 on the travel industry has also affected YouTrip. But as a whole, YouTrip finds that the pandemic has largely served as a business opportunity for the company instead.
“While the pandemic did bring about challenges at the start, our ability to stay nimble enabled us to build YouTrip into a pandemic-resilient company. This was achieved by identifying new opportunities beyond travel for us to stay relevant in this ever-changing landscape,” explained Caecilia Chu, co-founder and CEO of YouTrip.
On the consumer front, YouTrip’s transaction volume has exceeded pre-pandemic levels as it expanded its strength in overseas e-commerce, especially at a time when online shopping saw a huge uptick.
According to Caecilia, overseas e-commerce transactions now take up around 70 per cent of their total transaction volume.
Furthermore, with travel restrictions easing up, the spike in travel spend among Singaporeans has led YouTrip’s overseas transaction volume in April to witness a 200 per cent increase, as compared to the same period last year.
As travel makes a steady comeback, Caecilia foresees more money to be moved across borders, which sets the stage for faster and more cost-effective financial products.
“With the continued strong traction in online spending and the accelerated return of travel, we’re expecting transaction volumes to grow exponentially,” she said, adding that their expansion into the B2B payments space is expected to further fuel their growth.
“Temporary redirection” to cater to the long travel winter
Singapore-based business travel management startup TruTrip launched at an unfortunate timing, during the same month that the travel lockdowns came into force, which meant that they lost a lot of traction and early adopters who were no longer traveling.
The pandemic basically caused their business to shut down, though what made the situation harder was the “numerous false starts” in which a new wave would cause further restrictions.
In addition, Southeast Asia witnessed a “slower pace of reopening” compared to the rest of the world, noted Hugh Batley, founder and managing director of TruTrip. He added that short- and medium-haul travel only stand at around 50 per cent in the region.
“But we definitely see it as an opportunity to solve for challenges of today. The demands of business travelers have changed and companies now face a less stable world, changing requirements, inflation, a harder trading environment and more,” he said.
“That is why we offer an effective solution for a top three controllable spend item: business travel. TruTrip’s use of technology means it’s also very accessible without sacrificing quality.”
The untimely launch of TruTrip also served as a blessing in disguise. In a way, TruTrip was “lucky” because they were not scaling up just yet, which meant that they had the funds to keep themselves afloat.
Once the future became clear, we were able to reshape for the long travel winter. We did have a temporary redirection — we built Covid Entry Check and Covid-19 testing directory for users to find tests nearest to them.
At its peak, we were serving over 100,000 people a week to help navigate their way through the travel complexities. We also provided this platform to other travel providers at an industry-low cost.
– Hugh Batley, founder and managing director of TruTrip
Despite being a “temporary solution”, the Covid Entry Check platform definitely helped to extend their runway through service fees and testing commissions.
And even with the pivot, their goal remains the same: to make business travel management more intuitive, more useful, more straightforward and more accessible.
“Travel remains essential to companies that have an international footprint — in supply, demand or both,” said Hugh. “The pent-up demand and pressure from the economic reality will drive and overtake the 2019 travel demand, getting us back on the growth trajectory.”
Business travel continues to be a very exciting space, and TruTrip is focused on growing to be an industry leader. Beyond improving their services, they are continually innovating and refining their products to maintain their position as the go-to business travel platform in Southeast Asia.
Featured Image Credit: YouTrip / Seek Sophie / Lastingwander.com / Klook