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VIETNAM’S FINTECH UNICORN TO USE NEW FUNDS TO BEEF UP ONLINE TRAVEL BUSINESS
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VNLIFE, which recently raised US$250 million in Series B, will allocate “a significant chunk” of the new funds to build up its online travel division, VNTRAVEL, managing director Niraan De Silva said in an interview with WiT this week.
“It’s still early days in online travel in Vietnam and there’s a lot to do,” he said.
Despite Covid having brought Vietnam’s travel industry to a standstill – “there is no travel right now”, he said – the group remains confident about travel’s future. A surge in Delta variant cases has resulted in Ho Chi Minh and other cities in Vietnam being placed under the strictest lockdowns since the pandemic started, grounding domestic travel.
VNTRAVEL has used the downtime during Covid to strengthen its content and product. “Hotels need us more than ever and we are making sure we push ahead,” he said. “We have upgraded our recommendation engines and improved algorithms for customizing of client base.”
It is also rolling out Tripi One, a corporate platform, Tripi C-Suite, a premium booking platform as well as Mytour Event, an events management platform that will match the demand for events and parties with hotel partners. “Hotels love that business,” he said.
In July, VNTRAVEL signed an agreement with South Korean hospitality software provider, Yanolja Cloud, to provide its technology to hotels in Vietnam to enable digital check-in and check-out, contactless payments, and other services.
“The global experience and perspective they can bring to further support our growth ambitions is very exciting. Given a rapidly growing digital consumer base in the country, the additional funding will allow us to accelerate our efforts in technologically enabling our merchant partners to keep up with this change,” said de Silva.
He said the overarching motivation of the VNLIFE group is “to use technology to make life better for Vietnamese”.
VNLIFE’s core fintech subsidiary, VNPAY, offers software for banks that want to provide mobile payment apps and other digital services. It also offers QR code payment systems to retailers, which can process payments from those bank apps. VNLIFE says it works with over 40 banks and that its payments network has 22 million users and more than 150,000 partner merchants. Its two other verticals are online travel and retail.
The latest investment came from investors including US-based General Atlantic and Dragoneer Investment Group. PayPal Ventures, the venture capital arm of US payments company PayPal, and Singapore’s EDBI also participated in the funding round, along with existing investors GIC and SoftBank Group’s Vision Fund.
The investment values the company at “well over $1 billion”, de Silva told the financial press, but it is “years away” from an initial public offering. In July 2019, it raised $300 million from Softbank and GIC.
He told WiT that online travel was a natural progression of what the company is trying to build in Vietnam. “It was an essential use case for consumers, we want to touch the consumer at multiple points during the day, during the week, during the year. First we had digital banking, then top up, bill payment, QR pay.
“Point to point travel is a complementary business and one of the largest pain points in travel in Vietnam is payments. Credit card penetration is very low in Vietnam and travel is a higher value item and the current mode of payment is cash on delivery. Since we have a cashless payments network, it can support travel and fix that pain point.”
De Silva, who joined VNLIFE about five years ago, said, “We are likely one of the largest online travel agents in Vietnam”.
It is a pure domestic play, with an omnichannel distribution for inventory and a centralized pricing and aggregation engine that pushes out content across different channels depending on different demographics, said de Silva.
Its first travel distribution channel was through its banking vertical in which Vietnamese could book travel through their banking app and pay by direct debit. Then it partnered with non-bank partners such as My Wallet and iCheck, so that they could sell travel to their customers. Its third distribution channel is through its direct consumer apps such as Dinogo, which caters for younger first time travellers and mytour.vn, aimed at the higher end segment. The fourth channel is its agent network – Tripi Partners – with 10,000 digitally-enabled agents nationwide.
“We don’t rely on just one channel, our aggregated inventory is distributed through different channels, different product mixes. We can do this because we are focused on domestic. The biggest cost in travel is user acquisition and we work with strategic partners to monetise their customer base.
“We pride ourselves in supply side integration and merchant management. Travel is not a difficult business. You win the travel business with your relationships and serving of airlines and hotels partners.”
Customer service is also a prime focus and even though mytour.vn is an online business, it has opened what he called “experiential customer service stores” in Ho Chi Minh City and Hanoi. “They are not designed for selling, but for customer experience. Today if customers want service, such as changing flights, they are pushed into a call centre. During this whole pandemic, customer support is where we have excelled.”
It plans to open up to 15 service centres in the country.
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