The current crisis will not spare even the most well funded, high-flying startups from making the same tough decisions facing every tour and activity business.
Klook, the Asia-focused online travel agency (OTA) in tours and activities that have raised nearly $500 million from investors including TCV, Sequoia China, Matrix Partners, and Softbank, has reportedly laid off or furloughed more than 300 people and closed some offices.
While the company would not confirm specifics, CEO & Co-Founder Ethan Lin did acknowledge cost-cutting measures.
“The global impact of the COVID-19 pandemic is unprecedented, and the travel industry is amongst the hardest hit at the moment. Unfortunately, we are no exception,” said Lin. “After very careful and painful consideration, we have decided to take the appropriate and responsible action now to ensure that we can weather this storm and protect the long-term success of our organization.”
Founded in 2014 and headquartered in Hong Kong, Klook has been a symbol of startup success in Asia. The company grew rapidly, focusing aggressively on mobile and deeply discounted products tailored to younger Asian travelers. The company also began expanding into Europe and North America and had more than 2000 employees by 2019
Now, as with the rest of our industry, those expansion plans appear to be on hold. Lin said steps taken included headcount reduction, furloughs, and reduced work week company-wide. He added that the co-founders are not receiving any salary during the crisis, and leadership teams have accepted voluntary pay cuts.
The news will likely accelerate speculation of a merger with GetYourGuide, a leading OTA in Europe that also has Softbank as an investor. The complementary regional strengths of the two companies (Klook in Asia and GetYourGuide in Europe) as well as the common investor in Softbank have driven many industry observers to say such a combination would make sense. However, the co-founders of both companies have repeatedly waved off the idea.
However, a continued travel lockdown and the slow return of travel will only increase financial pressure on every business in this industry. All companies in tours, activities, and attractions will face ever more difficult choices, the longer this crisis continues.