Travel TechnologyLower advertising and customer acquisition costs key to reboot a new travel distribution model

Super app strategy could help crisis-hit travel in recovery

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Experts say super apps model offer low customer acquisition opportunity costs for travel companies.
Experts say super apps model offer low customer acquisition opportunity costs for travel companies.

Super apps could offer a new model of distribution to drive impending recovery of the Covid-hit travel industry, say investors in the travel tech space.

Fritz Demopoulos, CEO of Queen's Road Capital, an early stage fund focused on emerging markets, believes that super apps could offer a "fantastic distribution opportunity" for the travel industry.

Speaking during the 'Face‐Off: Inside The Investors’ Ring of Fire' panel session during the recent WiT Virtual Summit, he said: "It is clear that we live and die by distribution, and it's unfortunate or fortunate depending on how you think that Google has been a fabulous channel for many companies over the years. But it has also led to a massive outflow of capital from the travel industry.

"If you could possibly design your product and service around a super app, for example, take advantage of certain design features and implement them into your core offering to consumers, that might be an opportunity," he added.

"Many companies in China have built their businesses around the Tencent or WeChat ecosystems so that I am slightly optimistic, but I think it is going to be a difficult slog."

On the other hand, William Bao‐Bean, general partner, SOSV and managing director, Chinaccelerator, expressed greater optimism in the adoption of the super app model, based on his experience working with super app startup, TravelFlan, which had found success pre‐Covid and is currently weathering the ongoing pandemic by selling “cups of coffee, make up and clothing” until travel recovers.

Partnerships is key, he stated, citing the example of how TravelFlan, despite not selling any travel themselves, has partnered with a Chinese telecommunications company as well as Klook, airlines, SITA and hotel players.

As well, he added that Travelflan also partnered with Samsung with the super app pre‐installed on every Samsung Galaxy mobile in South Korea, which expanded the free customer acquisition opportunity.

Mr Bao‐Bean added: "Their special sauce is having a customer acquisition cost of zero. The cool thing is that in January 2020 they peaked at 40 million users with still no cost of customer acquisition.”

The greatest advantage of this model, he continued, is that the travel companies no longer have to pay Google or Facebook for advertising. "So hopefully we can disrupt the model and take advantage of this pretty difficult time for the industry. It can provide a trust-based model to help the travel industry to come together, stay profitable and serve customers the right way," he added.

However damaging the impact of the global pandemic had been on the travel sector, both tech experts are hopeful that the crisis would offer opportunity for those who stay the course.

“If all of us are super committed it is going to turn around and some amazing entrepreneurs are going to build billion dollar companies. It will be the ones that stay committed, who have a different perspective and who understand super apps,” Mr Demopoulos concluded.

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