Hong Kong-based TravelFlan is using chatbots to help corporates integrate online travel solutions into their existing products and services.
Backstory: TravelFlan runs an artificial intelligence-enabled travel marketplace platform. It has created chatbot technology to help companies sell travel to their existing user base.
- The startup has secured more than $10 million in funding since its establishment in 2015.
- Chief Executive and co-founder Abel Zhao is responsible for the firm’s growth strategy and sales. Zhao formerly led travel technology providers Travelport and Amadeus after helping Air Canada to build high-margin travel routes.
- Managing Partner Wang Wenbin previously worked for Amadeus and Renault. He is responsible for overseas partnerships.
Unique selling point: TravelFlan utilizes a personalized chatbot engine to drive revenue creation from flight, air, hotel, and local experience bookings. They work with big corporate clients like Samsung and China Mobile. The solution allows them to engage existing users without developing their own travel systems.
- The firm started as a consumer-facing service. Due to high user acquisition costs, the original model was unsustainable.
- The company shifted focus to business-facing services in 2018.
- Operation costs have since dropped by nearly three-quarters. User acquisition fees fell to zero. Other platforms typically spend millions of dollars on marketing, Managing Partner Wang Wenbin said.
“Many compare us with online travel agency platforms like Ctrip and Alibaba’s Fliggy. But we see them as partners rather than competitors because we are serving clients like Samsung and China Mobile who are important distribution channels for their online travel services. Through our chatbot service, they can reach a broader user base for our enterprise clients.”
—Wang Wenbin, managing partner of TravelFlan
The investors: In December, TravelFlan received a $7 million A round from SPK AI Travel Tech Fund founded by Lazard Korea at a valuation of $27 million. Other investors in the round include Artesian Capital, Linear Venture, Construction-Radiant Tech Ventures Fund, Hong Kong Government ITVFC Fund, Artesian Capital, SOSV and its accelerator Chinaccelerator.
- In 2017, the firm secured a $3 million Pre-A Series from Linear Venture and Cyberport Macro Fund.
- Prior than that, TravelFlan has raised a $125,000 seed round from 500 Startups and GWC Innovator Fund in May 2016
Present condition: The company has developed two core technology solutions. The first is a text and voice-enabled AI personal concierge. The second is a one-stop management system. The system integrates supplier resources to cover inventory and data management, as well as distribution and customer analysis services.
- Headquartered in Hong Kong, the company has offices in South Korea and Shanghai. They serve corporate clients like smartphone makers Samsung, China Mobile, Hong Kong Airlines, and SITA, an IT and telecommunication services provider for the air transport industry, among others.
- About 70% of its current business comes from China, while 20% is from South Korea, and 10% from Southeast Asia.
- TravelFlan’s product comes preinstalled on every Samsung Galaxy phone in Korea, according to the company. “Samsung gets a fee from every purchase of travel services and we get a 15% margin,” said Wang.
- The platform has signed deals with 25 partners while 120 more are in the pipeline, according to Wang. It also works with more than 100 travel content and product suppliers including Asian booking platform Klook, Chinese platform Tuniu, and hotel chain Marriott.
- TravelFlan generates revenues from research and development projects, monthly usage fees, sales profit-sharing, and advertising.
- TravelFlan operates both business and consumer-oriented lines. Corporate services account for 85% of the overall business and the rest is from the consumer-facing segment— mainly on social networks like WeChat, Facebook and WhatsApp.
The landscape: The global travel market was worth $8.8 trillion in 2018 and the market is still growing.
- The company is competing with other chatbot companies that focus on providing customer service solutions for the banking and financial industry, according to Wang.
- In the meantime, chatbots are helping in increasing efficiency in the travel sector, in areas like customer service and bringing down human resources costs for airlines and OTAs.
- Beijing-based AI chatbot Laiye, which also targets at online travel sector, merged with robotic process automation startup Uibot and closed a $35 million Series B round in 2019.
Prospects: With the December financing, TravelFlan plans to build the team and update the back-end system for its supply chain and ordering system.
- After launching the first enterprise-facing project in July 2018, the company records a stable income of around HK$ 10 million monthly income. With the launch of new projects, the company’s revenue is expected to double or triple this year.