SoftBank checks in early for post-Covid hotel boom
HONG KONG (Reuters Breakingviews) - A rare South Korean unicorn is offering a glimpse into post-pandemic travel. SoftBank’s Vision Fund 2 is investing $1.7 billion in Yanolja, an unlikely success story in a sector among the worst hit by Covid-19. It’s a huge bet on the upstart’s AI-powered hotel software and contactless services for guests.
Founder Lee Sujin earned early success by advertising so-called love hotels, expanding the market for budget, short-term stays despite their once seedy reputation. Within a few years he had built the business into an online booking service that includes not only cheap digs, but also swanky hotels, leisure, transport and restaurants. It has branched out into selling technology to hotels too.
That has allowed Yanolja to navigate the Covid-19 chaos in style. Its cloud-computing software, which competes with Oracle, allows clients to cut costs by managing bookings, contactless check-ins and other nifty tools like tracking guests’ whereabouts, making it easier to plan housekeeping and other operations. Opportunities to reduce overheads and enhance social distancing were welcome during the pandemic, so whilst most major travel companies saw sales nosedive last year, Yanolja flipped to an operating profit of 16.1 billion won ($14 million) as revenue rose by 44% to 192 billion won.
SoftBank and existing backers including the $87 billion Booking Holdings are riding a wave of travel-related optimism. Despite the Covid-19 chaos, a basket of twelve major travel stocks including booking groups Expedia and TripAdvisor, airlines and hotels have added more than $100 billion to their combined market capitalisation, or nearly 80%, since March 2020 when the World Health Organization declared the outbreak of coronavirus a pandemic last year, Breakingviews calculates. Financial details of Yanolja’s latest funding round were not disclosed, but recent sales of over-the-counter shares suggest the company’s valuation has ballooned to $7.6 billion compared with around $1 billion in 2019.
SoftBank’s endorsement should help Yanolja win over new customers particularly as international borders gradually re-open. The company told Reuters that it expects its client base to reach half a million companies by 2025 and has signed up new hotels in fast-growing markets like Indonesia, India and Africa. That suggests SoftBank’s early check-in could reap five-star returns.
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- SoftBank’s Vision Fund 2 has invested $1.7 billion in Yanolja, the South Korean travel firm said on July 15. Yanolja plans to use the funding to invest in new technology and to expand in new markets.
- Last year Yanolja swung to a 16.1 billion won ($14 million) operating profit from a loss of 6.2 billion won, while revenue rose 44% to 192 billion won.
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(Editing by Robyn Mak and Sharon Lam)
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