Just last week, Korea-based travel search startup Allstay announced that it has received US$432,000 from Japanese firm Venture Republic, which operates travel sites Travel.jp and Hotel.jp, and local online travel agency TideSquare.
The startup, which wishes to take advantage of the country’s high smartphone and Internet penetration rates, has recently launched its mobile app, which aggregates and compares travel accommodations. It also has a service for the web, which is in beta.
We met up with its Co-founders Hyunsoo Cho and Yongseok Lee to understand more about how the business is doing.
The interview excerpts have been edited for grammar and clarity.
Can you tell us more about Allstay?
Allstay is an accommodation metasearch service optimised for the Asian traveller, and we are focussing on the Korean traveller first. Our differentiation from other metasearch services will be local accommodation such as pensions or motels. B&Bs are also rising in Seoul, and we are planning to cover all the private accommodations into metasearch, which I think other services cannot do. At least in Asia.
Another point of differentiation is that we are really focussed on the mobile side. And the metasearch services from web… I don’t think they are doing really good in mobile interface. We are originally from mobile startups and hence, we’re thinking about having an in-house payment function or something like curation, so that we can recommend themes… let’s say, top three romantic hotels in Hawaii or something like that. That’s why we’re working on the product side.
How did you come up with the idea?
Well, when we started the first startup, we were doing a travel content curation platform which is very long and difficult. We were doing pretty good, I thought, and we were about to launch the first product. Then we found out that the business model is really important. We wanted to get some funding, but all the VCs (venture capitalists) in Korea asked, “What is your business model?” And I would say, “I am going to make a lot of users and then going to do the advertisements and stuff.” But that was not really a good answer for the VCs.
I found that all the money in the travel industry came from airlines and hotels. That’s the point where we started; we have to make some money out of this tool. But we can’t just move into OTA (online travel agent) because we don’t have any sourcing powers. So we came out with the idea of metasearch. It’s going to be great because we’re a curation platform, so we can just create all the detail pages from the OTA and we’re going to get the subscription fee from the OTA.
There was an audition — pitching competition — on the incubator’s homepage that they are looking for a team, which is connected to Venture Republic in Japan. I didn’t know whether it was an awesome product, project or not, but I just thought it might be a chance to get funding or something, so I just automatically applied for it. I met Venture Republic and also TideSquare, which is a major OTA in Korea. By the time I heard about this project, it was an amazing fit for what we expected. So, I thought…why not? Let’s do this.
When did you first come up with the idea?
It’s been around a year since we actually met for the first time. But the agreement came around October and we established the company in December. So it has been about six months of building the products.
Can you tell me about Allstay’s business model?
Allstay’s business model is pretty simple. It’s about subscription fee from OTAs who have contracted with us. So we have to meet every OTA and make an agreement and we send them the traffic and if the traffic converts into booking, we’re going to get a subscription fee.
How big is the team right now?
We have six members.
Are you hiring?
We are always open for designers or developers, but I think our team is okay for now. We have four developers, one designer and me, which means that there are five expert hires on development and design and I’m taking care of everything else. Making coffee and going to the post office… (laughs)
Who are your competitors?
I’d say the biggest competitors in Korea are HotelsCombined and Trivago, which are really great companies. They recently entered the Korean market and they’re doing pretty good. I think that they might be our direct competitors, but on the other hand, Korea-based OTAs are also our competitors because the idea of metasearch isn’t really familiar with the Korean traveller yet. So, if I show our product to friends, they always say, “Is it the same with Hotels.com or Booking.com? What’s the difference?”
But for me, it’s very obvious because we have all the comparisons. But Korean travellers are not very familiar with the concept, so I’m very happy that HotelsCombined and Trivago are doing so much marketing; they are going to expand our pie — what we’re trying to do is provide at least the Korean travellers a better product than other metasearch services.
How confident are you that you’ll be able to provide a better product than Trivago which has an enormous budget?
The thing that I’m confident about the most is speed and customisation to the partners. Trivago and HotelsCombined are too big, and they have all the systems — they have to pass all the partnership agreements and everything, and they don’t want to talk to small OTAs.
Do you know the accommodation type called pension? It’s a Korean local accommodation which is really, really popular — there are more than 100,000 pensions in Korea, but only less than 10 per cent are online, which means there are many pensions that might become or move onto online. In that case, I can go faster and we already have succeeded the contract with some private accommodation companies. We are already doing well and will do better.
How much funding has the startup received to date?
We have US$500,000 dollars — little less than that because of currency. We are planning to inject more from the same investors.
What can we look forward to in the next six months?
I think in the next six months, we are going to put all the effort on Korean travellers first. Our differentiation will be the local, private accommodation of Korea. So I think our goal, within six months, will be the best metasearch mobile service for the Korean traveller.
When do you see Allstay as a household name in Korea?
I’ll say two years. I will be so happy.