— Sean O’Neill, “Shift”
Yanolja may soon receive the most important recognition. SoftBank Group Corp’s $30 billion Vision Fund is reportedly looking to buy a 10 percent stake in the South Korean travel company.
The world’s largest venture capital fund will announce an investment of about $800 million in the start-up, the Seoul Economic Daily reported citing investment bank sources.
Earlier this week, the companies declined to answer questions from Skift about the rumored financing talks.
It was unclear how much valuation the investment might bring to Yanolja, an online travel agency, hotel technology provider and hotel operator. In 2019, Booking Holdings and Singapore’s sovereign wealth fund GIC participated in a US$180 million funding round and jointly own about 35% to 40% of Yanolja, valuing the company at US$1 billion.
Until recently, Yanolja had been preparing for an IPO and hired Mirae Asset Daewoo and Samsung Securities as underwriters. However, while the startup is profitable and achieved a global business-to-business transaction volume of $10.6 billion (11 trillion won) in 2020, the pandemic has hampered its growth.
Delaying the U.S. IPO until 2023 could allow the startup to show investors stronger post-pandemic numbers and lead to a stronger IPO. In March, Vision Fund successfully witnessed the U.S. IPO of one of its South Korean portfolio companies, e-commerce company Coupang.
In May, SoftBank Vision Fund proposed to take a $2 billion stake in Yanolja by acquiring stakes in Booking Holdings and GIC, Korea Economic Daily reported. It is unclear whether Booking Holdings and GIC have since declined to sell their stakes, or if the report was incorrect.
If SoftBank’s 10% stake cashes out this month as expected, the Vision Fund’s stock price will soar again. The roughly $100 billion investment vehicle has delivered an “internal rate of return” of about 30% to its outside shareholders since 2017 and earlier this year, the firm said. SoftBank has raised $30 billion for the sequel.
Yet SoftBank’s “go big or go home” approach has had a mixed record, and has caused problems along the way, such as its investment in WeWork failing to go public as planned. One of its portfolio companies, hotel group Oyo, said on Wednesday it would retrench after experiencing geographical overextension before the outbreak.
Yanolja’s surprise hotel technology appeal
Despite the pandemic, Anolia appears to be afloat. The company said this month that it would hire 300 tech workers over the next six months, suggesting it has the capital to go on a hiring spree. It also launched a $22 million summer marketing blitz in South Korea on the theme “travel tech.”
The Yanolja is a multi-tool that resembles a Swiss Army Knife. It started in 2005 as a budget hotel listing service and has grown into a full-fledged online travel agency. It has expanded to offer different categories such as attraction tickets, rail tickets, spa passes and restaurant reservations. It independently manages several hotel brands and has invested in the hotel brand Zen Rooms.
Perhaps what SoftBank likes most about Yanolja, however, is the startup’s commitment to becoming a software-as-a-service provider for hoteliers around the world.
Yanolja provides cloud-based hotel management solutions to more than 30,000 clients worldwide. The injection of capital will accelerate the development of Yanolja’s global hotel, leisure facility and restaurant platform. One of its products is a cloud-based hotel property management system that promises to be more cost-effective than traditional systems.
In May, Yanolja CEO Sujin Lee signed an agreement with South Korea’s Citibank to leverage the bank’s global connections to expand these services. It plans to “expand licensing agreements and country reach through a strategic business alliance with Citibank” and make it easier for the hotel industry to use Citibank’s payment services.
Pandemic-related travel disruptions have exposed many hotel companies’ old-fashioned processes. Digitization has been long overdue.
Savvy hotel companies will add more software to their methods to cut labor costs and distribution costs. This trend means there is a lot of room for technology vendors like Yanolja, Oracle Hospitality, Cloudbeds, SiteMinder, RateGain, Amadeus, Saber, Protel and Mews to grow.
Being a one-stop shop for hospitality technology is key to Yanolja’s business-to-business strategy. See Skift’s earlier analysis of Yanolja.
SoftBank’s investment will allow Yanolja to make more acquisitions, such as the purchase of travel data service Triple in December.
If Yanolja wants an IPO in the U.S. rather than South Korea, it will need to do more M&A outside Asia to bolster its claim of global scale.
Photo credit: Hotel The Artist Yeonsinnae is a hotel in Seoul bookable through the travel app Yanolja. Source: Yanolja Artist Hotel Yanxinnai