Tag: djarum group

This article is a part of DailySocial’s Mastermind Series, featuring innovators and leaders in Indonesia’s tech industry sharing their stories and point of view.

The tourism sector is one of the worst affected by the impacts of COVID-19, blocking the economies, livelihoods, public services, and opportunities on all continents. As Indonesia’s President Joko Widodo announced an end to the public activity restrictions, this will significantly affect the travel industry, including OTAs regaining their dominant position within travel distribution.

George Hendrata has an educational background in tech from Columbia University and MBA from Harvard Business School. He has working experience  in several multinational companies, including Motorola & Boston Consulting Group, and became the Director of Djarum’s Business Diversification before taking the opportunity with tiket.com. With his persistent character and creative mind, George turns tiket.com around and makes it blossom.

Nobody expects that the travel sector would be a bridge to disseminate something horrible such as coronavirus disease. As much as we cannot believe it, Covid-19 has been staying in this country for over three years now. However, due to hard work across sectors, we can at least say that the pandemic has been handled. It is now the time for the travel industry to rise again.

During six years with George, the t-fam (tiket.com employees) has grown significantly and managed to survive this pandemic without doing any layoffs to the core team. At the end of last year, tiket.com along with Blibli and Ranch Market announced a unified omnichannel ecosystem called blibli-tiket. The initial public offering (IPO) is said to be the 5th largest listing ever on the IDX, and the 2nd largest last year.

Alongside his current position as the CEO of tiket.com, George also likes to mentor and invest in companies. He said it gives him an opportunity to share ideas, learn new things, help entrepreneurs, and contribute to the economy.

DailySocial had the opportunity to have an exclusive interview with George Hendrata and discuss his career journey and leadership. Below is the complete version of his story.

I’m not sure to say that we are past the pandemic. However, the pandemic has transformed many lives and significantly affect some industries, including the OTA business. I want to know how are things going on in the OTA sector nowadays, especially tiket.com?

At that time (the first case in China), we still think that we were immune to this. When it finally happened, we were expecting the revenue would get to zero. Many customers asked for a refund and reschedule. Obviously, we have to focus on our people, that is our consumers, our partners, and our t-fam. We reinforced our Customer Service team, seconded by other teams in order to take care of all the issues. Because of this focus on people, we gained market share even during the pandemic.

Our travel partners, such as airlines, tour operators, and accommodations are deeply affected. Their businesses went down significantly. Not long after, they had to lay off. Even though business was slow, we kept trying to promote our partners. Since our customers were not able to explore international destinations, they started to explore their own backyards. Many visited Labuan Bajo or Raja Ampat for the first time. Fortunately, during the pandemic, hotel room occupancy was higher than expected, due to people doing staycation and staying during quarantine.

During the crisis, we have to creatively look for opportunities. Due to covid, our customers prefer to travel with their families, stay outdoors, and avoid common areas. Hence, we launched alternative accommodation (villas) category called tiketHomes.

Currently, tiket.com has 3.6 million accommodation listings in total, including 2.2 million tiketHomes listings. The pandemic also hits hard on the economy. People may have reduced buying power when it comes to travel. Hence we try to solve this issue by offering Tiket Paylater. Now, our customers can enjoy purchasing travel products and installments.

PPKM restrictions have shut down offline attractions. We experimented with offering online attractions. To our surprise, it turned out that people not only like to scream when they go to theme parks but also in their own homes while watching online horror live shows; and customers are willing to pay for this. 2022 is getting off to a great start with all the offline concerts, events & attractions coming back. To date, the offline and online combination has created almost 8 times the volume compared to before the pandemic.

To date, the travel & lifestyle sector recovery has been amazing. There is no longer PPKM in the 2nd quarter of 2022. By September 2022, based on national data, the flight industry has recovered around 65% by seats; domestic recovery is about 70% and international recovery is about 55%In accommodations, the occupancy rate has reached the pre-pandemic level. Travel in the 4th quarter of 2022 has gone very strong. This makes 2022 the best year ever at tiket.com, in terms of bookings.

Originally, Tiket.com was founded in 2011. An interesting fact, you joined the OTA later in 2017. Who are you before the CEO of tiket.com?

I graduated from Columbia University and majored in electrical engineering in VLSI (Very Large Scale Integrated circuit). I used to work for a mobile phone company, Motorola, before I finished my MBA from Harvard Business School and joined Boston Consulting Group. Djarum Group wanted to diversify the business, and that attracted me to join the business development/diversification team as Business Development Director.

We have been blessed to run successful businesses in FMCG, consumer electronics, financial services, telecom infrastructure, natural resources, and tech. By being exposed to these businesses, I realized that my strength is in either starting up or turning around. With tiket.com, we saw an opportunity to turn around the business, and I took it.

I led the due diligence for tiket.com and fell in love with the founders. As we interviewed our travel partners, it was clear that there is a space to compete with the current market leaders. They would like to have a better relationship with online travel agents. On the other side, customers also need options. Hence I believe that we should go ahead.

How was your early days with tiket.com? How did you take the succession?

One of the issues with companies that have been stagnating is that typically the positive energy & spirit is no longer there. Typically the star employees have left as well. The first thing I did was to speak to the employees. We were around 250 people with about 60 people in the tech team.

I interviewed them one by one, asking simple fundamental questions. After the assessment, I asked, “Do you believe that we can be number one?”. The ones who said yes, became part of tiket 2.0 The ones who said no left, as they didn’t find the place right for them. We grew our tech from about 60 people to about 500 people in 5 years. tiket.com currently has around 1200 employees.

Today’s tech companies are fraught with layoff news. However, (so far) tiket.com has managed to survive the pandemic without any. What kind of insights can you share about this current issue?

We call our employees the t-fam. Yes, we did not do any layoffs. We focus on strengthening our core team and downsizing only the outsourced workers.

However, it all comes down to the hiring process. We are being prudent in our hiring, by being careful and selective. We are doing selective hiring to complete our manpower planning, instead of massive hiring. Therefore, in the downturn, we did not have to downsize as much. To build an effective team, company values & culture is very important. This depends on what the company is all about.

Also, it depends on what the leaders and management are like. Company culture can’t differ much from the leaders’ culture. If the leaders do not embody the intended company culture, the culture won’t stick. tiket.com is a startup that disrupts the travel space. It needs people who are “hungry” to meet the unmet needs. To find areas where you can disrupt, and where you can provide value for customers.

Also, we need to be “agile” as customers’ demands will be changing over time like in factories, where arguably the most important asset is the machine, and the most important asset for start-ups is its people. Therefore, we need to be “people-oriented” Also, a dream is only a dream if doesn’t get implemented. In order to implement well, we need to have a “performance orientation” to monitor whether products are being launched well and timely.

Lastly, we need people to join us not only with their arms and legs but also with their hearts and minds. For that, you have to be a unique “you”, so you can be creative in your approach we put the initials together, and it will form the word “HAPPY”, that is the culture of tiket.com. This is what glues us together. When people are engaged, they are more passionate in delivering apps that people love. That is our vision.

In October 2022, Blibli, tiket.com, and Ranch Market announced a merger into BlibliTiket. What is the story behind this merger, and what changes after?

The beauty of a merger with Blibli and Ranch Market is that we don’t need to overextend ourselves to reach a bigger market. We have seen some companies trying to increase the total addressable market by going into areas that are not natural extensions. We are not going that way.

People typically travel between 3-4X per year, maybe buy through e-commerce every couple of weeks, and buy groceries every couple of days. This merger offers a very unique combination of travel, e-commerce, and grocery, naturally allowing more frequent, and deeper engagement with our combined customers.

The three platforms have proven profitable business models worldwide. As we offer each other services and provide single sign-on, it will naturally extend the overlap between three different businesses and increase the synergy of the whole ecosystem. With the synergy, you’ll be able to acquire more customers into each other’s platform and create a bigger, better ecosystem.

Based on the study by Frost & Sullivan and Euromonitor, eCommerce in Indonesia is projected to reach US$150 billion by 2025. The travel & lifestyle market is projected to be US$ 41 billion. Most OTAs are also profitable and publicly listed. International Air Transport Association (IATA) said Indonesia will be the 4th largest travel market in the world by 2030.

Grocery, which is served by Ranch Market is projected to be USD 245 billion by 2025. The combined total addressable market is USD 436 billion by 2025. This is about one-third of Indonesia’s current GDP. It is HUGE. We want to create an ecosystem of choice through omnichannel. Indonesia will still have a huge offline market, even though the online market grows rapidly. Hence omnichannel is the right strategy for Indonesia.

Integrating two companies is hard enough, let alone three. How would you overcome the challenges?

Any merger is never easy. The important thing is that the people involved understand that unity brings bigger synergy. Each of the businesses has a different natural frequency, and the current customer overlap is small. By bringing each platform’s customers into a single ecosystem, we have a better picture of the consumer journey. Our recommendation will become sharper, and consumers will become more sticky and loyal.

Corporate action allows us to improve our corporate structure to grow better. Being a public company also means better corporate governance. We can attract more talents as we can provide ESOP During this volatile equity market condition, we have successfully executed the 2nd largest tech IPO in Asia Pacific in 2022, and the 5th largest of all time in IDX. It gives us a lot of confidence to move forward.

Our focus is on the fundamentals of the business. The support from investors during the IPO provides the confidence that this is a good company to back and that the company is going to be there for the long run. We believe this successful IPO also shores up confidence in Indonesia’s tech startups.

During your 6-year journey with Tiket.com, have you ever thought of starting something new or shifting industry

I personally love people, I love to connect. I like to share ideas and learn new things. Also, I’m obsessed with building GREAT products to meet unmet needs. When I was developing mobile phones, I used to bring 4 mobiles to take the same pictures and compare the quality of the mobile cameras. I love the challenge to start a greenfield operation or turn a company around. With deep curiosity, there are lots of things that interest me.

Personally, I like mentoring and investing in companies. It gives me an opportunity to share ideas, learn new things, support entrepreneurs and contribute to the economy. In terms of investment, in my opinion, if you have experience operating a company, your investment acumen sharpens.

What is your projection for the OTA business in 2023 and forward?

First, the OTA sector is consumer tech, meaning that the size of the business is driven by the number of consumers. With a large population in Indonesia (about 270 million), and South East Asia (about 600 million), this will continue to grow. Second, the travel sector usually grows at 2-3 times the GDP growth. Since online travel penetration in Indonesia is still increasing, online travel usually grows at about 2X the total travel growth. The year 2022 growth is much faster than the typical year, due to revenge travel post covid.

Indonesia’s internet economy will likely reach $330 billion in value by 2030, almost double the current Southeast Asia’s digital economy value of $170 billion, according to a recent report by Google, Temasek, and Bain released in 2021.

Third, Indonesia’s GDP per capita is currently at USD 4000 per capita. Travel inflection point typically happens at USD 7000 per capita level, as we have seen in other markets. As Indonesia crosses this GDP per capita level, travel growth (and OTA growth) is expected to accelerate even more.

I am optimistic that 2023 will be a better year than 2022 in terms of travel. However, we also need to be prepared should things don’t turn out as rosy, by controlling our expenses well. Personally, I think when we finally overcome the pandemic, we’ve grown even stronger. It’s just like the saying “What doesn’t kill you makes you stronger”.