Lokal raises pre-seed funding from international investors to transform budgeted hotel stays and experiences in emerging markets

Published: Thu 16 Feb 2023, 4:42 PM

Amidst a global fundraising slowdown for startups, one Pakistani startup is blazing a new trail with its revolutionary business model and garnering the attention of international investors, including WahedX's first-ever investment in a Pakistani startup.

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Lokal, a revolutionary hospitality start-up, is on a mission to democratise access to local travel and communities. The company has recently raised pre-seed funding from international investors, which will be used to fuel its growth and expansion plans. Currently, Lokal is focused on expanding its operations within Pakistan, with plans to later expand to other emerging markets in the MENA and Southeast Asia regions.


Lokal is solving the foremost issue faced by most travellers: the lack of safe, reliable, and affordable accommodation in emerging markets. With luxury chains out of budget, and booking platforms having no control on the actual staying experience, finding a quality budget accommodation is a real inhibitor to travelling locally in many of these markets. To change this, Lokal is creating a network of standardised budget hotel rooms that offer travellers safe, reliable, and high-quality stays.

Lokal appears to be ahead of the curve with a business model focused on unit positive economics rather than rapid growth at all cost. The founding team, drawing on their leadership experiences at companies such as Procter & Gamble and Coca-Cola, chose to pursue a sustainable approach to growth, which has caught the attention of investors seeking to fund startups with a clear path to profitability. Khurram Kidwai, former P&G senior director and co-founder of Lokal, said: "Uber, Airbnb, and WhatsApp are all startups that were born during a recession. While market conditions are challenging today, if you build a business on solid fundamentals, there are tremendous opportunities to grow and disrupt inefficient markets. This fundraising is not only an endorsement of Lokal's business model, but also a testament to the audacity and agility of Pakistani entrepreneurs to play to their strengths and build strong businesses that grow organically and profitably while scaling quickly."


"We saw an opportunity to bridge the gap between the high-demand for short-term budget stays and the lack of technology and expertise for local property owners to deliver a world-class experience," said Asim Kidwai, co-founder at Lokal. "Lokal's cutting-edge platform is designed to upgrade facilities and services of local properties, and help property owners, big or small, to operate short-term stays efficiently, enhance customer satisfaction and boost occupancy. With this funding, we'll be able to expand our network and bring this experience to more travellers in more markets."

Lokal's launch timing couldn't be more favourable. Firstly, the emerging markets travel industry, worth over $500 billion already and fuelled by rising incomes, urbanisation, and a growing middle class, is growing twice as fast as developed markets. Secondly, currency devaluation in markets like Pakistan is leading to an increase in domestic travel and expenditure as international travel becomes less affordable. Thirdly, the hospitality market is experiencing a post-pandemic surge in ‘revenge travel’ as people look to make up for lost opportunities. Finally, Lokal is tapping into a major shift in consumer preferences towards unique and local experiences, as recent study by TripAdvisor found that 64 per cent of travellers worldwide are looking for experiences that give them an authentic taste of the local culture. As co-founder Umar Malik said: "At Lokal, we're on a mission to curate meaningful local experiences for travellers. From artworks in our rooms, handcrafted furniture, to locally-sourced amenities and insider recommendations, our guests experience the best of local hospitality."

With operations already expanded to seven cities, tens of thousands of stays served, and a remarkable customer return rate of 43 per cent, which is a staggering four times higher than the average for budget hotels — Lokal is on a path to success. The company's commitment to providing exceptional experiences is reflected in its outstanding ratings across third-party verified platforms, outpacing even the listings of five-star hotels.

“We are very pleased to close our first investment in Pakistan," said Safdar Alam, CEO at WahedX. "It’s exciting to be a part of LOKAL’s journey and I think, particularly as Pakistan moves into a new wave of tourism in 2023, it can be part of the remedy the tourism sector needs to help bolster growth. We believe it is important for all investors to have access to opportunities to grow their wealth in a meaningful way that directs capital to businesses that are aligned to their values. We will continue to bring more ethical deals like this one to the market."

This round of funding will enable Lokal to continue growing the supply of properties on its platform, as well as make strategic investments in technology enhancements and top talent hiring, positioning the company for even greater success in the future.



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