Technology over Hoteliering
Operating in the highly competitive market of selling rooms of budget hotels in South East Asia, the founders of Reddoorz have come up with a winning formula which they feel is perfect for their target market of Indonesia.
(L to R) Kunwar Asheesh Saxena and Amit Saberwal of RedDoorz at their Noida office,
WHAT WOULD make a couple of Indian entrepreneurs think of opening up a vertical serving Indonesia, you may ask? Well, it made perfect sense to Amit Saberwal and Kunwar Asheesh Saxena, when they set up RedDoorz. Saberwal is Founder and CEO, while Saxena is Co-Founder and CTO of the company, which was began as a thought in Saberwal’s head while working for Make My Trip in Singapore.
“I work for Make My Trip from 2005 to 2014 and used to run the hotel business from them, I decided to do something on my own after working for them in Singapore,” Saberwal told us, Saxena added that he met his partner while working at Make My Trip. He joined Reddoorz in 2013.
“We are in the budget hotels space in Indonesia, the way OYO, Fab hotels and Treebo redefined their budget segments contracted and sold online, is pretty much what we are doing in Indonesia,” Saberwal said adding that they have great faith in the South East Asian Market and after studying them for many years, decided on targeting Indonesia, the largest market. South East Asia as a hotel market is three times larger than India.
“The company has been growing 20 percent month on month. We had more than 300,000 people who came and stayed with us. Our repeat rate is incredibly high, 56 percent on a monthly basis,” he added.
The company started off as a self-funded venture, then got the first round of funding of $1.2 million from Jungle Ventures and Steadfast Funding in 2015 as well as a further funding later from a fund called 500 Startups, before going in for a Series A from International Finance Corporation which is part of World Bank, SIG a big fund out of the US and China and Jungle Ventures, their existing investor, which it did not publicise. Finally they raised debt of around $1 million from InnoVen Capital, a joint venture of Temasek Holdings and UOB Group.
“When you raise unsecured venture debt, we announced it because it kind of positioned ourselves in the minds of venture capitals, these guys are doing okay. It is generally a percentage of what you raised in your previous round--you get it when you raise good money,” Saberwal added.
“What drives the business? I think it is a question of putting technology on top of hoteliering. If I am a property owner--of a 2.5 or three star property, I can either run it like a Pahargunj hotel, which means I will sell at a certain pricepoint and I will have to sit there and run it myself, or I try to approach large hotel chain, who will say buzz off, or tell me to spend and upgrade, which normally does not guarantee success. To that level we have redefined hoteliering for them.
“Property owners have to deliver on our standards. It's like a franchise, but its extremely success based. We make sure that they deliver the standard and we deliver the customer. If not, we don't make money. Multiple models are used, either we make money on every booking we give a hotel, or if the hotel gets a minimum number of bookings, or we can lease out the property--the solution is for the property owner to decide,” they both explained.
“We put our money down only when we have a firm belief that this property is going to do exceptionally well. The reason for our firm belief is because we have the data and technology to back it. We know in advance what the demand is for a certain property in a certain area and we make our bet on that premise. When we do make the bet, we literally turn around the property within anywhere from 45 to 70 days--90 days is a maximum period of time,” Saberwal said.
“The business is very online driven--95 percent. A lot of it comes from our own App, but we also distribute on third party channels,” Saxena said.
“There are similar competitors in SE Asia, we put a lot of focus on building tech at the back end. From the time the property is priced (which is dynamic) to the time the customer checks in and gets a mailer asking him to rate his stay, the whole process is automated literally on a self-learning mode,” he added.
The properties which Reddoorz sells range from 55 rooms to as little as five rooms.
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