Bridging the digital gap for small hotels

HI-TRAC The author’s shorthand for Happiness Index, Infrastructure, Talent, Regulations, Access and Capital. The six pillars that make the UAE a great place for a startup. This week’s article is about Infrastructure and Access.

Globally, there are about 4 million hotels. Of these, only 2.1 million hotels are listed on Booking.com, 1 million on Tripadvisor and 0.8 million on Expedia. Within this, the budget hotel segment is the fastest growing (9 per cent CAGR globally) and is the first choice of millennials.

In the GCC, 45 per cent of rooms are in the budget and mid-sized segment with online penetration at 46 per cent. In huge neighbouring markets like India, mid-tier (3star and 4-star hotels) represents a $4 billion opportunity. Only 30 per cent of these are connected online for search, discovery and booking. There is significant opportunity to move hotels online by providing them efficient technology and remote services.

However, the budget and mid-sized hotels and chains are ill-equipped to ride this wave because of technology and talent constraints. Hitherto, technology available for such hotels was either too complicated or too expensive to maintain.

Targeting this opportunity is Hotel Launcher, a cloud-based Software-as-a-Service (SaaS) technology for budget and mid-sized hotels and chains. The platform’s objective is to help this segment of properties increase revenues by bringing them online via an efficient SaaS discovery and booking system. They also have an engine for revenue management.

Rajiv Malhotra, founder and CEO, said: “Simply put, Hotel Launcher is Shopify for small and mid-sized hotels and chains. Our technology is a highly advanced PMS [property management system]. It is integrated with a channel manager and a website builder. We call this solution Integrated Distribution Management System.”

The foundation team, consisting of Malhotra, Dushyant Verma, co-founder and CEO, EMEA; as well as Sudipto Majumdar, cofounder and CTO; have several decades of cumulative experience in the online travel and ecommerce industry. The team has set out with the objective of creating a product and viable business model to bring about measurable innovation in the booking and operations management domains of the hospitality industry. Their professional experience with MakeMyTrip has proven valuable to them in building this platform.

About results, Verma said: “We are growing by high double digits, with over 20,000 net room nights in the second quarter of 2018 and over $1 million by value. Our average month-on-month growth has been 43 per cent on an average for 2018. We currently have channels and partners in India, UAE and South East Asia to speed up the acquisition drive.”

When quizzed about the business model, Verma answered: “Hotel Launcher’s core focus on simple

Simply put, Hotel Launcher is Shopify for small and mid-sized hotels and chains

Rajiv Malhotra, founder and CEO, Hotel Launcher

technology with a remote service model helps to bridge the gap for such hotels and multiply their revenues. Hotels pay a subscription fee to access technology and services, with three to four months for break-even within a one-year contract. The quality and simplicity of the technology and services encourages hotels to stay in the contract and even avail new services.”

He said: “We earn on subscription fees paid by the hotel for our IDMS technology as well as a percentage share for our remote revenue management.”

Looking to the future, Malhotra discusses two key aspects. “We are getting it right in the UAE and India. But what we see is that budget and mid-size hotels and chains have the same problem in all geographies. We have contracted hotels in the UAE, Hong Kong, Thailand, India and Singapore. Our focus now is to expand operations and speed up acquisition in the GCC and South East Asia. Further, we will define our roadmap for hotel acquisition in Africa and CIS countries on to our platform. The other aspect is that in the GCC, there is still not much utilisation of information for data-driven pricing decision.” The writer is founding partner at Bridge DFS, a bespoke financial advisory firm (www.bridgeto.us). Views expressed are his own and do not reflect the newspaper’s policy. He can be contacted at sanjiv@bridgeto.us