According to the world travel and tourism council, the travel and tourism industry in South-East Asia was US$128b in 2017, with 11.6m people employed, with an average of 7% annual growth.
This is an exciting and growing industry, so what opportunities can entrepreneurs work on, in particular to the hotel industry?
RedDoorz has raised US$11m in pre-Series B funding in March this year. RedDoorz began operating first in 2015 in Indonesia, and have since expanded into Singapore and the Philippines.
Indonesia chosen as the initial market due to sheer size
Saberwal kickstarts the fireside chat and explained why he chose Indonesia as the first market to operate. He says, “Indonesia is the most exciting market in SEA. It’s one of the biggest lion share of the companies e-commerce market, an US$88b SEA marketaccording to Google by 2025. There are big opportunities, lots of big city-hospitality needs, it’s a natural choice for us.”
Using tech to resolve operational issues key to growing RedDoorz network
I asked how technology played a role in expanding RedDoorz in Indonesia.
He shares, “We [are] like a Marriott for two-star hotels there, which is on technology steroids [powered by RedDoorz]. This is the best way to explain our business in the simplest way.
So, we will actually go to a small property owner that is nameless and faceless and tell them to be a part of the RedDoorz network. And we will brand you and give you customers. It’s a little bit like Uber, where the operations is handled by the property and then we do the customer service.
So we started to put our tech solutions to solve this problem. And we will quickly identify and implement what we want to do. And then we will build a technology that will actually solve the problem and follow up to improve it.
When I asked what key tech feature helped to solve hospitality issues for RedDoorz, Saberal continues,
“The geo-fencing feature really helped us and will tell us that the customer is already reaching the property when he is 200m away. So two things will happen, the property will get to know that the customer is coming and be ready.
And the second thing, when the customer reaches, the receptionist will never be able to tell us the customer did not arrive or did not pay his money. That is one of the features that helped us and a lot of the mobile based technology which are really helpful in getting our act together.”
Unique consumer behaviors between the Indonesian and Philippines markets
RedDoorz has entered the Philippines market recently, with Saberwal operating there for five months now. I asked him what unique differences that he faced moving into this new market.
“Philippines is a very exciting market, and if you look at Metro Manila, it has got double the per capita income as compared to Jakarta. Being an affluent area in the Philippines, we target new entrants in Metro Manila first, and not the whole Philippines. The rest of Philippines will be a logical progression as time passes.
…The banking systems, the way people access mobile data, the charges of data, are all completely different. In the Philippines, 80% of people who use Wi-Fi to access the internet because the data plans are expensive. But on the other hand, you can buy Spotify for 2 days.
In Indonesia, people who check their Instagram 28 times a day on average, so for us we have to be very active on Instagram. But in the Philippines, Facebook is accessed 4 and a half hours by a person a day on average. So it is a completely different dynamic for us to work on in different cultures and different markets altogether.”
Traditional hotel chains adopting technology well as compared to family-owned properties
Saberwal was formerly a hotelier before he started-up, I asked if traditional hotel chains were sufficient in their efforts to adopt technology in their operations.
“[Traditional hotel chains] are 95% real estate, 5% technology. RedDoorz is 45% real estate and 55% technology.
The adoption of technology in the hotel industry in the 4 and 5 stars Marriott and Continental, is much better. But we work with people in the 2 and 3 stars and below. They will have at some stage figure out how they will build a larger network or they will lose out. They have very little reason to do it right now, because a lot of the properties are family owned and operated.”
In terms of tech adoption by the hotel industry, will there be more futuristic tech like drones, automated check-ins and robotic room service?
Saberwal gives his take. “A lot of the startups that we perceive as futuristic, we already see it today. For example, we have a Chinese-based startup changing normal door locks into QR-based code locks in under 100 dollars. I can send a QR code with a normal door lock and if I upgrade to a 500-dollar room and I walk in, I will listen to the music that was popular when I was in college, because they know my age.
And there is a digital code that will be giving me specific advertising that is specific to me. It is like Google Home, except that it is happening today as we speak. There will be a lot more technology as it gets cheaper as people have more opportunities to experience it.”
Focus on one market, one city at a time for hospitality startups
I asked Saberwal for fundraising advice for SEA-based hospitality-startups.
He concludes this chat, “If you have a China or India connection, you will be a little jealous of what is happening there. You could actually raise a fair amount of money by showing a great business plan.
I think in SEA you have to struggle and build a real business before you get funding. It is a tougher one, I think you have to be very focus on one market, one city, one segment. If you can’t crack that, no one will fund you. Once you crack that, you will then be able to go for your funding.
People are a little wary of the SEA story, so you have to go with the Indonesia story, or in our case the Jakarta story.”
This fireside chat is part of the ongoing Echelon Asia Summit 2018 that is happening on the 28-29 Jun 2018 at the Singapore Expo Hall 7A.
This article first appeared on e27.