Just over a year ago, Justin Giovanni’s hotel in Surabaya, Indonesia was running at 30 percent occupancy and his staff struggled with employing technology.
Nowadays, occupancy is at 70 percent and WhatsApp is indispensable in dealing with customer requests.
Giovanni is one of over 500 hotel owners who have joined RedDoorz, an online budget hotel marketplace set up by Amit Saberwal to revolutionize the Southeast Asia travel industry.
The business follows an “Uber-like model,” Saberwal explained to CNBC Make It.
RedDoorz aggregates existing low-cost hotels on one platform and provides their staff with technology training as well as basic customer service, language, and cleaning lessons to ensure a uniform level of service across the entire network. Each location is then branded as a RedDoorz hotel.
It is designed to tap into Southeast Asia’s $52 billion travel market, which is largely comprised of budget hotels rated three stars or below. So far, RedDoorz operates in Indonesia, the Philippines and Singapore.
“We saw that there were a phenomenal number of properties that were just not being run to their full potential,” said Saberwal, who has worked in the travel industry in Asia for more than two decades, including at MakeMyTrip, one of India’s largest travel booking sites.
“The scale of the Southeast Asia opportunity is mind-boggling. A lot of people don’t know that,” Saberwal explained.
With rooms available from just 99,000 Indonesian Rupiah ($7.30), RedDoorz is specifically targeting the region’s domestic travelers, especially its large youth demographic. Saberwal said that market is under served by the current industry and it’s most likely to produce the levels of repeat business required by low-cost hotels.
“These countries are growing at rates of around 5 percent but their citizens don’t have the disposable income for the big chains. We’re disrupting the hotel industry, which has been running the same way for 50 to 60 years,” he noted.
Technology lies at the center of this disruption. A “chaotic environment,” such as Indonesia, which is in the midst of mass mobile and internet adoption, is “ripe for technological innovation,” said Saberwal. RedDoorz’s technology helps customers by removing the “taxing” aspect of screening and booking hotels while also helping the company identify where to target new properties, he explained.
The business also focuses heavily on training local hotel staff — like Giovanni — who Saberwal said often lack understanding of hospitality best practices.
“The real value lies in training these people. It has been a trickle-down effect: The biggest beneficiary is the owner, but it’s also about the upskilling of staff at all levels.”
Saberwal said he believes the education element of the business is having the greatest impact in smaller cities, where education and exposure to technology is poorer. Those locations are set to account for an increasing proportion of RedDoorz’s portfolio as it aims to ramp up its presence across its 16 cities over the course of 2018.
“We want a RedDoorz on every corner,” he added.
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