Top Global develops hospitality tech

IN A bid to be less asset-heavy, property developer Top Global is nurturing a new growth engine: smart solutions, starting with the hospitality industry. From self-service check-in to dynamic pricing, some solutions are already in place at its 5footway hostels, with more in development.

But chief operating officer Jennifer Chang clarified: "We don't want to be an IT company." Nor is Top Global exiting the property business. "I don't even consider (smart solutions) as mature yet. Our revenue is still dependent on property development, mainly in Indonesia."

In the second quarter ended June 30, revenue of development properties accounted for S$10.3 million or about three-quarters of Top Global's total revenue of S$13.9 million.

Providing solutions is a more strategic and asset-light way to expand within hospitality, said Ms Chang, adding: "This is our growth engine. We intend to move in this direction."

For a start, the firm is pursuing this new business area abroad - in Bali, where its smart solutions brand Ultron was launched in October. The Indonesian island is "a better place to start" than Singapore due to its focus on tourism, and it has a potential client pool of many small operators, she said. "There are more than 7,000 (such) properties. We hope to capture a few per cent of the market share eventually," she added.

Top Global was originally a major investor in 5footway but was not involved in its management. Over the course of 2017 and 2018, it gradually raised its stake as the hostel founders left. Facing the "very operationally-intensive" business of managing the hostels, as well as the challenges of labour costs and shortages, Top Global's line of thought was, according Ms Chang: "If I want to continue to stay in this business, I cannot go on like that. It doesn't make sense . . . So we decided that technology is the only way to solve this problem."

5footway had self-service check-in and check-out kiosks, but the usage rate was under 2 per cent. This has since risen to 95 per cent, with manpower savings of 40 per cent.

Having achieved such efficiency gains, Top Global considered going further. Yet the 5footway model - leasing a property and running it - is too capital intensive, and the firm's balance sheet was "already very asset-heavy". Total assets stood at S$456.7 million as at June 30, with total liabilities at S$70.1 million.

Top Global thus went into solutions. Running the 5footway hostels gives it an insight into the challenges that small hospitality players face, letting it tailor its offerings accordingly.

Top Global's tech unit Ultron Techniques came up with a dynamic pricing engine, with automatic price changes based on each property's attributes and factors such as occupancy rates and major events. In 2018, this was tested with a Bali partner for three to four months, resulting in a 15 per cent rise in revenue.

Beyond their effect on sales, such digital solutions also reduce labour needs, said Ms Chang. Wages in Bali may be low, but that is no reason to stay inefficient. "You can always redeploy your manpower," she pointed out. Putting more resources into housekeeping or guest relations could make for happier guests and better reviews, she added.

As for Singapore, the firm hopes to launch some solutions at the Food and Hotel Asia trade show in March.

On July 29, Top Global announced the acquisition of a 75 per cent stake in I Industries, whose founders had developed an autonomous "traffic cop" robot at Jewel. This stake has since been raised to 80 per cent.

The tech firm's capabilities in areas such as artificial intelligence, miniaturisation and the Internet of Things were seen as complementary to Top Global's existing tech team.

"Since we are committed to move in this direction, having just software is not good enough," said Ms Chang. I Industries will be able to help develop not just software, but also gadgetry.

While I Industries used to provide research and development services for clients, it can now look into making products for the market with Top Global's support, she added.

For example, Top Global hopes to develop a series of smart quality control solutions, starting with a housekeeping self-assessment. Beyond hospitality, it may eventually offer tech solutions in industries such as health care, security and agriculture.

Through all this, the firm is guided by a couple of principles, said Ms Chang. "You need to be practical, and the cost has to be cheap and low. Otherwise why would the operators adopt it? There's no point to have very fanciful and sexy gadgets or methods . . . (that) you can only showcase but nobody is going to use." Top Global remains open to acquiring more tech talent if the opportunity arises, though perhaps not more tech companies per se.

On the property front, it is staying flexible. Asked about possible divestments in order to go asset-light, Ms Chang replied: "We don't rule it out. . . . We are really asset-heavy, it's true." But she added: "Everything has a timing, everything has a right price. So under today's economic condition, a little gloom with a bit of uncertainty, we will just observe."

Conversely, Top Global is not ruling out new property developments either. While remaining very cautious, particularly in Singapore, the firm would be open if there is "good opportunity, good partners". "We are talking every day with different people - even development projects, they want partners - but we are just very careful."