RedDoorz gunning for IPO, and making expansion a priority

Singapore

SINGAPORE-based hotel booking and management platform RedDoorz is shooting to be Ebitda-positive by 2023. Its chief executive thinks that it is a milestone which, when reached, would mark the right time for a public listing.

The technology-driven hotel management startup now operates a network of more than 1,500 properties in Indonesia, Singapore, the Philippines and Vietnam.

RedDoorz founder and chief executive Amit Saberwal has big plans for the next four years: "By 2023, RedDoorz aims to have 15,000 hotels on its network." (He noted that this amounts to about 10 per cent of the total number of hotels available in the "affordable accommodations" category.)

To hit the target, he said the hotel chain will need to undertake a "measured expansion". It is looking towards markets such as Indonesia and the Philippines as key drivers of growth; next year will be a "critical" one for the hotel chain's expansion plans, which also include Thailand.

"But Indonesia in particular, is our strongest market, give its robust domestic travel ecosystem," said Mr Saberwal.

RedDoorz is acquiring 150 new properties every month, with 50 new franchises going live every day. Next year, the chain will also expand its Singapore portfolio of 18 budget hotel properties to 29.

The company is able to this, Mr Saberwal said, because of its strong direct customer base with positive unit economics.

Three-quarters of bookings come through the RedDoorz app, said Mr Saberwal. This means the chain does not need to spend as much on commissions for intermediaries as its industry rivals - and commissions can account for between 10 and 30 per cent of a room's price.

The RedDoorz app, called RedFox, is a dynamic pricing and inventory management tool which updates hotel prices based on demand and potential revenue forecasts.

Chris Ho and Edmund Koh, owners of the RedDoorz Hostel @ Little India and Clarke Quay, said their tech-savvy guests typically use mobile apps to search for travel and accommodation options.

"We have been able to streamline operations, manage distribution and pricing more efficiently," said Mr Ho, adding that this has bumped up booking and revenues.

RedDoorz is expecting one million room nights this December, and aims to grow its annualised revenue by 21/2 times to reach US$500 million by the end of next year.

The five-year old hotel booking and management platform operates both franchise and lease models for its hotels. Through these models, RedDoorz manages the day-to-day operations of the establishments for property owners who prefer to be more hands-off or do not run hotels as part of their core business.

This year, RedDoorz had its first close of US$70 million as part of its larger Series C round, and launched a new regional tech hub in Vietnam. The company has raised approximately US$140 million since its inception in 2015.