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Booking website RedDoorz launches its first fully leased and run hotel
A SINGAPORE-BASED web platform that markets hospitality spaces is venturing into brick and mortar as part of efforts to transform the hospitality industry in South-east Asia.
RedDoorz, which runs a budget accomodation booking website, has expanded into directly leasing and operating hotels. It recently launched its first, fully-leased and -operated hotel property in Singapore as part of a long-term strategy to provide predictable, consistent customer experiences, as well as to "grow deeper in the hospitality value chain".
The target is to open 100 such hotel properties across the region this year, with its second one launching in Indonesia as early as May, The Business Times has learnt.
To do that, RedDoorz has raised US$11 million in pre-Series B funding for "aggressive regional expansion".
It said on Monday that investors include World Bank Group's private investment arm International Finance Corporation; UOB-backed InnoVen Capital; the Asia Investment Fund of Sushquehanna International Group; and Shanghai-based FengHe Group.
Amit Saberwal, founder and chief of RedDoorz, said: "With the new leased-property model, we can manage the property to our best ability, ensure a constant revenue flow for the property owner, offer the most efficient rates to the end-user, and provide the customer with a much better user experience, because we manage the entire spectrum now."
Mr Saberwal told BT that RedDoorz has so far played the role of a "franchiser and marketer" for the over 500 low-cost properties in Indonesia, Singapore and the Philippines that it has aggregated on its platform.
RedDoorz will provide the hotel staff with training in technology, customer service, language and cleaning to ensure a "uniform level of service" across its entire network. The hotels will bear RedDoorz's branding.
"Our role has enabled us to go deep into the functioning of hotel properties. So, the natural step for us is to fully lease and operate a hotel property. Both these business models will work for us in the long run. What excites us here is that we can make higher margins as we are going higher up in the value chain."
He added that the new business model will allow RedDoorz to "own" the end-customer experience, and remove inconsistencies in customer experiences which can occur under the traditional marketplace model, where the hotel fulfills the reservation.
"One of the most common customer complaints is getting unclean rooms or rooms different from what they were promised. With our own properties, we will have full rein over the day-to-day operations.
"The new leased model is also a great model for property owners who are sitting on properties that have probably been handed over to them via family legacy and are no longer a core business area for them. We partner such people to help them keep their business alive and kicking."
Mr Saberwal said that the greatest benefits RedDoorz will bring to these budget property owners are the access to technology, revenue management, training and hospitality management skills, and being part of a larger hotel chain and online platform.
"The way we operate, technology is in our DNA. The biggest beneficiaries of this are the properties."
RedDoorz has developed its own algorithms using data analytics that can forecast areas that are going to see an influx of travellers, allowing hotels to manage their prices. It runs a full operations unit in each country that looks at customer service, sales, branding, finance and marketing.
The first RedDoorz-leased property is a shophouse in East Coast Road. Named RedDoorz, it is a 65-room hotel that features Peranakan-style interiors that pay tribute to the neighbourhood's Peranakan history during Singapore's colonial period, said the startup.
John Wu, founding partner and group chairman of FengHe, said: "We are very familiar with the space RedDoorz is in and have seen a similar model unfold in the past in China.
"We are very confident in the foresight and growth that RedDoorz has spotted, most notably the potential to disrupt the budget segment in the hospitality industry in South-east Asia."