RedDoorz oversees a network of independently-owned partner hotels that must meet common standards regarding cleanliness, internet connection availability and other services. The company's proprietary system uses big data to predict demand and set room rates for member hotels, allowing them to benefit from economies of scale.
It has more than 3,200 hotels in its network in Southeast Asia and is planning to increase that to 8,000 in the next three to four years. Indonesia, where the startup launched its first hotel in 2015, is its biggest market, but RedDoorz also operates in the Philippines, Vietnam and Thailand, which it entered last year. Despite quitting the Singapore hotel market, it maintains its corporate headquarters in the city-state.
"We decided to just focus on the core business and the core markets," founder Amit Saberwal said in an interview this month, referring to the Singapore withdrawal. "Because we had to get to the end goal, close to profitability."
He also revealed that the company cut about 90 employees.Hotels that partner with RedDoorz must conform to a set of standards in areas such as cleanliness. (Photo by Ken Kobayashi)
Saberwal, who hails from India, said the company is expected to break even by December this year on a quarterly basis in terms of earnings before interest, taxes, depreciation and amortization (EBITDA). It is expecting to be EBITDA-positive in 2024 on a full-year basis after implementing cost cuts. "Our fundamental view was start working on the core business, core markets, then we focus [on] ... learning how to control costs by automation."
Like many tourism-dependent businesses, RedDoorz was hit by the COVID-19 pandemic as governments in Southeast Asia implemented travel restrictions.
While the region has since reopened to tourists, RedDoorz plans to continue to put more emphasis on domestic travelers to avoid risks such as fallout from another pandemic. Many Asian resorts previously relied on Chinese visitors, who are yet to return to Southeast Asia in the same numbers as before. "I don't know whether it is good or bad, but people have learned to live without the Chinese tourists," Saberwal said.
Southeast Asia's growing population -- which is approaching 700 million -- is a big attraction for RedDoorz. "It is a market we understand well, we've been in [it] for many years," he said, but stressed that the company's top priority in the region now is Indonesia and the Philippines -- Southeast Asia's two most populous countries.
As for Indonesia, RedDoorz sees promise for growth led by the increasing number of young travelers in the nation of more than 270 million people, the world's fourth largest. The RedDoorz office in Jakarta. In addition to focusing on core markets, the company allocated resources from early this year to increase customer loyalty. (Photo by Ken Kobayashi)
Saberwal said international tourism is now picking up in the Philippines after the country embarked on a massive drive to transform public transportation -- especially in greater Manila -- under an infrastructure push by the previous president, Rodrigo Duterte. The CEO added that returning Filipino expats are a big segment for RedDoorz "as they have spending power" and usually take family trips.
In addition to focusing on core markets, the company allocated resources from early this year to boost customer loyalty. The measure "allows us to reduce our marketing budget and keep customers to book directly with us," he said. That, along with cost optimization and use of artificial intelligence for automation, is helping the push for profitability, he added.
According to Saberwal, emerging markets like Indonesia, customers tend to make reservations at the last minute, unlike in advanced ones where people book many months in advance. Unless hotel owners know how and when to price, they will suffer competitively, he says.
The RedDoorz system, however, picks up demand signals including surges in traffic in real time, so hotel owners can increase prices. The need for a real-time solution is more important in emerging economies, Saberwal said. RedDoorz "is closer to the ride-hailing way of thinking," he added, an apparent reference to the rise of Southeast Asian technology startups that offer on-demand food delivery services such as Singapore's Grab and Indonesia's GoTo. Asked about future plans for an initial public offering, Saberwal said the company aims to go public around 2027. "My desire remains that we want to IPO and we want to build the largest hospitality company in Southeast Asia," he said.
