RedDoorz is disrupting Southeast Asia’s budget hotel market
Budget hotel brand RedDoorz grew its portfolio by more than 20% in March with the addition of more than 110 hotels in Central Java.
Since opening its first hotel in 2015, the Singapore-based company has expanded its portfolio to more than 500 properties across Indonesia, Singapore and the Philippines. Another 100 fully leased properties and an additional 1,000 franchise properties are expected to sign on over the next 18 months. The new locations will also be scattered throughout Southeast Asia where the budget hotel market is highly fragmented.
Founder and CEO Amit Saberwal explains:
“We started with Indonesia as we saw the biggest opportunity there with thousands of small nameless, faceless properties across this exciting and dynamic country which we would standardize, brand and market. We are now the largest branded budget accommodation chain in Indonesia with more than 500 properties, with a clear path to profitability for 16 Indonesia cities by the fourth quarter of this year.”
To date, the hotel group has raised nearly US$20 million in funding, with its most recent cash injection of US$11 million announced in March. The latter was a pre-Series B round and represented additional investment from Asia Investment Fund of Sushquehanna International Group, International Finance Corporate, InnoVen Capital and Jungle Ventures.
New investors, including DeepSky Capital, FengHe Group and Hendale Capital, also contributed.
The new funds will support the brand’s strategy to increase its stable of fully leased properties, the first of which –the 65-room RedDoorz near Marine Parade—opened recently in Singapore.
Saberwal adds that “with the newly leased property model, we can manage the property, ensure constant revenue flow for its owners and offer customers the most efficient rates and predictable end-user experience.”
The lease model is also expected to bolster the brand’s repeat guest rate from its current 65 percent marker and that has, at least in part, been driven by the brand’s RedCash loyalty program. RedDoorz caters to a tech-savvy demographic, between the ages of 24 and 35, who want a standardized experience on a budget.
Beyond the rewards program, the brand’s app has garnered more than a half million free downloads by Android users since launching last July. Currently, more than 70% of customers book via the app or the brand’s website.
This has much to do with the fact that Saberwal defines RedDoorz as a technology-based company, of which hotel real estate is the growth engine. RedDoorz has proprietary a AI-based dynamic pricing program that predicts and adjusts rates on an hourly basis, if not more frequently. Saberwal is so confident in the accuracy of the demand predictions that hotel owners are guaranteed a minimum revenue and a profit share arrangement.
“We look at demand patterns, scout for properties that will turnaround quickly and get demand to up occupancy and yields. We ensure that we saturate an area of high demand in our segment before we move on to the next area. All of our properties have an average occupancy rate of 80 percent.”