By Amit Saberwal | Southeast Asia is ripe for technology disruption. It has the third-largest population at 680 million after China and India, with 48% living in urban areas, more than 50% are below age 30, and 330 million monthly internet users, according to recent Google Data. Indonesia is the apple of the eye of Southeast Asia being its largest economy: 7th largest economy in the world, 4th most populous nation, and extremely high mobile (90%) and Internet penetration (143 million users).
Travel is an important economic contributor in Southeast Asia, accounting for at least 10% of total GDP for all ASEAN countries with the exception of Brunei and Myanmar, according to DBS. It is also a region with high domestic travel (Indonesia expects 275 million domestic trips a year by 2019). This opens a huge opportunity to serve a frequent domestic traveler’s needs, which are different from an international traveler’s.
Travelers, especially millennials, have a unique travel behavior driven by the latest technological trends. About 40% of millennials share their trips on social network, according to the Euromonitor (EIU) Annual Report 2015. Half of the millennials in Indonesia book their travels through a mobile phone – according to a report by Expedia in 2015. It was also reported that millennials in the same year made 260 million trips.
Google Data shows that 80% of millennials go online to plan for a travel stay. Within the millennial segment in Indonesia, there are 10 times more budget travels than non-budget ones, according to BPS Indonesia and the Indonesian Ministry of Tourism.
All the above allows for the growth of new businesses that can engage a new generation of travelers in a meaningful way. In just a little less than five years, a new business model was developed by companies like OYO, FabHotels, Treebo (India), and Tujia (China) to solve this problem and they have raised more than US$1 billion along the way. They help aggregate hundreds of unbranded properties into a single well-known brand that customers love, with technology at its core.
In Southeast Asia, companies like RedDoorz, ZenRooms, Nida Rooms and Tinggal have also joined the bandwagon to take a crack at a market triple the size of India, which according to a Phocuswright Report (2014) stands at US$55 billion. Though many struggled and went out of business, those who are able to serve the needs of millennial travelers and also solve the fragmented nature of Southeast Asia grew with strong traction. We will call this new generation ALCs (asset light companies).
To capture the needs of a modern millennial travelers, ALCs focus on delivering three key values superbly – Transparency, Convenience, and Engagement.
Instead of getting a bed of roses or a marble bathtub that customers don’t need most of the time, ALCs start to offer the most basic but fundamental requirements of a modern traveler: fast wifi, clean linen, clean toilet, bottled drinking water, satellite TV, and a nice toiletries kit. This simple brand promise creates transparency that gives comfort to a generation of increasingly savvy traveler.
The last thing a business traveler wants is to get stuck in a Grab or Go-Jek in the middle of Jakarta traffic in the evening (good luck if it rains!). Imagine the convenience of a 7/11 store where a person can get what he needs at every relevant street corner. That’s the vision of ALCs – to make finding accommodation as easy as a walk across the street after a long business trip meeting. For example, RedDoorz has more than 100 properties across 18 cities in Southeast Asia, making it easy for a traveler to have a convenient stay.
The customer relationship doesn’t end the moment they hand back the room keys. For example, at RedDoorz we are very active on social media and hold fun competitions to keep them engaged. Our attractive prizes include free trips and accommodation to Singapore, an aspiration for many young Indonesians.
We held a country-wide band competition in Indonesia this year, where winning bands in each city will compete in Jakarta at some of our flagship properties. Millennials enjoy being engaged with unique experiences and share them generously on social media.
Technology At Its Core
ALCs are able to offer a great stay experience at only a third of the price for an equivalent stay experience at other branded hotels because of smart pricing through technology that results in an increase of occupancy by 150%. Additional revenue generated is distributed back to the community – higher income for property owners, and a great value stay for travelers.
Quality assurance is possible at scale because of the ability to track customer satisfaction and property owner’s behavior in real time, followed by necessary interventions. Many property partners experienced a major improvement in hotel management and service levels after joining the network of ALCs.
Technology also helps ALCs to scale quickly because of the ability to predict accurately high-demand areas through aggregating data on demand indicators such as commercial, travel, and Google search queries and then directing property acquisition teams for ground assessment. Instead of building physical hotels one by one – which would take decades to cover the region – ALCs partner with existing property owners and drive customers to them.
In order to capture the needs of today’s millennial traveler in Southeast Asia, constant technological innovation is needed. If ALCs are able to deliver on the latest trends with smart technology deployment, they have the potential to change the budget accommodation landscape in their regions.
About The Author
Amit is the Founder and CEO of RedDoorz, a leading and fast-growing budget hotel online booking platform in Southeast Asia that is headquartered in Singapore and was founded in 2015. Amit drew on his wealth of experience in the online travel, e-Commerce and hospitality sectors and saw the opportunity to address the lack of standardisation in the budget hospitality segment in Southeast Asia. To date, RedDoorz has grown to more than 500 properties across Indonesia, Singapore and the Philippines with offices in all three and a strong technology centre that supports the backend in all technological aspects of its proprietary platform.