Leadership Series Fireside Chat #6 with Amit Saberwal, Founder & CEO, RedDoorz

After successfully serving MakeMyTrip for nine years, Amit spotted an opportunity in the budget hotel segment and decided to pursue his vision of providing quality $20-a-night rooms. This dream led to the inception of RedDoorz in Jakarta in October 2015. The first product which RedDoorz came up with was a B2B platform for small hotels. It was a tech-based solution allowing small property owners to use the suite of products to distribute online. Based out of Singapore, RedDoorz now has more than 1,800+ properties across South East Asia. Please find below some of the insights that were shared by Amit.

1) The Attraction towards Budget Hotels : While working with MakeMyTrip, Amit realized that the subscription model for hoteliers in India is not something that works well as nobody wants to pay. It was one of the prime reasons why he decided to start the business outside India. Besides, being based out of Singapore, he saw the potential in the emerging market of Jakarta and decided to begin with it. The large and mid-hotel segments had more or less sorted out their problems, but the budget hotels were still struggling to achieve higher occupancy percentage. Tapping onto this opportunity, he decided to step up and help these small hotels improve their occupancy, thus choosing budget-hotel as the business category for RedDoorz. 

2) Tips for Aspiring Entrepreneurs : An aspiring entrepreneur has to identify the segment that provides ample business opportunities. He should also identify the areas of fundraising. The journey of being an entrepreneur is a humbling experience, and one should be mentally prepared to face the hardships. One should believe in his or her idea and should focus on it with full throttle. 

3)The Red Doorz Business Model: RedDoorz’s business model is like a "7 X 11" model, which means that there are a lot of small-format stores rather than a single supermarket. The opportunity to have many properties in one area allows RedDoorz to saturate the demand before moving onto the next area. The saturation of hotels in a particular area helps them become a consumer brand for customers and, hence, they will stick to this model.

4) Tech Experiments at RedDoorz: RedDoorz has been building technology to solve their problems, and they will keep continuing to do so to solve their problems. For example, when RedDoorz started, they were on a third party booking engine, and they realized that having one of their own will help them better. Thus they built their booking engine. Some of the other technological developments that they have done in-house include demand forecasting mechanism, customer loyalty programs, app-based tip allocation system for customers, automated check-ins, occupancy sensor lighting system, and others. One of the most exciting developments is their demand optimizing engine that does a phenomenal job of helping RedDoorz make a fair amount of more money.

5) Pricing Strategy: Since RedDoorz had decided to solve their problems, they never went back to check how others are solving those problems. Therefore, for them, pricing became a part of how their properties in a particular area are showing trends about occupancy picking up. Basis this RedDoorz would decide on the pricing strategy and not based on competitive pricing or historical patterns. Reducing prices beyond a point doesn’t help anybody. Hoteliers should hold the prices and wait for the recovery to happen. 

6) Distribution Strategy: Although RedDoorz’s 75% of the bookings come direct, they still think that OTAs are great partners. However, the way their business model is structured, they cannot have multiple commission layers. OTAs play a significant role in the distribution ecosystem, and they cannot be left alone. 

7) Safety and Hygiene Initiatives: The inspiration for RedDoorz’s safety and hygiene programs came from the SG Clean campaign that was launched by the Singapore government. According to the SG Clean campaign, the hotels have to get certified in a multi-step process following norms of taking temperatures of guests, clean certain times a day and, other precautions that get audited by a 3rd party. RedDoorz is following the same process of maintaining the hygiene of the guests and ensuring their safety. 

8) Integrated Packaged Experience: In the budget segment, most guests are domestic travelers, and they are well aware of the property and the risks involved. Providing integrated packaged experience is not so relevant for RedDoorz’s customers as they are local and price sensitive. However, some hotels are a part of the quarantine program. For these properties, RedDoorz is providing integrated packages. 

9) Marketing Initiatives: The reality is that in a post COVID scenario, there will not be so much cash to do paid marketing. Hotels should carry on with paid marketing. However, given the situation, the focus should be on organic marketing activities initially. Fortunately, RedDoorz has lots of loyal customers, and in the past, they have seen a lot of their customers revisiting their properties. 

10) CSR Initiatives: At present, there is no CSR policy in place for RedDoorz. However, there are RedDoorz properties that have been given away to front line people. Under the RedHeroes program, RedDoorz has been trying to benefit the front line people as much as possible. They also launched a Mental Health Support Programme for employees, hotel partners, and industry-at-large called Hope Hotline. The new program acknowledges the different psychological challenges arising from the COVID-19 situation. It offers to support the mental wellbeing of its employees, hotel partners, and their staff by providing online counseling sessions leveraging RedDoorz’s partner counselors and psychologists.