Amit Saberwal worked in the hospitality industry for more than two decades before he founded what is considered to be Southeast Asia’s fastest-growing value hotel chain. Taking existing budget properties and rebranding them as RedDoorz hotels, the company grew 700% YoY in 2018 - now on its way to operating across 62 cities with close to 2,000 properties and almost 50,000 rooms in Indonesia, Singapore, the Philippines and Vietnam.
Click.: What was the strategy behind the brand’s accelerated expansion?
Saberwal: We try to solve single problems at a time, ensuring we understand what’s important to both our property owners and customers. When scouting new properties, we look for hotels that will turn around quickly, ensuring we saturate an area of high demand before moving on to the next location. We are on a constant lookout for properties that are in denser populations, and, so far, have been adding over 100 properties per month to our portfolio. Our aim is to have a RedDoorz at every corner of the street, in every city.
As a local company, we are also quick to spot trends and can move with more agility. For example, localisation is key for Southeast Asia, so we offer payment solutions including Go-Pay wallet in Indonesia and Momo Wallet in Vietnam to accommodate this.
Click.: RedDoorz currently has an occupancy rate of more than 80% across all markets, what’s the secret to this success? Saberwal: The market we focus on - three-star segment and below - was underserved by the current industry in Southeast Asia, which is likely why it has produced high levels of repeat business. The average domestic tourist in this region makes at least two visits to the same location in a year, so providing a standardised and affordable brand experience has played an important role. We also have a lot of properties in close proximity to each other, with the idea being to have a property on every relevant street corner - a bit like 7/11 [an international chain of convenience stores]. One reason for this approach is that traffic is a huge consideration in Southeast Asia. People are very conscious of that and want to stay very close to where they need to be in order to avoid any delays.
Pricing also plays a role. When you have a lot of properties in a particular location, pricing them right is the most critical aspect. This is where technology comes in. We price our properties according to the location’s demand, which is typically last-minute and can be very spontaneous, so pricing can change every few minutes based on that. From a property owner’s perspective, our model is a bit like Uber. We take care of the pricing, customers and loyalty, leaving the property to focus on the guest experience.
Click.: How do you maintain consistency in service across RedDoorz properties?
Saberwal: We train the property at the start - focusing on areas such as customer service, language and cleaning - to ensure a consistent level of service across the entire brand. We are constantly monitoring service delivery and found that the guest rating acts as an incentive for the properties. If the reviews start dropping then we have a team of people, who are like hoteliers, that will go to the property and retrain the staff.
Click.: What has been the biggest lesson you’ve learned since setting up RedDoorz?
Saberwal: Setting up RedDoorz has not been easy. It’s important to build up property by property, working your way through a particular location and building enough inventory that is in pace with demand. It’s about deep relationships as well, and working with partners who are property owners to understand the local issues and challenges.
Click.: What trends are you currently seeing in the budget hotel sector?
Saberwal: We are going to see budget travelling undergo a huge transformation across Southeast Asia as middle-class millennials adopt travelling as a lifestyle, with a focus on cost-efficiency. Travellers no longer see the need to spend a large amount of money on expensive hotel rooms. But I also think that customers are going to start expecting a better experience from budget accommodations as the industry evolves.
Taking a hyperlocal approach to understanding your area, city, environment and people is important. Partnering with leading consumer companies is helpful to build that travel-lifestyle ecosystem for your customers to provide a more experiential journey.
You might also want to read:
- Growing 700% YoY in 2018, Southeast Asia is considered to be Southeast Asia’s fastest-growing value hotel chain
- The brand has currently been adding over 100 properties per month to its portfolio, scouting properties that will turn around quickly
- Focusing on the three-star segment and below, RedDoorz has an occupancy rate of more than 80% across all markets
- Training hotel staff - focusing on areas such as customer service, language and cleaning - is crucial in ensuring consistency across the brand’s portfolio