Nida Rooms zeroes in on funding for expansion
By Masyitha Baziad March 3, 2016
- Closing in on second round of US$3-3.5mil investment
- Targeting third round in Q3 to add hotels in more SEA countries, Latin America
VIRTUAL hotel operator Nida Rooms is looking to expand to more countries in South-East Asia and even as far afield as Latin America by the end of the year.
This aggressive outlook comes six months after it launched its platform in Indonesia, the first market for the Malaysian company. Nida Rooms, which focuses on budget hotels, is now also operating in Malaysia, as well as Thailand and the Philippines.
“But we have Cambodia, Vietnam, and Myanmar, as well as Argentina, Brazil and Mexico in our expansion pipeline, especially after we raise our third round of investments, hopefully in the third quarter,” its chief executive officer Kaneswaran Avili told Digital News Asia (DNA) in Jakarta recently.
He said the company is in the final stages of closing its second round of funding, in which it is expecting to land another US$3 million to US$3.5 million.
This would bring the total it has raised to about US$5 million in its first year alone, following the US$1.3-million seed funding it secured from UK-based True Capital Partners and Singapore-based East Pacific Capital Ltd in November 2015.
The US$5-million injection would aid Nida Rooms in acquiring up to 5,000 rooms by the first half of this year, compared with its current 3,000 rooms in four countries, according to Kaneswaran.
The second round will also help the company gain more traction for its web reservation and mobile booking app, via partnerships with online travel agents (OTAs) as well as through direct selling.
Nida Rooms started in Indonesia before expanding quickly to Malaysia, Thailand and the Philippines.
It provides a web and mobile platform for three-star hotels and below to boost their occupancy rate, by locking in a minimum of five rooms to be branded and marketed as ‘Nida Rooms.’
“Basically, consumers will see ‘Nida Rooms’ labels all over the room, and it is supposed to assure them that the room has passed Nida Rooms’ standards,” its Indonesia country director Anna Ervida Dartania told DNA.
Nida Rooms provides accommodation for prices as low as US$15 and right up to US$112. Guests are provided with standard rooms equipped with air-conditioning, clean linen, Internet connection, and hot showers.
It is able to offer such low prices by partnering these hotels. “The idea is clear from the beginning. We want to give consumers a good choice of hotels, at good prices, with good quality and at good locations,” said Anna.
Many of Nida Rooms’ partner hotels meet these requirements, “but they do not have the resources for marketing or even to do online promotion. Even search engines cannot find them.
“This is the gap we want to fill,” she added.
Anna, who had worked as a senior manager for the country’s full-service airline Garuda Indonesia, said even though the partner acquisition process was critical and sometimes difficult, Nida Rooms managed to get almost 950 rooms throughout the republic.
“This year, the Indonesia team will focus on bringing more value-added services to customers,” she said.
The company now covers 68 cities in the republic, but has yet to establish a presence in East Indonesia – that’s also in the pipeline for this year, according to Anna.
It recently partnered with end-to-end Internet Protocol television (IPTV) provider SelecTV, also a Malaysian company, to give its consumers access to various TV programmes during their stay with Nida Rooms.
The LCC business model
Kaneswaran has had experience with low-cost carrier (LCC) AirAsia and its sister company Tune Hotels, and also led TigerAir’s commercial team.
It is no surprise then when he admitted that Nida Rooms’ business model was inspired by the LCC industry.
“The idea of an LCC is to bring something premium like travelling and flying to everyday people, at a cheaper price but with a certain standard of quality.
“Consumers have the choice to pay for added luxury if they want, but they can enjoy travelling more now, which was quite difficult with full-service airlines,” he said.
The idea of Nida Rooms came to Kaneswaran when he was working as chief commercial officer of Indian LCC airline SpiceJet. He studied the virtual hotel operator business model pioneered by India’s OYO Rooms and thought that such a model would work well in South-East Asia as well.
He quit his job and found a partner in former Credit Suisse banker Dennis Malka, who also had experience in the palm oil industry. The two incorporated Nida Room’s parent company Global Rooms Ltd in September 2015 – it landed its first round of funding that November.
Nida Rooms is not the first virtual hotel operator in the region – Singapore-based RedDoorz and Rocket Internet’s Zen Rooms are among the few players competing in the budget hotel market.
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