- Management team skilled but unable to adapt to startup culture, roll up sleeves
- Builds Hotel Operating System for independent owners, launches franchise model
THE startup template post funding is to talk grandly about expanding into new markets, strengthening grip on the home market, improving the core product and adding talent.
Just don’t tell that to Kaneswaran Avili (pic), founder of Global Rooms Ltd which runs the Nida Rooms hotel system in Southeast Asia. Because, as soon as he raised his most recent round of US$5.6 million in December 2016, Kaneswaran cut his entire senior management team. Which is why he is now the CEO/COO/CMO/CIO. Was this the ultimate founder power trip?
Actually, No. It boiled down to speed and execution.
“The first thing I did after raising my Dec round [it was officially announced in Feb 2017] was to let go of my entire management team because I thought things won’t move as fast if there were too many filters. So, I removed the filters.”
Headcount went from around 150 to the current 30 staff. Being smaller has allowed Kaneswaran to be more focused and get more things done, he says. By necessity, he also had to increase automation to reduce human intervention to serve the roughly 4,000 independent operated hotels in their network with price points of US$40 (RM180) and below.
Operating as an asset light hotel operator, each hotel property allocates a certain number of rooms to Nida with the hotel staff branding the rooms with Nida Room collateral and toiletries anytime a booking comes through Nida.
A one-man management team, he is now involved in every part of the development of the tech platform, in every pricing decision, and spending.
But is he feeling the strain of so many decisions and actions depending on him? “I actually feel happier,” he says. “That’s how you can bring company performance to the next level.”
He also offers some advice to startups. “If you want to be innovative and creative and move fast, don’t outsource your tech needs, build an in-house team.”
Having started out by using an outsourced tech team and off the shelf software to help him manage his asset light business model, Kaneswaran experienced three realities of this approach.
Firstly, off the shelf solutions in hotel room inventory management were not suited to the dynamic nature of an increasingly digital consumer and travel market. Nor were outsourced tech partners as committed to your cause, which means they never shared your urgency in getting things done. And if you wanted speed, you had to pay for it. His experience leads him to conclude that, “outsourcing is slow, it’s expensive and it won’t give you innovation and creativity.”
Which is why, he now has an eight person tech team, all of whom have had prior startup experience – a critical point for Kaneswaran who realizes that the lack of this was what hobbled his management team.
“They all had super skills and were high performers but just could not adapt to startup culture where you have to be on the ground and lead by example. It’s all about rolling up your sleeves,” says Kaneswaran who regularly is on the ground visiting his network of hotel partners “knocking on doors” as he puts it.
Enter the Hotel Operating System built for independent operators
Having his own tech team that he can drive, “we work seven days a week” has resulted in Nida Rooms building its own Hotel Operating System for independent hotel operators with Kaneswaran involved in every part of the system development, leveraging on his airline experience where he was employee number 8 at AirAsia back in 2001 and also his hotel experience where he was a co-founder of Tune Hotels in 2006 and remains a shareholder today.
Claiming that there is no such system in the market today for independent hotel operators, Kaneswaran says, “We have built a Hotel Operating System which encapsulates all the modules you will need to run an independent operated hotel which combines elements of an airline revenue management system with dynamic pricing.” He claims this pricing system is not available in the industry for independent hotel operators who are perennially plagued by talent issues, lack of technology and data applied to the business, inability to tap digital marketing, dependence on the OTAs such as Agoda and Booking.com and not having a strong brand.
To this group, Kanes is now offering the Nida Hotel Operating System to solve their operational issues along with the Nida brand to solve their brand issues with the introduction on 1 Oct of Hotel Nida.
[Correction: An earlier version carried the wrong name for Hotel Nida.]
“Hotel operators can run their hotels using our platform with the option of two models. The first is a full franchise model, where they use our platform and we rebrand their property as a Hotel Nida ,” he says. Here Nida will pick up the cost for rebranding the hotels which will run on their platform.
The second option is the semi-franchise model where the hotels keep their brand but use the Nida platform to run their property.
Either option takes away the pain points of these individual run hotels and will be a big help for them Kaneswaran believes. “Most of these hotels get around 30% walk in customers but they don’t even capture the customer data because they don’t have a system that allows them to do so. That’s why we built our Hotel Operating System and are now offering it to them They can start running their property with an efficiency that approaches that of the chain hotels and with a platform that is digital enabled.”
More importantly, this strategy, using the franchise model and their hotel operating platform marks the next phase of the startup’s goal of becoming the largest branded hotel chain in Southeast Asia without actually owning any of the assets.
It’s a strategy driven by data. Thanks to the 4,000 hotels they have partnered with across Malaysia, Thailand, Indonesia and Philippines, Kaneswaran says Nida Rooms has data that tells it which hotels are doing better than the others, that get better visitor reviews and ratings.
“With the data we had came the question of how could we take this data and use it to achieve our vision of becoming the largest branded hotel chain in SEA?”
The answer was the full franchise model with their own branded hotels but without owning the actual properties.
With the first hotel unveiled yesterday in Changkat Bukit Bintang, a popular location in Kuala Lumpur (see pix, above), Kaneswaran has a target of acquiring 20 hotels by the end of Dec under both the full and part franchise model with property in Kuala Lumpur, Bangkok and Jakarta the initial target. The goal for end 2018 is to hit 100 hotels.
The next funding round will also kick in towards the middle of 2018 to support achieving this target for the startup that is aiming to be cash flow positive by mid 2018.
And will Kaneswaran still be wearing multiple hats then? “I think once we hit the 100 hotels target, I will bring in a COO,” he laughs. Those who expect this to be a sit in the office role, need not apply.
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