RedDoorz, one of the leading online budget hotels booking platform in Southeast Asia, announced its expansion into its third market in the region – the Philippines. Currently with operations and properties in Indonesia and Singapore, RedDoorz intends to tap onto the dynamic growth of the budget hospitality and travel sector in the 7,000-island archipelago country by making an investment of more than US$5 million where it projects to grow its footprint to 100 properties across the Philippines over the next 12 months.
Speaking on the occasion, Amit Saberwal, Founder and CEO, RedDoorz said, “Our expansion into the Philippines came as a natural progression for RedDoorz, where like our first market in Indonesia showed many similarities and thus the potential for a vibrant domestic travel and hospitality industry. RedDoorz’s business is one based on cities, not countries, where with our city-to-city approach has resulted in growing to over 500 properties, processing more than 1 million room nights and consistently delivering occupancies of more than 80 per cent across 16 Indonesian cities, Singapore and now, the Philippines.”
“The Philippines ranks second as the fastest growing Internet economy in the world, right after Indonesia – with an Internet penetration of 63 per cent (67 million users) of approximately 105.7 million Filipinos. Whilst we continue to grow our footprints in Indonesia, we also closely monitored and surveyed the Filipino market. Following our fresh funding earlier this year, we realized that the Philippines held a strong demand for hotel rooms not only for tourists but also for business travelers. We felt that it was timely for us to make the conclusive move to start expanding here – especially seeing how boisterous the budget hospitality sector has been in recent years,” he added.
According to a joint study titled “e-conomy SEA: Unlocking the $200B Digital Opportunity” by Google and Temasek Holdings, it found that the Philippines ranked second after Indonesia as the world’s fastest growing Internet market with the potential to grow by 11 per cent in CAGR to 93 million Internet users by 2020. This also meant a vibrant outlook for the online travel market in the Philippines, specifically for online hotels and airlines, which is expected to grow approximately five times from US$1.1 billion in 2015 to US$4.6 billion by 2025. In a 2018 report by WeAreSocial showing digital usage in the Philippines, it revealed that the Philippines not only has 67 million Internet users, but all of whom are also active on social media – of which more than 60 million were either unique mobile users or active mobile social users.
With its entry into the Philippines, RedDoorz will also be introducing a new category of properties. Adding on to its existing two categories, RedDoorz and RedDoorz Plus, the new RedDoorz Premium, launched in June 2018, are properties that are designed for the budget business traveler – not only strategically located close to business districts but have more amenities than the other two existing categories on the RedDoorz platform.
The World Travel & Tourism Council found that domestic travel spending in the Philippines generated more than 86 per cent of direct travel and tourism GDP in 2016 and is expected to grow 4.8 per cent per annum to PHP3,336 billion by 2027. Additionally, in the same year, the Philippine Statistics Authority found that domestic travel rose by 20 per cent from the figures in 2012 – this reinforces findings from the 2016 Household Survey on Domestic Visitors (HSDV) where three out of five Filipinos (59 per cent or close to 61 million) 15 years or older traveled within the country that year. With a high penetration of Internet activity as well as a year-on-year growth in not only domestic but also international travel, the budget hospitality segment holds a key driver for the tourism industry in the Philippines.
Commenting on the new addition of property categorization, Rishabh Singhi, Chief Operating Officer, RedDoorz said, “This introduction of Premium properties came with our observation of how the Filipino concept of a ‘condotel’ had seen a remarkable growth in the Philippines over the past decade. We felt that by adding this new category, we could create a distinction of rooms in the market while also keeping to our ethos of providing the same standardization and predictability that comes with all RedDoorz properties – all at affordable prices. The aim of this new category is to target the business traveler who looks for certain amenities like good Wifi connection, location closer to business districts and other amenities. We see this as a strong category as we expand into other Southeast Asian cities where there is an influx of business travelers.”
He added, “Furthermore, our loyalty programme for all RedDoorz users, RedCash, which is extremely popular in Indonesia will also be extended to the Filipino market. With a high usage of local Filipinos who are not only tech-savvy but use social media on their mobiles, we look forward to new customers in the market to book via our RedDoorz app where they can redeem the RedCash earned from their stays. We strive to maintain our current track record of over 80 per cent repeat stay as we continue our growth across our three markets.”
With a strong local team on-the-ground coming from diverse backgrounds as well as a deep knowledge of the local travel and hospitality sector, RedDoorz runs a full operations unit in in Manila ranging from customer service, operations and product sales to branding, finance and marketing. RedDoorz has developed its own proprietary technology using data analytics to accurately forecast demand on areas that could have more hotels or properties to drive more footfall for travelers.
“At every step of our growth, we have firmly believed in building the right team, meeting the right set of investors and especially biding our time for the right market opportunity. This belief attributed to our success in Indonesia and also paved the way for our entry into the Philippines. The biggest challenge is the mindset for property owners to accept our model, especially since this technology disruption has only taken place over the last three to four years in this region. With this disruption, owners of such properties become the most affected and we come in to educate and train these owners and their staff on why it is essential for their businesses to go on online platforms. Becoming a part of the RedDoorz network will allow them access, similar to how large hotel chains operate, which would not have been made available to them. Technology is part of our DNA – the biggest beneficiaries of this are the mid-sized and budget properties,” Amit Saberwal further added.
Over the past 18 months, RedDoorz has trained over 2,000 staff across properties in Indonesia and Singapore. As part of their inhouse training program RedPro, the brand runs ongoing programs for the staff of their partner properties and ensure smooth running of their properties. Training is conducted across areas like: technology, housekeeping and maintenance, sales and marketing, and more. RedDoorz has a strong team of over 180 staff across four countries that specializes in operations, sales, marketing and all aspects of hospitality.
Headquartered in Singapore, RedDoorz recently raised its Pre-Series B round of US$11 million as an additional investment from Asia Investment Fund of Susquehanna International Group, International Finance Corporation (private investment arm of World Bank Group), InnoVen Capital (venture lending firm owned by Temasek Holdings and United Overseas Bank), and Jungle Ventures – all of which had invested in past funding rounds. This fundraise also saw new investors DeepSky Capital, FengHe Group, Hendale Capital as well as other investors.