- The “uberising” of hotels
- Clean budget rooms in a good location
- Brand recognition
Asked what he’s disrupting, he said “my divisions” and “my staff” and not the hotel industry as I had anticipated. “Disrupting my divisions to make my staff be in tune with the changing way of doing our business.”
Although he did not say he was disrupting the hospitality industry, he is definitely creating waves as a Virtual Hotel Operator, a label he laid claim to when he launched the company last October from Kuala Lumpur.
“We basically don’t own the hotels. It’s like the ‘uberising’ of taxis, we’re ‘uberising’ hotels, taking a number of rooms (usually five to 10) in each of these qualified hotels and then rebrand them as Nida Rooms. We’re a room-only product.”
The company focuses on small hotels (60-80 rooms) that are individually branded – “but good hotels” providing six key items – clean rooms, comfortable beds, air-conditioned rooms, WiFi and functional amenities.
“Most of the hotels are individually branded, they do not have any brand recognition per se, so people don’t recognise their brands. By having a Nida Rooms brand they are making their properties more well recognised, and being part of the largest brand in South-east Asia.”
The company has teams on the ground to check out the rooms before listing them. They inspect the facilities and rooms are then categorised by quality – super good, premium, and standard – before being rebranded as Nida Rooms and listed.
To date, NIDA Rooms has partnered with over 3,500 hotels throughout Malaysia, Indonesia, Thailand and Philippines. It also integrates its marketing activities with OTAs worldwide. The company expects to increase the number of hotel partners to 4,500 by end October and 7,500 by year-end.
It is also about the branding, added , and Nida Rooms has strong brand recognition with its neon boxes at every hotel where it has rooms to sell.
“With 3,500 hotels branded, we have 150,000 eyeballs looking at the Nida Rooms neon boxes that will increase with more hotels added. This is the best form of advertisement,” said Kanewaran.
On a fast track since launch
It’s been a fast track since incorporation in the Cayman Islands on September 1, 2015. It was launched in Malaysia in October, Indonesia in November, Thailand this April followed by the Philippines in May.
started his career in AirAsia as part of the initial turnaround team and oversaw its regional expansion. He was also part of the launch team for budget chain Tune Hotels (part of the AirAsia group), as well as having held senior management positions with Viva Macau, Citilink and TigerAir. He was the COO with India’s SpiceJet for a number of years before returning to Malaysia to start Nida Rooms.
He decided to return to the hotel industry when he saw the business model kicking off in India, and thought it would work in South-east Asia and Asia.
He also felt the timing was right to achieve his dream of selling rooms with less capital involved (Tune Hotels was capital intensive as it was investing in hotels). He approached his former colleague in AirAsia, Dennis Melka, who liked the concept and became the co-founder.
Asked if he modelled Nida after Oyo Rooms, the successful Indian aggregator for standardised inexpensive hotel rooms, said, “Oyo is an ecommerce model, it prepays for the rooms and subsides the consumers. We don’t do that.”
He said that Nida Rooms’ model was created for its customers, specifically to increase accommodation choices for leisure and business travellers “at the right location, for the right price with the right quality.”
Indonesia and Thailand are its biggest markets with 1,200 hotels and 1,600 hotels respectively.
On why its headquarters is in Malaysia, a relatively small market with only 800 hotels, he said, “Because I am a Malaysian and Malaysia is the cheapest place to have an office in Asia. Also most of our talent are based in Malaysia. As a startup cost is critical and Malaysia is the ideal place where we can set up the head office and grow.”
He however said that as the company expands, there’s a question mark over whether HQ would remain in Kuala Lumpur. “It depends because the company has a global ambition and our biggest markets are now Thailand and Indonesia; Malaysia is not a dominant market for us and it’s still a small market.”
Going forward: Funding growth and pure online focus
The response to the less-than-a-year old VHO model has been tremendous from consumers and investors, said .
The company has already attracted two rounds of funding – US$1.2 million in its seed round and US$4.2 million in a “pre-series A” round in April. The latter was led by two leading Asian venture capital firms, Convergence Ventures and CyberAgent Ventures.
A third funding, Series A, should be sealed by end September. He declined more details but hinted at an amount of about US$10 million from “very well-known investors”.
When probed for more information, he laughed and said: “Wait for the announcement when the deal is inked in Jakarta”, giving a hint that the new investor(s) could be Indonesians.
said 60% of the fresh funds would be used for marketing and the balance to build the brand.
“We want to pivot the model as the initial one is basically dependent on our guys on the ground. As we have now reached to a good size with about 4,300 hotels and with a strong penetration in the region, the timing is right for us to change the model to be only online, and not be heavily dependent on people on the ground.”
Does this mean the downsizing of its workforce and offices? “No, we will still have our local marketing offices as 80% of our customers come domestically, with the balance inter-regional travellers. We’re very much a local business still in each of the country, so marketing wise, finance wise we still need to have a local office in each of the country.”
He said that when Nida Rooms started it wanted to be a local company in each of the countries it is operating in. “Because this is a very new business model as we are basically putting our brands into the hotels, we want to be very much localised. That’s why we incorporated 100% foreign owned companies in the four countries and get all the local licenses as well.”
Its revenue model is no commission but mark-ups on the net price that the hotels give to Nida Rooms.
Kareswaran said most of Nida Rooms bookings are still on its website. It has a mobile app for both iOS and Android that he said has been downloaded 180,000 times.
Looking ahead, he wants to win the four existing markets (Malaysia, Thailand, Indonesia, Philippines) first, then move on to Vietnam, Laos, and other ASEAN countries as well as North Asia by Q1 2017. “And going after profitability in the third quarter of next year.”
Challenge going forward? “Finding the right talent, hard to find the right people to manage a business like ours.”