"Cloud allows budget hotels to compete with the 5-stars"
What can give small and medium hotels that business-edge? Hotelogix’s Aditya Sanghi talks about challenges faced by such properties, and what they need for seamless ops and scalingBy Maneka Tanwani 07 Aug, 2014
It has never been easier to plan a holiday. Large disposable incomes, lower cost of air travel, ease of booking tickets, increase in online hotel booking sites, disruptions like AirBnB and most importantly, the wanderlust among today’s youth, have all made a huge impact to the hospitality industry.
Millennials in India have taken to travelling like a duck takes to water. Be it exploring Europe or taking a life-changing trip to Ladakh, they want to do it all. Even this author is on a mission to take one holiday a month this year and all it takes is a few simple clicks to plan the adventures. In the last five to eight years, the online marketplace model has made this possible. It has boosted the SME sector, giving it visibility and enabling to compete with big brands, and most importantly, bringing affordability to travellers, explains Aditya Sanghi, CEO and Co-founder, Hotelogix, a global provider of cloud-based hotel management systems, based in Bangalore, India.
In an exclusive conversation with e27, Sanghi talks about the travel bug, emergence of lesser known hotel brands in India, challenges they face, how Hotelogix is helping them compete with five star properties, and using the cloud model to get a business edge. Excerpts:
What are the trends we are witnessing in the hospitality industry in India?
The online marketplace model has completely disrupted how a traveller would traditionally book a hotel. It has shifted travellers from a Best Westin or a Taj to smaller budget hotels. Earlier, there was no way to get exposure for such properties, but travel sites have changed the game. We are seeing a good percentage of booking being diverted to small and medium hotels.
Awareness of such hotels is one part of it, but the real challenge lies in gaining trust of customers. In developed countries, reliability and dependence on such properties is prevalent. But this is not the case in developing markets. Here, consumers don’t know what they will get. Fortunately, marketplaces such as Agoda, Expedia, HolidayIQ and Bookings.com are slowly bringing in the reliability factor. The reason for this is that hotels lack consistency, among other things, and hence need in-house automation to deliver the right experience.
What are the key challenges that SME hotel properties face?
Brand positioning is the biggest challenge. The online marketplace is complex. Customers, while researching, look at online travel agents, social media, review sites, hotel websites, etc. So how should a hotel create awareness and position itself? How do they identify what customers are best for them? How to understand what the guests prefer? These are few questions that need to be addressed.
Second is keeping up and following the rules of the marketplace. Thirdly, updating inventory and upholding agreements with all parties concerned. A simple example will be a hotel selling a room to a customer on Agoda, but when the customer arrives there are not rooms available because someone overlooked updating inventory. This just creates a huge mess, ultimately antagonising the customer and losing him to competition.
Another thing is the rapid pace at which the industry is evolving; it is a huge challenge to adapt. Big brands have teams but independents have no such resource at their disposal.
So what can be done to deal with these hurdles?
Most small and medium hotel properties face identical operational challenges to those faced by larger and starred hotels. The only difference between the two is the scale of operations. To address operational challenges, we have created a cloud end-to-end in-house automation system. This ERP (Enterprise Resource Planning) solution is a single platform from the cloud directly to the hotel.
It is easy-to-adopt and provides hotels with real-time updates by integrating all their critical operations. With Hotelogix’s platform, hotels can use a single point dashboard control that allows them to centralise their room operations, manage the hotel group easily, see a complete booking snapshot, minimise operational costs and even expand distribution through various online channels.
A cloud model works best for budget properties essentially because it is cost effective and does not require a large team to manage. Additionally, all marketplaces are internet-based services. Hence, usage of legacy systems creates a technology bottleneck as they are not interoperable. Not to mention, that they come with huge costs involved for small establishments to bear. Legacy solutions have reached end of rode in the hospitality sector.
Providing a cloud based solution ensures hotels can access information on-demand and scale the solution as their operations grow, while allowing them to cater to their customer needs.
What does Amazon Web Services bring to the table?
Amazon Web Services has helped us bring the Saas-based experience to the hospitality industry. Its transparent pricing, ease-of-use, 24X7 support to online businesses has played a big role.
The AWS cloud platform has also helped Hotelogix to grow globally in a cost effective way, thus allowing us to support hotels across 75 countries in a short span of five years. Adding to this, AWS also services customers quickly and provides upgrades quickly with no downtime.
But the most important reason for partnering with the cloud giant is the reliability factor. Hotels hear that our business is supported by AWS and it automatically gives us the credibility. Being a global leader, it helps us get into the global play that we aspire to.
You mentioned you are present in 75 countries. Which is your biggest market?
Our biggest market is North America, followed by South America, Caribbean, Thailand, the Philippines, Indonesia and Malaysia.
Who are the backers of Hotelogix? Can you share your funding history? Are you looking for investment actively?
Our investors include Accel Partners, Blume Ventures and Mumbai Angels. We got our seed round funding in 2010 and Series A funding in 2012. There are no developments so far in terms of more funding.