Hospitality and tourism continue to grow steadily in Southeast Asia, as demand is outstripping supply. This bodes well for the region’s hotels and to help them capitalise on the growing market are companies like ZUZU Hospitality Solutions.
By combining technology with good old-fashioned account servicing, this three-year-old startup is helping independent hotels across Southeast Asia take control of their revenue management and compete with the major chains.
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We spoke to Co-CEO and Co-Founder, Dan Lynn to find out how he believes the industry is evolving and the role of technology and his company will play. As the former CEO for the AirAsia/Expedia partnership AAE, Dan has the background and knowledge of the region and beyond. Fresh off a Series A funding in late 2018, Dan along with other Co-CEO and Co-Founder, Vikram Malhi, are expanding ZUZU Hospitality’s presence across Asia Pacific and Australia.
Find out what Dan had to share with us.
Congratulations on the fundraising. Could you share the story behind ZUZU Hospitality and how it came to be?
ZUZU Hospitality Solutions was set up to help independent hoteliers to thrive, by delivering the very best professional yield management through a combination of technology and service. Yield management is making sure that a hotel is as full as it can be at the optimal rates. There is a science to distribution and pricing that the big chain hotels are increasingly good at. As such, we wanted to make sure that independent hotels could effectively compete with this without the massive expense of building their own data systems, technology, and/or hiring revenue managers.
What is the potential for your industry in Southeast Asia?
There are more than 30,000 independent hotels across Southeast Asia and almost 100,000 across the Asia Pacific region. Each of these independent hotels delivers a differentiated and local experience. By outsourcing their yield management to us, these independent hoteliers would be able to focus all their energy on delivering a great hospitality experience for their guests.
We do not want to see the hotel industry in Southeast Asia dominated by just a few big global chains. We believe that by empowering these independent hoteliers with great technology as well as the very best outsourced revenue managers, we can help the hotel market thrive and offer a rich diversity of travel offerings.
How does your business help hotels improve revenue by up to 30%?
We provide a combination of software and service to help hotels improve revenue by up to 30%.
Firstly, we provide them with a 5-in-1 technology platform that delivers all of their in-hotel operational needs and simplifies their day-to-day-operations. This platform consists of insights analytics, channel management, revenue management, property management and reputation management.
Secondly, rather than just dropping a piece of software to the hoteliers and letting them figure it out themselves, we also provide a dedicated revenue manager who is able to make the right distribution and pricing decisions for the hotel based on the real-time information provided by the platform which shares insights on what is happening at the hotel and across the market.
With such an aggressive expansion plan in place, what do you expect to be the major challenges for your company?
Over our first three years we have successfully scaled the business across Singapore, Indonesia and Taiwan, and so adding Thailand, Malaysia and Australia is a natural progression. With local teams in each market, we can ensure we deliver on localised needs while benefiting from the investments we make in technology and revenue management science at a regional level.
Which markets in Southeast Asia do you think represent the biggest opportunities for your company and why?
It is genuinely hard to narrow down to just a couple of markets in Southeast Asia. This is because we can add value to independent hotels wherever they are. We have proven we can work well in more mature online travel markets, such as Singapore, as well as more nascent online travel markets.
That said, we are extremely excited to be launching in Thailand and Malaysia. In particular, Thailand is a huge domestic and inbound travel market, with a shortage of revenue management professionals. With our software and service, we think we can help general managers and owners of hotels to deliver better results from their assets.
Has the hotel industry been as impacted by technological innovations as other industries? Could you explain the reasons behind your answer?
The hotel industry is hugely fragmented, with over 300,000 hotels globally. It is also an industry with a lot of seasonal or short-term labour. As such, technology adoption in properties is not as quick as it should be. This is one of the reasons why we think it is important to pair a technology solution, with a service element such as our revenue managers. You cannot rely on technology alone in an industry where there are many people that need to be educated and persuaded in order to understand your solution.
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On the other hand, the impact of consumer adoption of technology on hotels is immense. No industry has seen such a rapid shift to digital consumption – for example, more than 50% of hotels are booked online in the US, but only about 10% of all retail is online thus far. As such, there is a disconnect between consumer expectations and the current state of technological adoption in hotels. We feel that ZUZU Hospitality Solutions will be able to help bridge this gap.
What do you think is next for your industry?
For the majority of the hotel industry, what’s ‘next’ is actually getting the basics right in order to get as many of the right travellers into your hotel. For instance, pricing intelligently is important and hotels should do so based on existing data on competitors’ actions, market demand and historical performance.
For those who are on the cutting edge of the hotel industry, ‘next’ is about continuing to remove the pain points from the travel process. These include, but are not limited to, easing check-in through technology automation, making personalised recommendations to a traveller and automating the hotel’s back-office operations.
What advice would you give an aspiring entrepreneur looking to enter the Southeast Asian market?
Be super clear on problem identification. The problem you identify should be one that many people or businesses share and would pay money to solve. Using the travel industry as an example, many entrepreneurs project their own travel desires and difficulties into what they assume is a widespread issue. However, even if they do find a widespread issue, something that is desired or seen as annoying may not always be something that consumers or businesses will pay for. Ask yourself – is this issue in the top 2-3 desires of your target audience? Is your solution going to be ten times better than any alternative? If you still feel bullish after answering those questions, then do it!