The online travel market in Southeast Asia is expected to reach a value of approximately USD 44 billion (SGD 59 billion) by 2025, showing significant growth compared to pre-COVID times. This indicates a promising rebound for the online travel industry.
So, ZUZU Hospitality announcing the completion of a Series B funding round of USD 9 million during this time, comes at an interesting period for the industry.
To find out more about the upcoming challenges and opportunities in the market, we had a chance to ask Vikram Malhi, Founder & CEO of ZUZU Hospitality, about these issues. Recognizing the challenges faced by independent hotels in payment management, ZUZU Hospitality established a comprehensive payment platform that ensures seamless payment management with all OTA partners and guests, effectively mitigating payment discrepancies.
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Despite the pandemic’s adverse effects, ZUZU Hospitality has dedicated the past three years to enhancing its products. The company focused on simplifying and automating revenue management tools, leading to significant revenue growth for its hotel partners. Additionally, ZUZU Hospitality introduced a new line of products tailored to enhance direct distribution capabilities. These products include custom-designed websites and booking engines for each hotel partner, complete with localized payment platforms tailored to the unique requirements of each market.
With the recent funding, ZUZU Hospitality plans to expand its network of hotel partners across the region, with a specific focus on India. The company aims to achieve a remarkable milestone of 5,000 partners by the end of 2024. Additionally, ZUZU Hospitality intends to make strategic investments in AI tools to enhance pricing, automate guest management, and improve the partner experience.
Congrats on the funding. How do you plan to utilize the funding?
Thank you for the good wishes. We are especially grateful and fortunate to receive such strong support during our Series B funding round led by SoftBank Ventures Asia. The success definitely highlighted the strong confidence our investors have in the vision and capabilities we have shown as a team.
As such, we are hoping to fully utilise the funding raised and direct them towards improving the products and services offered to our clients. This includes product innovation, such as the introduction of AI elements to our existing platform. Also, we hope to improve our partners’ experiences of working with us and expand our sales and marketing efforts within the region. Primarily, we are definitely looking towards growing and scaling ZUZU Hospitality to better support more independent and small chained hotels in APAC.
What does the hospitality landscape in Southeast Asia look like at the moment?
Well, we are definitely witnessing a rebound and growth in the hospitality industry, especially in the past year. Within the APAC region, countries like Malaysia and Singapore are both enjoying the economic boost brought by the tourism industry, with both countries witnessing a surpass in their initial tourism target. It is undeniable that the prominent and bigger players in the hospitality industry are reaping the benefits of the influx of tourism. For instance, Hilton, a large chain hotel, witnessed a 33% increase in revenue.
However, a rather disheartening observation we made was that smaller or independent hospitality organisations are not able to fully capitalise on this opportunity. Instead, their lack of manpower impedes the hotel’s ability to work at full capacity. This calls for a desperate need for a solution that helps them remain competitive in the current boom period.
Despite the surge in travel, there is a labour shortage in the sector. How do you expect the hospitality industry to keep up with the lack of supply?
The labour shortage is not something that only the tourism or hospitality industry is facing. Many other industries including marketing, HR, and F&B are also witnessing the issue of labour shortage which impedes their ability to scale and grow their business. However, the common solution among these industries is the integration of digital or automated solution that reduces the complex nature of the job.
As such, I believe that the hospitality industry can also benefit from the integration of automated solutions that reduce operational complexity in a cost-effective manner so that the team can focus on delivering the best experience for their guest. With more independent hotels understanding the importance of online channels, this gives us the opportunity to manage their online distribution channels and revenue despite their lack of manpower and expertise.
Which Southeast Asian market has shown the most potential for growth in the region?
Though we believe that the SEA market has grown a lot as a region, India is a market in the APAC region in that we see great potential. As we delve deeper into the Indian hotel industry, we have noticed a trend that has caught our attention. It seems that hotel partners have been exploring various avenues to increase their revenue, and one of them was adopting a branded approach. However, after experiencing the incentives that came with it, they came to the realisation that it wasn’t their cup of tea. Nevertheless, it wasn’t all in vain, as they learned the significance of hospitality technology and the importance of distribution and revenue management. They have come to understand that professional revenue management has been the most significant game-changer for their business rather than the brand itself. Hence, as they move away from the brand, they are in search of solutions that can help them create more value for their business.
Furthermore, over the past few years, a remarkable expansion has been observed in the Indian outbound tourism industry. A staggering surge of 143% in the number of travellers has been noted, escalating from 11 million to 27 million between 2009 and 2019, which is an impressive feat in itself. The latest forecast indicates that the Indian outbound market is predicted to recover fully by 2024, reaching an estimated 28.5 million outbound travellers in 2025. This growth manifesto underscores India’s potential as a significant player in the global tourism industry. As outbound tourism improves in India, this will impact the domestic tourism numbers in India, which have been at their peak due to border closures during the Covid pandemic. The impact of outbound tourism on the expected occupancy of Indian hotels desperately calls for the need to get ready and compete with inbound international travellers, which usually come through online channels. They will then have to be equipped with an effective platform to manage the multiple international online travel agencies to cater to the additional demand. This is where ZUZU comes into play and shows its expertise in managing this surge in demand.
What’s next for ZUZU Hospitality?
With the hospitality and travel industry facing a strong rebound, we see this as a huge opportunity for us to scale and grow our business. Especially with the recent fundraised, I would say we are now entering the stage where we aggressively push for growth instead of slowing down. For now, we are focusing our efforts and diversifying our revenue streams with our recent expansion into India.