Euromonitor International is discussing the plight of independent hotels in a rapidly changing lodging landscape by talking to four experts on the subject. Here, in the third installment, we speak to Anemone Hartmann, founder and CEO of Rooms2night, a mobile application helping travellers find small and independent hotels in Latin America.
In the previous installment, Skye Legon, CEO of Bookbedder, discussed his vision on how to help independents reach a wider audience without breaking the bank on online travel agencies (OTAs) commission fees. Rooms2night, in contrast, is more focused on the traveller, helping him/her to find accommodation in some of the most remote parts of Latin America, not normally charted by OTAs like Expedia and Booking.com.
How did you come up with the idea for Rooms2night?
I worked in a few hotels in the US, and ended up in Miami. Miami is very much influenced by Latin America, so I started reading about it and travelled there. That’s when I realised that a lot of hotels are independent. There are many amazing local hotels, but they rely on word-of-mouth and people to walk by and see that they are renting out rooms. This is obviously not perfect, because they run at about 50% occupancy rates. But what you do get is that local feeling when you stay with them.
So what does Rooms2night offer?
I also realised that a lot of Europeans and North Americans like to travel to Latin America nowadays, because it’s becoming a lot safer, but they are a little too scared to stay at an Airbnb. What we are doing is to offer them another way to stay at a local hotel, and because it is run by locals, they still get a truly local experience. We try to offer exclusive inventory that is not on Booking.com or Airbnb yet.
On your website, it says you understand “hotels’ constant struggle to balance occupancy rate and average daily rate while trying to push their own distribution channel over online third party distribution channels.” How are third party providers impacting independents in Latin America?
All hotels would like to rely on their own distribution channels and their own websites for bookings, because they don’t have to pay commission. The problem is that, in Latin America, there are a lot of hotels and many new investors building more, leading to an oversupply. Demand is growing slowly, but not fast enough to deal with the oversupply. So there is a need for another channel to help independent hotels sell their inventory, because, at the moment, demand alone is not high enough for hotels to manage healthy occupancy. There is the expectation that oversupply will remain until 2022, and independents might not be able to survive this period if they do not have an online presence. Through our app, hotels can sell their rooms last minute, often providing a discount for the user, which therefore profits both the user and hotel owner.
So are you running this business to support independent hotels to bring their product to the market, or are you coming at this from a customer point of view, offering them more choice of hotel rooms?
Probably more from the consumer point of view. Ultimately, we also work for the hotels, because we bring supply and demand together, but we are trying to provide a service to international travellers that want a local experience. A lot of backpackers go to Latin America and when they get there, they find the city’s main square and hope to find a hostel there. This does not provide the opportunity to pick and choose. What we offer is a way for travellers to quickly search different hostels and hotels and decide which one they want to go to, saving them a lot of time that is better spent on more fun things.
You’ve made some references to the app focusing on last-minute bookings, and on your website it states that you can only book up to 60 days in advance. Are you not losing out by focusing on a specific traveller segment which does not book in advance?
There are always people that are trying to get places last minute, and obviously we’re hoping that local hotels will have something available last minute. The reason for the 60 days is simply due to loan agreements with the bank, and because we are a new business it is too expensive for us to provide up to 180 days advance booking facilities at the moment. We will extend the booking period in the future if we get the opportunity. Right now, we’re focusing on younger travellers here in the US, because we find this age group is easy to reach and open to downloading apps and trying new things. But this is just a start. We also want to focus on older people who have a little more money to spend, but have no kids and want to be a little more adventurous when travelling. This is why we offer different price segments on our app; it is not just budget hotels and hostels. We have hotels which cost over US$100 per night, and we’re trying to expand this to get every hotel segment included on our app.
Do you actively select and/or rate hotels based on design or service levels?
We have people in countries like Ecuador and Argentina to go and find hotels. These are not the hotels where most Western tour operators would go to, and these hotels don’t have a website, but local people know them and these provide an authentic experience. So our people go there and try them out, finding great hotels and, in some cases, helping to improve them. Regarding ratings, we have an integrated rating system on the app, filled in by travellers. The more positive the feedback, the higher up the hotel will be in search lists.
What stops large OTAs like Expedia or Booking.com from going on your app and approaching the hotels that are currently only on your app?
We have tried to pitch exclusivity with these hotels. However, as we are a new company, we can’t guarantee how many bookings they are going to get every month, so they won’t sign exclusivity. Many have agreed that, in a year, if we provide enough guests, they will sign exclusivity though. The benefit of our app over those of major OTAs is that the hotels will not be on page 4 or 5. Small independent hotels generally get pushed to the back pages. And for users, we offer a local experience not provided by OTAs. We make that authentic adventure easier, because travellers can pre-select and pre-book it.
What is your vision for Rooms2night for the future?
We started out producing the app in January 2015. Since then, we have launched and signed up around 300 hotels and over 1000 users. We’re completely privately funded, but we’re looking for an investor to take this to the next level. Currently, we are only in Costa Rica, Ecuador, Guatemala and Peru, so we are still missing a lot of countries in Latin America. A major next mission is to get into Brazil before the 2016 Olympic Games. Our goal is to increase our inventory dramatically, and we want to be the first name in mobile booking apps for Latin America. With that, we will focus on all of Latin America, from the smallest town to the largest city, so that no matter where you are, you will find a hotel on our app.