RedDoorz Targets Profitability This Year, Plans for IPO in 2027

Through its unique business model, RedDoorz wants to support the traditional hotel landscape and open up new opportunities for guests traveler who are looking for affordable and comfortable accommodation alternatives. Since launching in 2015, platform budget hotels has undergone a transformation and started to focus expansively on its main markets, namely Indonesia and the Philippines.

To DailySocial.id, Founder & CEO RedDoorz Amit Saberwal revealed the company's plans to achieve profitability this year and accelerate expansion.

Focus as multi-brand hospitality platform

RedDoorz begins to position themselves as multi-brand biggest in its category hospitality in South East Asia. The focus of the company also returns to core business, namely the provision of rooms to local tourists with an approach to price and quality according to company standards.

Indonesia is the largest market for RedDoorz, has made the most significant contribution to the company. This can be seen from the increasing number of hotel partners and the increasing market potential.

Jakarta, Bandung and Yogyakarta are still included in the location category that has the largest number of hotel partners, as well as the number of users. Bali, which since 2021 has begun to reopen to local and foreign tourists, is also considered to be starting to experience positive growth.

"Recovery from the pandemic in Indonesia is a slow process, in contrast to countries in the west such as the United States and Europe. However, now we are starting to see positive growth. At RedDoorz itself, we are getting this momentum this year during the holy month of Ramadan," said Amit.

He added that before the pandemic, RedDoorz's occupancy had reached 60%, but currently it has only reached 44%; is expected to continue to increase in the future.

This is different from previous years, when companies had to provide awareness to users and partners regarding the services and technology offered by RedDoorz, currently Indonesian society is starting to mature or mature and understand the business model and services offered.

This condition apparently influences companies to provide a variety of different services. Not only two-star hotels with low prices, but other hotel options that fall into the premium class. It is noted that currently RedDoorz has different lodging options. Starting from Sans Hotels, Koolkost, RedPartner, Sunerra Hotels, UrbanView Hotels, RedLiving and The Lavana.

This option is also claimed to provide an opportunity for RedDoorz hotel partners to put forward the concept staycation and design "Instagrammable", which is currently being sought after by the wider community regarding their accommodation options.

Target to achieve profitability

By 2023, RedDoorz will have 10 million application users and partner with 3.200 property partners spread across 257 cities in Indonesia. Even though we still rely on third parties for orders, it is recorded that as many as 70% of orders or booking comes from the RedDoorz application.

"Our focus in the next 3-6 months is to achieve profitability. Apart from that, we are also optimistic that we can increase revenue, increasing the number of hotel partners. On the other hand, we also cut expenses by implementing an automation system. "In the future, we want to achieve profitability and launch an IPO plan in 2027," said Amit.

Asked whether RedDoorz still plans to carry out fundraising activities, according to Amit, if there are investors who offer and the time is right, they certainly won't miss this opportunity. However, the company is still focused on business development.

In 2019, the company obtained series C pendanaan funding worth $70 million (close to 1 trillion Rupiah). The funding round was led by Asia Partners with the participation of two new investors, Rakuten Capital and Mirae Asset-Naver Asia Growth Fund. Previous investors, Qiming Venture Partners and International Finance Corporation (IFC) also returned their support by participating.

Market potential and competition

One of the advantages claimed only by RedDoorz currently is hospitality platforms namely, their presence in Indonesia since 2015. The company's difficulty in studying the market and consumer behavior as a whole has now turned out to be the key to RedDoorz's success in being able to survive compared to other players.

Several players who were previously present in Indonesia include AiryRooms (closes service in 2020) and ZenRooms (rumored to be Yanolja).

Meanwhile budget hotel operators Oyo which has experienced ups and downs in business, is still able to survive and estimates that the total Gross Booking Value (GBV) in the 2023 financial year will increase 23% to $1,3 billion compared to last year where the accommodation business made the highest contribution.

Regarding the potential for new foreign and local players to present similar solutions, Amit said this was not a problem. Judging from the large opportunity for them to reach more MSME scale hotel owners in Indonesia and their experience so far targeting the budget hotels that prioritize technology in Indonesia.

"We position ourselves like Marriot for two-star hotels. We are a technology company targeting industries that are still untouched by technology," said Amit.

RedDoorz has also announced BEP achievement in 2022 with five-fold revenue growth. Apart from Indonesia, RedDoorz also operates in Singapore, Vietnam, the Philippines and Thailand.

In October 2022, RedDoorz Indonesia and the Philippines are said to have achieved break even point (BEP) or no longer making a loss. The company's current focus is Indonesia and the Philippines, which are targeted to be their two largest markets in Southeast Asia.

"Unlike Indonesia, which is mostly dominated by local tourists, in the Philippines many of its citizens who work abroad return to their hometowns during the Christmas holidays. This condition makes our hotels a choice for accommodation in the short term. They then become "Our target users are in the Philippines," said Amit.