14 November 2017

Category: Portfolio Company News

Zuzu Gets $2M Seed to Help Small Hotels Compete with Big Chains

Independently-owned hotels sometimes fall through the cracks of the hospitality industry because they struggle to compete with major chains, but don’t belong on Airbnb or HomeAway. Zuzu Hospitality Solutions bridges the gap in Asia by providing essential revenue management and marketing services to small hotels while allowing them preserve their own brands.

The Singapore-based startup announced today that it has raised seed funding of $2 million led by Wavemaker Partners, with participation from other Southeast Asian venture capital firms Golden Gate Ventures, Alpha JWC and Convergence Ventures.

Along with angel investments, Zuzu’s seed funding brings its total raised to $3 million. Other backers in this round include Paul Brown, the chief executive officer of Arby’s Restaurant Group and former Hilton president of brands and commercial services, and returning investor Goodman Capital.

Co-founders Dan Lynn and Vikram Malhi left their jobs at major players in the online travel space to launch Zuzu last year. Lynn was HomeAway’s vice president of APAC and emerging markets, while Malhi served as Expedia’s managing director of Asia. Expedia recently invested $350 million in Southeast Asian travel portal Traveloka at a valuation of almost $1 billion, underscoring the market’s potential.

Sites like that Traveloka, however, mainly target large hotel chains. As a result, Lynn says he and Malhi “could see that independent hotels, particularly smaller ones, were not getting their fair share of demand in the market.”

“We felt like the big online travel agencies could not build solutions that really helped these hotels, as no hotelier can rely on just one channel,” he adds. “At the same time, the pure hotel technology companies don’t appreciate the difficulty of using their product as a small hotel. So we decided to build a software and service solution, tailored for these independent hotels.”

Other companies that target small hotels in the region include OYO and Zenrooms, which add hotels to their networks and provide management and marketing services. In return, every hotel adopts their branding, including the same signage and room decor, which is supposed to reassure guests that they’ll find the same standard of service in every establishment. Zuzu, on the other hand, serves as a white-label solution for hotels that want to preserve their own branding, while at the same time outsourcing bookings, marketing and revenue management to the company.

Zuzu claims that hotels can see a 60% to 100% increase in online bookings after signing up for its services. Its team checks in with hotels every one to two days and helps them revamp their online marketing content, find new distribution channels for bookings, adopt dynamic pricing strategies and collect guest reviews through Zuzu’s site. While Zuzu offers different payment models, most of its hotels prefer revenue sharing because it means the startup’s goals are aligned with theirs.

Since its launch last July, Zuzu has signed up more than 150 hotels in Taiwan, India and Thailand and plans to expand further throughout in Asia. Its current focus is on boosting revenue at hotels, however, rather than growing its network.

“If we aren’t meaningfully increasing revenue at a hotel by 20% to 40%, then we won’t focus on signing up more hotels until we can ensure we have delivered that,” says Lynn.

Source: Techcrunch