In an interview with e27, Saberwal spoke about the opportunities and challenges in the online hotel sector, and what it takes to build a successful startup
Entrepreneurs build companies in industries that are not always linked to their previous career or their educational background. Some take a while to find their true calling — perhaps when a mid-life crisis or when an epiphany strikes. Take for example Wantedly’s founder Akiko Naka, who launched the social recruitment startup after quitting her job at Goldman Sachs.
Amit Saberwal, Co-founder of budget hotel aggregator RedDoorz, however, was dead set on pursuing a lifelong career in the travel industry early in his life. He embarked on this journey by taking up a Diploma in Hotel Management 30 years ago,
Saberwal then worked at several hotel chains initially, but in 2005, he decided to take a leap of faith and work in the nascent online travel sector — to the horror of his family. He joined India-based travel platform MakeMyTrip (MMYT), a small outfit then, and built its online hotel services from the ground up (which included securing 85,000 hotels).
Over the years, as Chief Business Officer for Hotels and International Markets, Saberwall oversaw the company’s rapid growth and was instrumental in helping it become listed on the NASDAQ.
But though Saberwal was comfortable working in a high-flying corporate job in an industry he adored, he felt the itch to launch his own company, even if it meant starting from scratch (no pun intended).
In an email interview with e27, Saberwall spoke at length about the challenges of the online travel sector as well as his journey at MMYT and RedDoorz.
Here is the edited transcript:
You have been in the travel hospitality sector for more than two decades. What pain points did you identify in the traditional hotel space, especially in the early days of your career?
In the earlier days before the advent of the Internet era, booking a hotel had three key drivers – word of mouth, branded chains and the traveller’s budget. Standalone boutique hotels and budget accommodations had to engage with traditional travel agents to secure bookings.
Guests, on the other hand, did not quite know what to expect as the glossy brochures seldom did justice to the actual property. People were beginning to get weary of the traditional travel agents.
After 10 years, you moved to a tech-focused travel company. Why did you make the move, and what opportunities did you see in tech solutions? (especially when travel platforms were still fairly new)
Drawing from my own experience as a frequent traveller, I realised that online travel portals were the next big thing and I wanted to be a part of the journey. Much to the horror of my wife and mother, I joined MakeMyTrip (MMYT) at a time when it was an unknown brand which was aspiring to change the way people booked online for travel in India and in the wake of the dotcom companies mostly having gone bust in the early 2000s.
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No one really thought there was a future for this approach, but I decided to take on a new challenge, reinvent myself and join MakeMyTrip to head their hotel business in 2005. The rest, as they say, is history. I was Chief Business Officer for MMYT and its 2010 listing on NASDAQ was a watershed moment for the industry in India. MMYT turned from a small unknown brand into an incredible billion dollar company.
As an early senior member of the company, I personally gained financially from the public listing and then moved to Singapore to head the international expansion of MMYT till 2014. This is where I got exposed to all Southeast Asian markets.
What were the initial humps and pushbacks you had to overcome when you were helping to grow MMYT in the early days? Especially when not many people in Asia were used to booking trips online.
I think one of the earliest challenges we found was that neither the hotels nor the travellers were ready for online hotel sales. We had to educate folks on both ends. People were used to booking flights through travel agents and now they simply take that behaviour online where they show up at the hotel and book on the spot. Changing this behaviour took a lot of effort especially since there was also limited or no mobile Internet connection outside the workplace at all.
Today, things have changed and some people who did not reinvent were left behind. For example, the travel agent who used to base his business on domestic air ticketing business in India became extinct.
You ventured out to found your own company, RedDoorz, about three years ago. What prompted this decision?
After several years in the hospitality trade, observing the various facets of the hotel experience, I wanted to make a difference. All the big Online Travel Agency (OTA) players have made booking hotels became simpler and user reviews helped to make an educated decision but consistent quality of budget hotels continued to be a bane as travellers could not be assured of an acceptable standard of room and amenities.
So I decided to set out on my own and design the budget travel experience as I envisaged it. I missed the rush of building something from scratch and RedDoorz was a byproduct of those two aspirations.
What were the challenges you faced when you founded RedDoorz? And how were they different than when you were an employee for MakeMyTrip?
Starting RedDoorz was like hitting the reset button on all that I took for granted as an employee for MMYT. A lot of your relationships and networking exist because you represent a large corporation. When you start another company you start from scratch. You are a nobody really.
You have some contacts and your reputation but that’s about it. My Co-founder Ashish Saxena and I had worked together at MMYT which was on the tech side of things We had to do everything on our own – and that’s a whole lot of things. Fundraising, building a robust technology platform, tweaking the model to suit the business, property owners and our guests, and building a world-class team were some of the many challenges we did and continue to face.
Which markets did you focus on first, and why?
Initially, we just focussed only on a few cities in Indonesia instead of spreading ourselves too thin with the whole country. Our aim was to make inroads into the average traveller’s immediate recall as a choice of hotels, before moving to more cities.
We chose Indonesia because of a myriad of reasons. For one, it is a strong internet economy with an estimated reach to US$85 billion by 2025. Indonesia is the seventh biggest economy in the world (US$3.2 trillion in 2018).
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It is also the fourth most populous nation in the world with over 262 million people. As the largest economy in Southeast Asia (40 per cent of Southeast Asia) nominal GDP and growing 5 per cent year-on-year, Indonesia has a high middle-class with 88 million people and an affluent consumer segment. This is why the country is ripe for technological disruption with 143 million active Internet users, 106 million active social media users, 90 per cent mobile phone penetration and 40 per cent smartphone penetration.
The environment RedDoorz operates in today is different than from 3 years ago. Now, the market is flooded with so many competitors, and so the battle to capture the biggest pie is becoming tougher. Have you had to tweak your business strategy to compete?
While we keep an eye out for what our competition does, our main focus is our guests and their changing needs. We are busy executing our own playbook and are rapidly growing as per our projections month-on-month and frankly that is what matters for us. We are constantly tweaking our business models but it is not reactive to competition.
We are also fairly prudent yet opportunistic in nature. We have distilled our business model to an extent that expansion doesn’t require huge amounts of capital.
What are some of the most difficult decisions you had to make while running RedDoorz?
The most difficult decision was when to expand and when to stay focused on a city and country. Also when something is not working out, deciding how long to keep at it is difficult as we have to be disciplined and not be over emotionally invested.
What are some evergreen advice you would impart to founders when launching and running an early-stage startup?
Get used to rejection! One of the toughest pills to swallow when launching a startup is that not everyone is going to buy your brilliant idea but you have to keep moving till you find that one savvy investor with a foresight. It can be quite overwhelming at the start but as things get moving you start getting used to the daily stresses of being an entrepreneur and take things in your stride.
There is never a dull moment. It’s a rollercoaster of excitement and disappointment and the cycle is repeated every day. Trying to manage your business; your investors and your colleagues at the same time can be a tall order – but the results are worth the effort. Be agile – do not be so invested in your idea that you fail to adapt in response to the market stimuli.
Who are some entrepreneurs you look up to, and why?
There are three entrepreneurs whom I look up to. Firstly, Deep Kalra, founder of MMYT, is a true visionary. Howard Schultz (Starbucks) is also another entrepreneur who made people all over the world line up and pay five dollars for a one-dollar product. Finally, I look up to Jack Ma for his vision, frank opinions. Candid manner and for not really following any ‘rules’.
One last fun question: Since you are a veteran in the travel accommodation space, which hotels do you prefer to stay at when you travel?
If it is not RedDoorz, I prefer to stay at a three- to four-star hotel which has a gym and a steady Wi-Fi connection that does not log me out every half an hour. If I am travelling with my wife, a five-star hotel will be preferred. With my kids, I would go for an Airbnb or a villa with a kitchen and pool where we can do crazy stuff together without bothering other guests or staying confined in our rooms.
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