CASE STUDIES: Hotel Aggregator

The start-up was helping users to get last-minute accommodation and also enabling hotels to improve their inventory utilization. Started in 2013 in the western region, it was one of the early entrants into this segment. They were part of a premier accelerator and received funding from angel investors. It closed down in 2017.

Name of the start-up: Promoters have chosen not to be revealed

Names of the founders: Founders have chosen not to reveal

Key reasons for the start-up’s inability to sustain operations:

• The team planned to roll out a mobile app as part of their launch. However, they chose to perfect the web presence, understand the user interactions and then release the mobile app. This cost them about a year. This period allowed other entrants to make their presence over mobile, even if their apps had glitches and not the best. They lost out time in perfecting the product rather than launching early versions, getting user feedback, and improving along the way. After deciding on a strategy, they chose to change track when it was to be executed.
• Their early launches were only in 2 cities of the west. Hence, while users came to their website from different cities, their needs were not met. The cost of reaching out to potential users did not translate to revenues apart from creating a set of users who were left unsatisfied.
• By the time they released the mobile app, they still had information on supplies only from the 2 cities. In hindsight, they realize that users cannot operate with their app for the 2 cities and some other app for other cities.
• The model of hotel inventory listing was by people-on-the-street. This limited the supply that they could list on their website. Again, this model too limited their ability to reach out to other cities and generate supply. In hindsight, the alternative could have been partnering with intermediaries, using technology to connect supply information, though it would have entailed part revenue loss.
• In a couple of years after their launch, online travel portals such as MMT, Goibibo, etc. entered the space of hotel booking. Their financial muscle made this start-up difficult to operate while the cost of customer acquisition went up.
• With competition increasing their presence, discounts made the start-up burn cash.
• The major competitors had multiple lines of revenue, but this start-up had defined only one stream of revenues. With the cash burning, there was little that the team could do to create additional revenue streams. However, they did come up with 4-hour occupancy and 8-hour room occupancy products; Not enough to pull it through.
• With their operations struggling, the only option was raising capital; Not a viable option when you have bigger players in the segment.

Despite accelerators and investors who helped the team with connections, the team believes that their execution should have been better, decisions should have been smarter and actions should have been quicker.

Points to reflect for entrepreneurs

• How can I de-risk my revenue streams?
• How can I fortify my business so that competition does not bring me down?
• What can I do to enhance my service delivery to customers?
• How can I build intrinsic strength into my operations to manage external vagaries?
• What can I do to improve customer stickiness/loyalty and improve repeat business?

- Reported by
Rameshwar ,
rameshwar at healthyjio dot in

About Founders :
Total : 3
Educational back ground : Graduates in Engineering. One cofounder with Masters in International Relations and another MBA ( Fin & Strategy)
Any Start-up experience prior to this start up : None
Experience : One cofounder had 5.7 yr experience, another 2.4 yr experience and the third less than 6 months
What they are doing now: One co-founder started another startup and is running now. Two others took up jobs. One of them is working is AVP.

- Reported by
Ramesh kumar
rameshb at vsnl dot com