Kenyan based travel-tech outfit HotelOnline has made a strategic acquisition of companies across Africa, positioning itself at the helm of the industry. While many companies in the travel industry have been facing a major dip due to COVID-19, HotelOnline has diversified and acquired other entities solidifying its position in the African travel industry.
Run by two Norwegian-born Kenyans, Havar Bauck, and Endre Opdal, the company has announced the acquisition of AfricaBookings – a pioneer in the tech–enabled distribution of African hotels with an impressive inventory of 6000 hotels, and Cloud9 – a savvy travel and adventure app that has gained huge traction in Kenya.
Since then, the HotelOnline platform which was born in 2015 out of Nairobi’s lack of affordable accommodation next to Jomo Kenyatta International Airport has grown to be a force to reckon within the hospitality industry. Since the first business in September 2014, to selling hotel rooms worth US$80,000 by the end of 2013 with 130 partner hotels to selling rooms worth US$1.7 million in 2016.
Acquisition of Cloud9
Cloud9 helps travelers to easily discover and book the best leisure experiences, at the best price, across Africa. Cloud9xp was among the 11 startups to be selected for the Google Launchpad Accelerator Africa program in 2018 and was featured among the Top 30 Demo Africa startups 2018, Top 100 StartUp Istanbul across Europe, Asia and Africa 2018, AfricArena Best of Kenyan Ecosystem 2019, Pivot East Entertainment Category Winner 2019 and Connected Kenya Oracle Innovation Awards Winner 2018.
With the recent challenges brought about by COVID-19, their owners were ready to exit in an asset-based deal, to consolidate the companies into a larger unit.
“Covid–19 is bad for travel, but it also opens up opportunities. This was certainly not planned, even though we have a long-running relationship with their largest shareholder,” notes Endre Opdal, co-founder of HotelOnline.
“AfricaBookings gives us an avenue to sell our hotels directly to end–users, as well as a large client base for our technology and revenue management solutions. It gives us a presence in new markets like Zimbabwe, Mozambique, Zambia and Malawi.”
The deal, according to HotelOnline helps consolidate their hold on the African market while at the same time bringing in experience in Asian markets, especially Bhutan.
He adds that they are also taking over Bhutanbookings which is the largest hotel booking portal in Bhutan. “With this deal, we also get their technology, which enables us to build tailor-made booking sites for airlines and other partners,” adds Opdal.
For a long time, HotelOnline pushed a campaign to enroll small and medium hotels that did not have online booking facility as well as the technology to tap into foreign travelers. However, with these new acquisitions, the company has now been able to interact with the big hotels.
Opdal notes that their fastest growing client segment is larger hotels that need to increase their online revenues. This segment has typically relied on corporate sales and the conference market, but has lacked the skills and technology to maximize their online revenue potential.
“Our solutions, with live connectivity, automatic dynamic pricing, and hands-on management drastically improve online sales, and reduces commissions to external parties. We have seen increased interest from branded chains, and we were just about to sign up 10 hotels that were part of an international chain before the crisis hit.”
Havar Bauck is excited about these new acquisitions terming them as very good business. “This is a very exciting deal for us. We have had a long-running relationship with Cloud9, and this was simply the right idea at the right time now.”
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Auditing Online Travel Agents
He says with Cloud9, they are bringing a fast–growing activity booking platform into HotelOnline ecosystem, and with that, the ability to offer integrated travel and experience packages. This also includes flights and hotels. “The Cloud9 app strengthens the B2C part of our strategy, especially towards younger customer segments. Cloud9 has a strong position in Kenya already, and we see an opportunity to use this platform to target the same segment globally,” adds Bauck.
Already, HotelOnline has repositioned its operations during the Covid-19 period with more effort being taken to help hotels recover unclaimed resources owed through the Online Travel Agents (OTA) by conducting audits.
“Our OTA Audit is a new service, which we are offering both to our current hotels, and also to those who don’t work with us at present. In essence, this service means that we help them identify and recover uncollected revenue from OTAs such as Booking.com, Expedia, CTrip, Hotelbeds, etc.,” adds Bauck.
He says some hotels have been able to recover up to US$8,000 from a single OTA noting that such money is quite substantial in a period with reduced revenues. With this recovery of revenue, HotelOnline charges a percentage that they say hotels do not mind because they could have lost the revenue without the audit.
“While OTA Audit is a once-off for us, we also hope this can help more hotels see the value that we offer and that this service can be the beginning of a new working relationship with many of the hotels we help through this service,” Bauck notes.
HotelOnline has been observing the trends in travel in the continent and notes despite the disruptions caused by Covid-19, the industry will open up allowing businesses to thrive. The recovery is likely to be slow and gradual, according to Bauck and will probably first see a small trickle, growing in strength as time goes by.
“First, we will see local and regional travel reopen, then between more and more countries. By the end of the year, we will almost certainly have seen a significant improvement from the current situation, but we only expect 2021 to be the real recovery year,” notes Bauck.
He expects the first lot to travel will be people seeking safe accommodation in hotels offering quarantine apartments or business travelers seeking to stay in a hotel suite as they watch and observe trends that the Covid-19 will take. Already, there are hotels that are offering quarantine getaways for people with ‘cabin-fever’ and this trend is expected to go on until economies open up.
