Singapore, April 13 (ANI): Singapore-based leading hospitality group RedDoorz is projecting a zero revenue budget for the next 15 months as COVID-19 pandemic continues to surge, paralysing the world economies and adversely affecting the hospital sector.
One of the largest budget hotel operators in Southeast Asia, RedDoorz made the announcement in a webinar hosted by Tech in Asia last week that it is implementing a "zero-revenue" scheme for at least the next 15 months and this started mid-March.
"Profitability is not on the horizon. I think now it's more about survival, and we will go back to the path of profitability when things start to get normal," Amit Saberwal, the hospitality giant's founder and CEO was quoted as saying.
With the spread of Covid-19 around the world causing low demand for hotel accommodation, its goal is to enable recovery in its core market when the time comes. He further added that the company is "decently funded" until 2022 and "doing okay for now".
The Singapore Business Times had on March 14 reported that it had laid off 50 staff from its Indonesia office in February which it said is attributed to a "periodic staff appraisal exercise". This represents 8 per cent of its 600-strong Indonesian workforce. About 75 per cent of its hotels are in Indonesia. The other countries where it has a presence are Singapore, Philippines, Vietnam and Thailand.
RedDoorz was on its way to profitability and was aiming to achieve 'unicorn' status - a startup reaching a USD1 billion valuation - sometime before 2022.
On April 1, as part of its Corporate and Social Responsibility (CSR) response to the Covid-19 outbreak, it unveiled its 'Red Heroes' regional initiative which involves working with Southeast Asian governments to support their efforts to fight the virus.
In Indonesia and the Philippines, it will provide free temporary accommodation across multiple locations for frontline healthcare personnel and emergency first responders battling the pandemic.
In Singapore, rooms will be provided to the Ministry of Manpower to accommodate returning foreign workers who need to serve their 14-day quarantine period as well as house Malaysians working in Singapore who have been unable to return home because of their government's lockdown.
The Red Heroes regional initiative will also see hotel guests receiving well-being kits that contain washable face masks, alcohol-based hand sanitizers, energy drinks, and droplet hats.
RedDoorz is Southeast Asia's largest and fastest-growing tech-driven hotel management and booking platform. It provides solutions to help hotel partners manage distribution, pricing, marketing, customer experience, and technology. Most of its solutions centre around using advanced data-driven technology to help partners make better decisions and using end-to-end advanced technology infrastructure to manage their businesses better and more efficiently.
It has raised up to USD 140 million in venture capital money with the last two tranches in 2019 of USD 45 million in Series B followed by another USD 70 million in Series C just five months later.
Series C was helmed by private equity firm Asia Partners and also includes South Korea's Mirae Asset-Naver Growth Fund and notably Japan's largest e-commerce platform, Rakuten. Rakuten has always seen itself as a rival to SoftBank albeit a smaller one.
One of SoftBank's investments which are hitting the business headlines these days is India' OYO Rooms. OYO is a rival to RedDoorz but with a more global footprint. SoftBank has a close to 46 per cent stake in OYO.
OYO, which is valued at USD 10 billion, claims to operate in over 800 cities in 80 countries including the United Kingdom, United States, Thailand, Indonesia, China, and India. Its portfolio comprises more than 43,000 hotels with over 1 million rooms and 130,000 vacation homes with China being the largest market by room count outside of India.
However, OYO has been going through a rough patch of late. Following the blotched public listing of WeWork, SoftBank has tightened and modified its funding process and looking to a clearer and quicker path to profitability and potential public offerings.
Even before COVID-19 put more stress on its balance sheet, OYO had been in the process of restructuring its operations to improve profitability, laying between 5,000 to 25,000 people in China, the United States, and India. Its consolidated losses in FY 2019 rose to USD 333 million from USD 50 million.
Just last week, in response to the business downturn caused by COVID-19, OYO founder and CEO Ritesh Agarwal said in a video message to staff that it has placed a significant number of its employees on temporary leave or furloughs of between 60 to 90 days. He added that occupancy has dropped by over 50 to 60 percent.
Just like RedDoorz, with occupancy rates tumbling, it has offered free accommodation to frontline workers and foreigners stranded overseas. This move will help house health-care professionals, police and army personnel working on the frontlines of the outbreak including in the US and India. They will also look to be used to accommodate asymptomatic people who have tested positive for COVID-19 that need to be isolated safely from the rest of the population.
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