This Israeli Traveltech Startup is Setting its Sights on China
EqualOcean spoke with Hotelmize’s CEO Dor Krubiner to gauge his company’s bold attempt to enter the world’s biggest domestic travel market.
As the world’s travel industry turns upside-down with COVID-19, one might guess that no investor would bet afresh on traveltech nor any startup serving the tourism industry dare to expand its business overseas.
But this startup, promising higher margins from hotel booking transactions by using the fluctuations in room prices and trading those as financial assets in post-bookings, raised its Series B from Alibaba Entrepreneurs Fund and Brilliance Ventures; and opened a new office in Hong Kong in a move to navigate in China’s gigantic domestic travel industry.
Even in recovering China, the travel and hotel booking industry is suffering the most. Trip.com, formerly Ctrip (TCOM: NASDAQ), one of the largest players in online travel booking in China, says it expects their net revenue for the first quarter of 2020 to decrease year-over-year by approximately 45% to 50% in its 2019 annual filings to the SEC. And that estimation was done before the world realized the extent of the pandemic.
“We are not afraid of our business suffering due to the epidemic,” Hotelmize CEO said. “Our clients choose us to boost profits and we charge them out of the profit created from the transaction, they need us more than ever,” he claims. “China has started to recover, it’s just the time to enter.”
The Tel Aviv-based firm claims to have generated around USD 15 million in extra profits for its clients in 2019. “We provide post-booking services for OTAs and various hotel resellers in tens of different countries,” said the CEO, while refusing to name his clients.
Yet, a successful China venture could well multiply Hotelmize’s gross transaction numbers, a venture that is full of hurdles for foreign startups. “The biggest challenge is to localize our team and business connections, but not the software and algorithms itself,” Dor Krubiner said, hinting at the reason behind the firm’s investor selection.
Brilliance Ventures is a venture capital firm that navigates Israeli startups in Asia’s labyrinthine business and investment ecosystem. “We are working with Hotelmize not only because we believe their lucrative and distinct touch for travel industry players, but also to help them build their team and business connections across China,” Qian Chen from Brilliance Ventures told EqualOcean.
China’s total revenue from the travel industry hit around CNY 5.7 trillion in 2019, according to the National Statistics Bureau, and it is home to one of the largest players globally. Meituan Dianping and (3690: HKEX) and Trip.com-owned Ctrip (the China-facing business) are together taking over 60% of the entire gross transactions in China’s online hotel booking business.
Hotelmize said that they are already “in talks with the major players in China,” and they’re not only striving to find new business partners in China but also negotiating with new investors who will join the yet to be completed Series B funding round.
The young SaaS company was founded in 2016 by Dor Krubiner, Guy Levitan and Omry Litvak, and has overseas offices in London, Bangkok, Buenos Aires and Mallorca.