The growth of the digital industry in Indonesia has strongly affected the tourism industry, with various online booking systems, both domestic and international, to cater for business-to-customer relations.
The developments have yet to touch the business-to-business sector, thus creating a niche market now being pioneered by a rising company, Klikstay. GlobeAsia’s Eko Prasetyo interviewed Klikstay CEO and founder Ricky Theodores, who began his career as a hotelier back in 1994. Excerpts of the interview:
GA: What triggered you to get involved in the digital industry?
RT: I saw the rising digital industry back in 2010, as it started to penetrate from online hotel bookings.
However, industry players at the time still saw it as a supplement, where the main markets would only be from corporate groups and travel agents, in addition to the regional markets from Europe or the United States.
At the time, if a hotel had a target of 70% occupancy, it would only take a look at online bookings as an additional resource after reaching 65% occupancy, so it was considered complementary.
In 2017, the industry changed significantly, triggered by the easy access of internet, where people’s behavior leaned towards digital technology with increasing online hotel bookings in comparison to the traditional offline methods. People started to want everything instant: to simply open their smartphones, select their options, conduct payments and finish the transaction simply under one platform.
It was in 2016 that I decided to start developing Klikstay and it was fully established in 2017. Klikstay is an online application we have designed to answer digital needs, with a main focus to cater to small hotels, motels or villas with less than 100 rooms.
We are looking at these small establishments simply because they lack digital infrastructure, starting from computerized hotel management systems, hotel websites, booking engines — where clients may book online based on availability — and payment gateways. Chain hotels also have a large number of online distribution channels, such as online travel agents like Traveloka, Tiket.com, Agoda and Expedia, combined in a channel manager.
I don’t think it makes sense for independent hotels to invest greatly on these systems, as they have less than 100 rooms with prices starting from Rp350,000, so they are unable to compete with the hotel chains, leading to a decline in their occupancy rate.
So why Klikstay?
We built Klikstay to answer this void in digital infrastructure, by providing a fully integrated system — including hotel management, website, payment gateway, booking engine and channel manager — in a free application.
These small hotels may utilize it by simply registering, uploading their data and going live to enable them to compete with the major hotel chains. Klikstay is in a sense similar to these major hotel chains, where we invest in the system and these small hotels become our units, while returning our investment based on commission.
Our ‘no booking, no fee’ policy makes sense since they receive a free system. If the system does not work well and their occupancy rate does not increase, they do not have to pay anything. On the other hand, if the system works well, they pay a fee based on their occupancy.
We have two sources of revenue: 10% of the issued rate if the bookings are placed through the hotel website and only 3% if they are booked through an online agent.
We manage the inventory of these hotels in our computerized hotel management system and connect them with Klikstay’s channel manager before exposing them to multiple channels in seamless real time under the ‘first come, first serve’ basis.
The small hotels do not have to invest in the software or digital infrastructure. We have developed Klikstay for desktop and mobile uses that allow these hotels to have only an internet connection with a desktop or mobile tablet.
Essentially, we are creating a pool of these seven (hotel management) modules into one integrated module. Klikstay is a seamless solution, initial-investment free, paid for based on commission. If we do our job, then we will be paid. This is fair for the owners.
How do you guarantee data security?
We had a bit of trouble in finding venture capital willing to fund our project at the beginning. We ended up meeting with the Ministry of Research and Technology which supported us through a program for technology-based startups. During the incubation period, they challenged our ideas and provided inputs, focusing on our business model and technology. This included technology development, scalability and the security of our system. Our data center provider has guaranteed our internal security within the server with 99.9% of SLE and multiple layers of threat tiers, while the payment gateway for our services is only connected to certified providers.
Moreover, we have also utilized the Security Socket Level, or SSL. Once our users log into our site, they are protected. When they are accessing the server, they are also protected, and it also applies to the secured payments.
How difficult is it to run a B-to-B company in comparison to B-to-C?
The B-to-B market is small compared to B-to-C, while the largest cost for the latter is on market acquisitions, or how to expose the product across the globe to become known. Meanwhile, our B-to-B market targets hotel owners or operators. It looks easier due to the market scale, but it turned out to be the opposite.
We found that our initial canvasing method did not work, as many hotels did not want to use our services. Over 80% of the hotels did not register for the trial within three months. The obstacle was that we did not find the owners.
In the end, we thought of an idea to attract the owners to come to us instead of us visiting the owners one by one. We created workshops for hotel owners under a partnership with the Indonesian Tourism Exchange (ITX) — a hub connecting tourism industry players, including tour operators, travel agents, transportation operators and hotel operators.
When we met with ITX, they found that we were the solution they were looking for. We have now stopped canvasing and interconnected Klikstay with the ITX platform. By the end of this year, they have targeted to reach over 1,200 hotels, so we are catering to their needs.
Klikstay itself has managed to invite 50 hotels within only two months, which are now live in our platform, out of many registered users. Hopefully, our growth will surge directly from 50 active hotels to over 300 in April.
What are Klikstay’s innovations?
First is the integration, second is the cloud base, and third is facilitating the hotels joined in Klikstay with daily forecast of competitors’ price — as long as these competing hotels put their rates online, Klikstay will be able to capture this in real time — enabling small hotel owners to observe the prices up to a month ahead.
We hope to provide this solution to the Tourism Ministry’s program in developing 200,000 homestays.
Klikstay is the answer they need to run this program well.
How will the industry develop within the next five or ten years?
Within the past five years, several waves have affected the tourism industry in Indonesia. The first is the China tourism wave, triggered by the exponential increase of their industries and revenues; there is halal tourism, which is still new but heading to become a rising business in the sector; as well as digital tourism.
Digital tourism is a focus, as it includes disruptive businesses such as Airbnb. This has developed rapidly to become the largest company that manages accommodation inventories in the world, surpassing Hyatt or Starworld. They have the power to shift the platform and even the battlefield and have managed to take over the markets once ruled by major hotels.
The current millennial generation is fond of the new experience offered by Airbnb, as they do not mind taking risks traveling in a new style. The force of the sharing economy, through Airbnb for example, cannot be stopped. The only way is to enforce regulations to ensure the safety of the customers and travelers, since I don’t think it is wise to stop this disruptive digital economy.
Regarding Klikstay, there is no similar engine that matches our capabilities in Indonesia. There are those selling only the channel manager, website, hotel management systems, but there are none selling these seven modules all at one time.
We have the luxury and opportunity as a pioneer. With Indonesia’s economic condition and the government’s support for tourism, we have elevated tourism to become the second largest contributor to GDP. At the end of the day, we will partner with B-to-C companies like Traveloka and other digital companies.