STARTUP STAGE: Sleepbox's micro-hotels house travelers in urban areas

Sleepbox

Sleepbox's portable micro-hotels are designed for travelers stuck in an airport or looking for a cheap and easy place to stay. The modular rooms are geared toward millennials who want accommodations that fall somewhere between hotels and Airbnbs. 

The company is launching a 16-room Sleepbox Nap Lounge at the Washington, D.C., airport this summer and plans to roll out more hotels in 2019.

Describe both the business and technology aspects of your startup.

We believe that travel is a key to new experiences and personal development. So, we are creating a new type of technology-driven, micro-hotel concept for millennials to make our journeys easier and more fun.

We design customized travel experiences for urban explorers, helping them to connect with the city and like-minded travelers in the hotel. We are creating a new flexible hospitality model with modular, stand-alone hotel rooms that can be installed and launched anywhere in a quarter of the amount of time and for one-tenth of the cost of a traditional hovel.

Guests get the convenience of staying in the heart of the action, like Boston’s Faneuil Hall or right in your airport terminal, for a fraction of the cost of staying at other hotels. Sleepbox develops a new market niche between traditional hotels and Airbnb/hostels. We are a new type of hotel for a new generation of travelers.

Sleepbox combines the best elements of contemporary hospitality, service, experience and travel industries in a novel, customer-centric package: on-demand experiences, frictionless and autonomous control, curated community and novelty and delight.

What inspired you to create this company?

As frequent travelers, we've more than once found ourselves sleeping on the floor of an airport terminal during a layover or delayed flight. Like most travelers, we have felt constantly at odds with being in airports with no convenient, private or clean space to work or rest during long layovers or overnight stays.

Initially, we mapped the problem in airports, but when we started devising a solution, we understood the problem we can address is so much larger than just airports. The problem is basically privacy and freedom of travel. The fact is that today's hospitality market does not match consumer expectations, things like price and technology access.

Today we are more spontaneous and improvisational in our travel and work; life demands mobility, so we believe environments, especially hospitality, should be more flexible in providing us basic amenities like privacy and a place to sleep. Sleepbox is our attempt to catch the hospitality industry up, to more quickly and effectively evolve the environment to match the demands of travel and work.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strengths: We have over three years proof-of-concept testing in Europe. Sleepbox Hotels got overwhelmingly positive reviews (average 8.5/10) and rooms booked out two months in advance. Second, Sleepboxes are stand-alone hotel rooms that can be installed anywhere. The possibilities as we see them are virtually limitless - cities, airports, offices, train stations, etc.
  
  We are also first movers in this space. We offer unique technology, an Internet of Things in hospitality that mixes new business models and new technology at the same time. We've also got an incredible team working across software, hardware, design and more.
• Weaknesses: We are in the process of scaling our manufacturing capability to be able to turn out more Sleepboxes to meet growing business requests; the real game and challenge is to create the consumer brand, and that takes time. It takes years for people to know you. There is a great need in marketing to educate people about new types of service.
• Opportunities: We see immense growth potential in the thousands of inquiries we have already fielded from interested operators, builders and hoteliers. City centers and airports are just the beginning. Hospitals and convention centers are just two other areas we are pinpointing.
• Threats: If we do well, competitors may emerge quickly; there is a relatively low barrier of entry for competitors.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

Right now, the hotel industry does not have adequate offers for millennial travelers; there is a huge gap between hotels and the ways people want to travel. This is why they are losing to Airbnb. Sleepbox addresses this new millennial generation of travelers. And this is a huge gap to fill.

The hotel industry does not have adequate offers for millennial travelers. This is why they are losing to Airbnb.

Sleepbox

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We've all been stuck in an airport for a layover, a delayed take-off or even a cancelled flight. Rarely is this enjoyable. From a recent survey of airport travelers, we learned that the majority of respondents say their most-desired service is a place to sleep. Some 10% of travelers end up staying longer than they intend in an airport when traveling. We want to be there for them. In airports, the convenient location of Sleepbox Lounges within terminals post-security means travelers can autonomously book, share and have their own private, quiet getaway, without having to leave the terminal.

In cities for millennial travelers, staying in the best locations with comfortable rooms is cost-prohibitive. Thus, the painpoints we address here are cost and comfort. We offer a lean and smart hotel – a comfortable, affordable and, importantly, premium experience right where they want to be.

Further, because of the lower cost and time frame of setting up, Sleepbox Hotels live right in the middle of the hottest parts of cities, eliminating the need for travelers to spend long times commuting between where they stay and where the action is.

So you've got the product, now how will you get lots of customers?

We also have tested Sleepbox Hotels for three years in Sweden and Russia, and the rooms were booked out months in advance.

Our first U.S.-based Nap Lounge at Dulles International Airport in Washington, D.C., opens this summer and is an exciting and groundbreaking opportunity to transform the airport passenger journey - and build customer loyalty through offering a premium, exciting and frictionless experience.

Starting in airports gives us great visibility; this is how we educate customers and build brand awareness. Second, since our production and construction processes are so lean and require only a short lead time to launch, we can enter major cities very quickly compared to traditional brands. Through that we can get a high volume of customers in one-tenth of the time.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market?

We've done a ton of market research and spoken with industry experts and thought leaders as preliminary research. This shaped our concept and business model. Once we put the model and business plan out into the world, our website received thousands of inquiries from hotels, operators and consumers. By speaking directly with the market, we learned what people want.

How and when will you make money?

Our plan is to launch our first 16-room Sleepbox Nap Lounge in summer 2018 in Concourse A in Dulles Internationa Airport, and we expect the lounge will be a profitable. Second, we have paying clients in the Middle East who are licensing Sleepboxes.

We have an ambitious lineup of hotel openings starting in 2019 with three hotels in the U.S., starting in Boston, and five airport lounges in the U.S., Europe and the Middle East. Some of these partnerships involve licensing between Sleepbox and hoteliers.

What are the backgrounds and previous achievements of the founding team, and why do you have what it takes to succeed with this business?

CEO Mikhail Krymov and designer Alexey Goriainov have built a successful architectural company in the past. Mikhail has led it to success for 10 years and created one of the most successful architecture companies in Moscow with 40 architects, international awards and landmark projects.

Mikhail moved to the U.S. in 2015, and in 2016, after a year at MIT, Mikhail started Sleepbox together with Alexey as chief designer and Peter Chambers as COO and CFO. Peter’s background lies in finance, real estate and hospitality operations. Together, the founders’ team has a unique set of skills and experiences in business development, marketing, operations, finance, product development and leadership

What's been the most difficult part of founding the business so far?

It's hard to choose just one! Balancing continuously developing high-level vision and mission while simultaneously figuring out and executing very basic and grounded logistical requirements. It has been a huge - but rewarding - challenge to navigate between them.

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

We are addressing a big problem with a very scalable and innovative method. So, if we make an impact, it is going to be a big one!