ByHours is a website that lets travelers book rooms in three-hour increments. A year ago, the Spanish startup raised $3.6 million.
In 2014, ByHours processed 150,000 transactions. In Spain, hotels have earned 5,5M€ by selling rooms by the hour through it, according to the company.
Now the Barcelona-based startup plans to become a broader marketplace that sells not only hotel rooms but also meeting rooms, cars, and gym access by the hour.
The 30-employee company is expanding beyond Spain in Europe. Some of its recently added hotels in London are the H10 Waterloo, The Kingsway Hall Hotel, Yotel Gatwick, Yotel Heathrow, Ramada Hotel & Suites London Docklands, and the Sofitel London Heathrow. It aims to go global, launching in the US later this year.
ByHours has made a Vine to illustrate its premise.
A Q&A with CEO Christian Rodriguez Fornos:
Tell us how you founded the company, why and what made you decide to jump in and create the business.
We founded the company in 2012 in Barcelona. We launched ByHours because we wanted to revolutionize the travel industry. We knew how, we knew the needs of the customers and the needs of the hoteliers, and we knew what not to do and what was important for the hoteliers to start with.
The idea was global and scalable. And no one had launched a similar idea.
Size of the team, names of founders, management roles and key personnel?
We are 30 people. Christian Picard is our COO.
Funding arrangements?
We have raised more than 3 million euro from La Caixa Capital Risc, SIE (Fons d’Enginyers), Labogar, Axon Partners Group and Mediaset Group.
Estimation of market size?
We are a hotel booking platform. Our market, and our customers, are all the travellers and business people who need a hotel only for a few hours (to disconnect, wait for a flight, wait during stop-overs, to work or to rest).
According to the occupancy rates, and to the online travel market size in Europe, ByHours can have a market size of 70M€.
Competition?
We are the only platform that allows customers to book hotels in sets of 3, 6 and 12 hours, and decide the hour of check-in and check-out, but there are last-minute websites to book hotels during the day with an special rate that could be our competitors in some cases.
But this is not about competition: we are a complementary service that hotelier can use to increase their revenue.
A hotelier can offer a room in Booking.com, for example, but what about all the empty rooms, or what about all the hours they have the room empty before the customers arrive?
Revenue model and strategy for profitability?
We receive a commission (between 15% and 18%) for each transaction.
We must be global, and sell worldwide: this is the way to be profitable (we need more volume). So we are expanding to London now, we are acquiring hotels there, we already have customers there too, we plan to launch in the US this year.
What problem does the business solve?
The strategy is to be global, we have to acquire product and make the platform scalable. Moreover, the plan is to become a marketplace with other services by the hour (for example, meetings rooms, cars, gyms…). We want our customers to book different services or products by the hour through our app or website, in any place in the world.
The platform is a solution to all those situations, in which just a few hotel hours are needed, or for just one night, and also for times when we need to get to the hotel before the standard time, or to leave it after a typical checkout.
We're especially appealing as a source of incremental revenue for hotels close to airports, stations, conventions areas, city centres and hospitals.
The ByHours target user is between 25 and 55 years of age, and the platform has a business traveller customer profile. It's someone who needs only a few hotel hours for rest, work, wait before departure of your flight or stop-over.
The global crisis has also helped us, because business people had to avoid unnecessary costs, and they come back in the same day, but they still need a room for a few hours, to take a shower, prepare a meeting, or wait until the time to come back. With ByHours, they have the solution.
On the other hand, in the same way that ByHours is a proposal clearly beneficial to the user, we are also beneficial for the hotel, because the platform empowers the hotels with an extranet, in which they can tailor the selling strategy, according to their needs. Basically, the hotelier decides what to sell, how, and when.
Now, the hoteliers can re-sell their rooms more than once a day, and optimize their resources.
In Spain, hotels have won 5,5M€ this year, because of us (selling their rooms by the hour too). If they were losing money because people are not booking room nights, now, they are increasing the revenue selling these rooms during the mornings, middays or afternoons.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
The initial idea started with the support and the know-how of the hoteliers, so we start with this knowledge inside the company. We have been doing changes in our platform to be efficient to the hotel, and to make the system more profitable, always with the help of the hoteliers.
Now, having consolidated the model in Spain, we are pivoting the model, and we are developing another platform to sell services and products by the hour, so in 2015, ByHours is going to be a marketplace, with hotels, meeting rooms, cars, gyms and motos by the hour.
Meetings rooms, for example is a SaaS business model, so the hoteliers manage their meetings rooms by the hour and they sell them independently.
Why should people or companies use the business?
We have increased our bookings 150% this year. The problem is that we need to educate customers on our pay-per-use service, which is a new concept.
When we want to park our car, we pay only by minutes. Why don’t do the same when we go to a hotel? Why do I have to pay the same as another customer that will be in the room the whole day, if I only need to sleep and stay 12 hours?
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
We are doing different actions in marketing online, and also, we are working on agreements with important companies. We work with eDreams Odigeo in Spain (they sell hotels by the hour in their website, through us), and we will do the same with them in other countries.
We are diversifying the acquisition channels, and also the channels to make the customer repeat in our platform. And the “word of mouth” is our best “ally”.
People recommend our platform to family, friends, etc., and we work hard to offer the best service during and after the reservation.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
ByHours, in three years, will be a global website, and will sell hotels by the hour in the main cities. We are working to be the leader on micro-stays in the main city-hubs (London, Paris, New York, San Francisco, Sao Paulo, etc) or business cities.
We have to be aggressive in acquiring markets, so we will hire new senior profiles in the company, and make our website more efficient and scalable. And we also have to open open new offices, first in London, and within a year or so in the US.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
The travel industry always has to reinvent itself. It had always reinvented the way to book, but always have had the same offer: room-nights.
The travel industry doesn’t have flexibility, people are used to book in the same way, travel industry only offers room-nights, but sometimes, customers need hotel hours. Customers need adaptability to their routine, and they need to check-in when they arrive to the city, or check-out one hour before the flight.
Why don’t hotels do it? Why do we have to wait until 11 pm to check-in or check-out at 12pm? We are innovating in the offer, we are changing the “unit”, it’s not all about room nights: now you also have hotel hours.
What other technology company would you consider yourselves most closely aligned to in terms of culture and style... and why?
Uber, Hailo, Airbnb, BlaBlaCar, SocialCar, Knok… They are changing their industry, listening to the people needs and working hard and very well to get it.
Tnooz view:
ByHours has helped to legitimate the idea of selling hotel rooms for just a few hours at a time -- something that has previously been associated with sleazy motels. But it's not the only player.
Day Use, founded in France in 2010, pioneered the concept. (See Tnooz's profile of Day Use from three years ago.) Day Use claims it now has 1,500 hotels in its inventory, with much deeper penetration in France and Italy than ByHours. It just opened offices in Miami.
UPDATE 12pmET: InnLink, the central reservation service owned by IHS and backed by Battery Ventures, recently launched a similar ability for its European clients.
Meanwhile in the States, HotelsByDay has just debuted.
ByHours is unique in that it's the first of these startups to try to pivot to a broader array of services, such as meetings rooms, cars, and gyms. But those products are even more diverse, and might be difficult for hotels to make available in a bookable form.
The company says it processed 150,000 transactions last year. That sounds impressive, especially if it took a 15% to 18% cut of each transaction. Given that it has about 1,500 hotels in its inventory, that's about 100 transactions a year per hotel, on average.
But it also says it had 30 employees, which must be expensive. As it expands into new products, it will have to spend money explaining to hotels how it can present their services on its platform. Trying to keep costs in line with revenue growth will be tricky, especially as competitors in other countries also grow.
It seems like ByHours has a good team and good mentors in its investors. We're wishing it the best.