STARTUP STAGE: Instaroom brings communication to direct hotel bookings

Describe both the business and technology aspects of your startup?

We believe that todays travel distribution scene, to a large extent, disconnects travelers with their destinations through an abundance of different “middle men” - creating an ecosystem that is neither beneficial for the hotel or the traveler.

Instaroom’s building a communication platform that aims to help hoteliers rely less on expensive distribution channels.

We’re powering our concierge platform with the latest in messaging technology, including Artificial Intelligence and Payment integrations, enabling hotels to build personalized and automated customer journeys that are equal or better than any leading consumer facing booking platform.

For many travelers the hotel is the center of their travels and a big part of the perception of a successful holiday or trip.  Empowering hotels with technology that enables them to offer personalized packages and digital concierge solutions, right on their own websites, we will ultimately help to bring hotels closer to travelers.

Our concierge platform is an excellent complement to the hotels existing booking solutions. Imagine, for example, a family looking to book connecting rooms for two adults and two children, plus arrange transportation or airport pick up upon arrival, and reservations for a nice family friendly restaurant that evening.

Today, this type of booking and customer journey requires multiple transactions and multiple emails or phone calls.  We want to help hoteliers offer all of these services in one simple messaging flow - from “hello” to “booking confirmed.”

What inspired you to create this company?

We’re hotel people.  We’ve been in the industry for decades and see the need for a user-friendly hotelier platform that can engage prospective and current guests – that leads to more direct bookings.

There are tons of data points that support our perceived problem.  For example, the average hotel website only has a 2% conversation rate, in large part because hoteliers aren’t offering equal or better user experiences than big B2C travel sites.

That means a whopping 98% of travelers are leaving a hotel’s website without making a booking.  Can you imagine that happening to other businesses?

Another supporting data points is that nearly nine out of ten millennials prefer messaging to other communication – and more than half of all travelers will be millennials by 2025.

It’s clear it’s time – or likely past time - for hoteliers to embrace the next generation of travelers and connect with them using an intuitive, centralized messaging ecosystem that engages them and keeps consumers on the hotels website.

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

I think our greatest strength is our team.  Collectively, we have decades of combined experience in the industry, ranging from hotel management to travel technology.

We very much believe in our product, but a heavily consolidated distribution scene, where very few companies have access to the different travel segments is probably our biggest challenge or weakness.

Fortunately, this travel vertical is ripe for disruption and the next generation of travelers are literally asking for new and unique digital experiences.

However, one threat to the space, that many people may not pay much mind to, are the global trade wars between the different world powers that can have an effect on the industry - ultimately deterring people from traveling to different destinations.

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

From a customer’s perspective, most hotel websites are antiquated and don’t offer the digital user experience that they’re used to.  The big OTA’s are much more user friendly.

Why wouldn’t consumers leave the original site, find a hotel on a big B2C platform, and secure their bookings there?

On the hotel industry side, it’s quite simple, not enough customers are bookings directly through their website.  Even if the price point is the same, consumers are leaving and confirming their stays on other sites.

Also, hotels are spending too much time and money on customer communications.  Whether it’s perspective or current in-house guest, repetitive, easy to answer questions shouldn’t need to be answered by humans.

Finally, hotels are typically not connected to other service providers within their destination and can't offer complete customer journeys. That creates broken user experiences and yet another reason to book elsewhere.

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

We’ve already partnered with hotel partners, like First Hotels, Scandinavia’s leading collection of hotels with more than 90 unique properties throughout Sweden, Norway, Denmark, Iceland, and Spain.

Now that we’ve officially launched the product, we aim to put our technology and satisfied customers out front.  Through word of mouth, free trial demos, marketing, and press, we believe Instaroom bots will soon greet travelers throughout the web. 

We also follow strict UX design principles and believe that the success of the product starts with great user experiences, both from a hotel user perspective and a travelers/end user perspective. There is a big “C” (B2BC) in our business model; hence we build our platform with great empathy for the end user.

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

Between Johan and myself, the founders, and our investors, we’ve been intimately dealing with the hotel industry for the better part of a century.

We know there’s a need for a simple solution that will help hotels increase their on-site bookings and decrease their distribution costs.

It’s estimated that there are around 200,000 hotels worldwide.  And, we’d be willing to bet that all of them would love to increase their direct bookings, while also leading to happier, more engaged customers.  When it’s as simple as taking 5 minutes to integrate our platform onto your website, it seems like a no brainer.

How and when will you make money?

We are selling our Concierge platform as a SaaS (software as a service) solution, offering hotels worldwide access to our platform through annual subscriptions.

We have three levels of subscriptions available at the moment: Basic, Premium and Customized.  The basic subscription gives hotels access to all the messaging capabilities, plus analytics.

The Premium subscription offers access to the payment integration, plus our BOTS and AI infrastructure that will be live soon in addition to everything included in the basic package. 

The Customized level enables hoteliers to build personalized customer journeys and integrations.  Our projections show profitability in 2020. 

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

I, Niklas Pettersson, CEO and co-founder, am a global business developer and entrepreneur with a background in building and managing high performing sales teams in the travel sector.

Prior to Instaroom, I was the Managing Director for the Nordics and Baltics for Tourico Holidays, one of the world’s fastest growing wholesale travel brokerage companies. 

Johan Hammer, CINO and co-founder, is a hospitality guru and author of Revenue Superstar. Johan previously managed a $25 million hotel portfolio for one of Scandinavia's largest hotel chains and built a new pricing structure for more than 60 hotels.

Between the two of us, we have a keen understanding of the industry – and its pain points.  We’ve been working hand in hand with hotels for a long time, and we’ve always over delivered on our promises.  Just ask our partners, like First Hotels.

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

Managing short-term with long-term - in terms of product development and overall strategy – has been a unique challenge.  It’s important to set daily and weekly goals, while keeping an eye on the bigger targets. 

It’s also equally hard to find the right people, who are willing and able to commit themselves to something new - and break away from a safe, traditional job.  Working for a startup requires a bit of sacrifice and a lot of hard work, but it has really brought our team even closer together.

The good news is, the work schedule and dedication required weed out some potential employees that aren’t fully committed. 

Finally, in an industry that’s rapidly developing new technology, it’s imperative that we keep pace.  That means quickly bringing solutions to market, while also ensuring we aren’t rushing or skipping steps. That’s where the long hours, focus, and teamwork come into play.

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

We’ve designed and developed a very smart, useful, and yet simple technology solution that couldn’t be easier to integrate.

The advanced technology is also at a very reasonable price, allowing our platform to make a positive impact, without much overhead or risk.

Plus, confidence in our product aside, I truly believe that we’re a team that will not only respond and adapt to our customer needs, but ensure we’re going above and beyond to make a difference.