SINGAPORE - Hospitality start-up RedDoorz has raised US$70 million (S$97 million) in the first close of its Series C funding round, the company announced on Monday (Aug 19).
This injection of funds follows the Singapore-based budget hotel management and booking platform's US$45 million Series B round, which was closed in April. The firm has raised around US$140 million to date.
A significant portion of the latest funds raised will be used to build a second technology hub in Vietnam, which will complement RedDoorz's current regional tech hub in India. It also intends to ramp up its hotel staff and quality training programmes across its properties.
The funds will also be used to improve the brand's presence in its existing markets, RedDoorz founder and chief executive Amit Saberwal told The Straits Times on Monday.
Vietnam is the company's newest market, having entered the country in July last year, and accounts for about 10 per cent of its business, he said. The new hub in Vietnam will be its Asean hub which will allow the company to localise its business further.
Developing the firm's technology, which includes artificial intelligence-based pricing engines, is paramount to the company's continued development, as they know that the budget hospitality space cannot be a people-dependent business, he added.
The start-up's Series C round was led by Singapore-based growth equity investment firm Asia Partners, which was launched in June.
Other participants included new investors Rakuten Capital, the corporate venture arm of Japanese giant Rakuten Group, and the Mirae Asset-Naver Asia Growth Fund, a joint venture between Seoul-based Mirae Financial Group and Internet giant Naver Corporation.
Existing investors Qiming Venture Partners and World Bank Group's private investment arm International Finance Corporation were also on board the financing round.
"By the end of this year, we want to have 2,000 hotels and one million occupied room nights," Mr Saberwal said. The company currently has 1,400 hotels - both franchised and directly-leased outlets - and hit about 520,000 occupied room nights as of July.
The company has been doubling its business every six months, he said, noting that RedDoorz had about 125,000 occupied room nights in July 2018 and around 250,000 in December last year.
Mr Saberwal said that the company is looking at countries such as Thailand and Malaysia to move in to, adding: "All of South-east Asia is our playground".
It is unlikely that the company will move into Europe or China, as the company is not familiar with these markets, he said.
"You have to understand your market, know where you can play, and that's part of our secret sauce," he added.
RedDoorz will continue to focus on its existing target customer base of domestic travellers - "road warriors, the younger demographic looking for functional stays" - and their main focus at the moment is to grow their customer base and retain their loyalty even as they become more affluent and look for higher-quality accommodation, he noted.
While the company is not profitable at this point, Mr Saberwal said: "This is not the time to look at profit stability, this is the time to look at growth, but we've always been within touching distance of profitability."
While the company has profitability in its sights, it is currently focused on growth and expansion.
He believes that the company's execution has been the key factor in its growth thus far. "We are not building a business on an airy-fairy concept, we are building it based on a real operational problem and executing towards that."
RedDoorz is the first company in the portfolio of Asia Partners, whose co-founders include gaming and e-commerce firm Sea's former group president Nicholas Nash and Mr Oliver Rippel, a former senior executive of South Africa-headquartered Internet firm and technology investor Naspers.
"Our team has a unique combination of investing and operating skills to help companies such as RedDoorz become true market leaders," Mr Rippel and Mr Nash said in a statement.
"We have every confidence in the team's ability to capture the enormous opportunity which exists in the affordable travel segment."
Founded in 2015, RedDoorz currently operates in 80 cities across Indonesia, Singapore, Vietnam and the Philippines. Apart from operating a budget hotel booking platform, it also directly runs and leases hotels. Its first directly-leased property, a shophouse in East Coast Road, was launched in March last year.
Its investors include 500 Startups, Jungle Ventures and Susquehanna International Group's Asia Investment Fund.