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November 2019, Amsterdam
Bidroom gears up for membership economy battle
With 250,000 members signed up, no shortage of backers and the promise of a fairer, more relevant marketplace for guests and hotels, should the OTAs be worried? Sally White and Pamela Whitby report
High commission – room for competition! That was the maxim followed by Bidroom founders Michael Ros and Casper Knieriem five years ago when they spotted an opportunity to set up in competition with the online travel agents in the hotel room market. Speaking at the EyeforTravel’s Digital Strategy Summit in London last week, Ros said Bidroom was prepared for the shift from the ownership economy to the membership economy. Think of Bidroom, he said, as the Amazon Prime, Netflix, or Spotify of the travel industry.
Based in Amsterdam where Bidroom launched in 2014, the group now has offices in Kracow, Istanbul and Paris. With 250,000 members already signed up, and ambitions to grow this to a million by 2020, Bidroom promises to do better by both hotel guests and hoteliers. Guests, at the very least, are promised a 5% discount on other booking platforms. Meanwhile for hotels, which are increasingly under margin pressure, the benefits include: no commissions; a revenue-first pay later model; a one-off activation charge; and no rate parity clauses or brand hijacking. Perhaps, most importantly, is the fact that hotels get to keep their customer data. As Ros explained the traveller books direct with hotel inventory via a channel manager or a dedicated API, and “all revenue and upselling opportunity is 100% yours”.
Ros was clear that driving member loyalty is crucial, as loyal members are 70% more likely to spread the word. The group’s data also shows that loyalty programmes attract business and leisure travelers alike, but across all age ranges – from Gen Z through to Baby Boomers - guests are much more likely to sign up to programmes that are relevant.
But loyalty today has to go much further than existing programmes and at Bidroom, says Ros, this means streamlining the sign up process, being relevant and personal, and continuous involvement to ensure that the platform is constantly evolving. He stressed that “loyalty starts within your own organisation”, highlighting the point that talent is increasingly at a premium.
Bidroom has identified four types of loyal customer:
- The broadcaster: an active sharer who is highly engaged and will talk about your brand everywhere – 38% will rave online about a great experience and would offer a review for a reward!
- The enthusiast: loyal but loud, 65% of these customers say excellent facilities are important to them, while 51% value exceptional service.
- Lazy loyals: 81% of these couch potatoes would be happy for hotel staff to be roving with a tablet so they don’t have to stand queuing for check-in.
- The seeker: Over two-thirds (66%) are price sensitive and over half are willing to shop around for promotions and will exchange personal details where relevant.
Ros says driving loyalty is also about building the right partnerships. Current usage of the platform has been helped by securing top ranking partners, including Visa, and a sophisticated collection of financial backers.
Eye on expansion
In order to succeed, Bidroom’s niche in Software-As-a-Service (SaaS) hotel bookings will require substantial membership growth. One of the advantages is that as a private platform, all hotels are free to advertise a variety room prices without any rate parity breaches. With an eye on what the business needs for expansion, and seemingly without any jealousy about control, Bidroom’s founders have opened up the management to new members. Last September the board expanded with the addition of experienced hoteliers and investors - Bas Tolmeijer, Francesco Monaco and John Stoffers came on board. Tolmeijer, Monaco and Stoffers are veterans in the international hotel sector, having been co-founders of Apollo Hotels, which was successfully sold to the listed Fattal Hotels.
At a press conference at the time Ros and Knieriem explained: “Bidroom could only go that far without senior-level business people with extensive hospitality experience in its Board. Bas Tolmeijer, our current CEO, was Bidroom’s angel investor from the beginning and in time it turned out that he was the leader we needed.”
One of the advantages is that as a private platform all hotels are free to advertise a variety room prices without any rate parity breaches
That made a five-member board comprising Michael Ros, as chief operating officer (COO), Casper Knieriem (chief development officer) with international development as his portfolio, John Stoffers as chief financial officer (CFO), Francesco Monaco, as chief commercial officer (CCO) responsible for the commercial strategy, and Bas Tolmeijer as CEO.
Further boosting its management capacity, Bidroom has just brought in engineering leader Maurizio Tripi to the board, to speed up the company’s technology innovation, in the new role of chief technology officer. An Italian with years of experience in Silicon Valley, he announced a rapid scaling up of Bidroom’s platform and 300% expansion of the engineering team this year. There are also plans to shift the perspective from ‘platform management’ into “more of a product management focused service development, to keep the company’s product offering ahead of the competition”, according to Bidroom’s website.
While it has gone back on its original business plan, no longer requiring rooms to be bid for, Bidroom seems to have no problem attracting funds. Two years ago it secured substantial investment from Egyptian businessman Samih Sawiris. He is the founder of the Orascom Development Group which among other hospitality and travel business assets owns RT/Raiffeisen Touristik, a group of more than 7,000 travel agencies. Soon after came an investment round that included funds from a several European medium sized hotel chains.
Just a few months ago the group received a capital injection of €15 million, mainly from wealthy backers, to step up its international expansion, expand employee numbers to 200 and move into a new, hypermodern office in Kraków.
The MENA market is a major target, too. Although the group is mainly in the European market, in 2018 it expanded into MENA and is forming partnerships in the financial sector to drive growth. In the MENA region, customers have been profiled as ‘travel planners’. Aged between 33-55+, these are people who visit countries like the United Arab Emirates or Morocco for a particular occasion such as bleisure (business and leisure), holidays, anniversaries, or the honeymoon.
Outlining the Bidrooms’ membership model, Ros explained that guests can sign up for €3 a month, €29 a year (the most popular) or sign up for a lifetime membership of €99. For hotels there is a one-time activation fee of €299 per property plus plus a membership price according to the hotel size (5 levels, starting from 50 rooms up to +200 rooms) but only after the hotel receives enough revenue.
Clearly, Bidroom still believes that the major OTAs are leaving plenty of space for it in the market!