As the coronavirus outbreak led to travel restrictions around the world in March, Hotel Data Cloud co-founders Gregor Amon and Kevin Czok feared their business-to-business platform would also face a drop in demand.
Through its subscription model, the Dubai start-up collects hundreds of attributes directly from hotels in its centralised global database to distribute to third-party agencies such as travel agents, tour operators and online platforms.
“When Covid-19 hit and when we saw the effects on the travel industry ... I told Kevin, ‘this is the worst industry we could possibly be in’,” says Mr Amon, who shares the role of HDC managing director with Mr Czok.
“But very quickly, after talking to our clients on the hotel side and on the distribution side, we actually realised that this is an opportunity for us to scale [up] bigger and faster than we anticipated.”
Amid the pandemic, HDC closed a Dh1.3 million seed funding round from five angel investors in April and hired a former Expedia executive to head sales. It is now raising a second funding round to accelerate growth.
With a current portfolio of over 11,400 hotels in 153 countries, it has also registered an increase in demand as the tourism industry looks to convince people that it is safe to travel again.
The United Nations World Tourism Organisation expects 850 million to 1.1 billion fewer international tourist arrivals over the course of this year – a decline of between 58 per cent to 78 per cent – and a loss in export revenue from tourism of between $910 billion (Dh3.3 trillion) to $1.2tn.
Founded in 2016, HDC attempts to solve a problem that many travellers encounter when booking hotels through third-party websites: often the information about the property is incorrect, missing or outdated. Nine out of 10 travellers blame the hotel, according to an August 2019 HDC survey.
In the new Covid-19 environment, HDC has shifted from not only helping hotels to provide up-to-date descriptive content to hundreds of booking partners, but also include over 90 coronavirus-related health and safety features to ensure customers feel at ease and, in turn, help the industry recover.
“Hotels now see how important it is to streamline and be more cost-efficient and to try new technologies to make sure they can recoup their losses,” Mr Amon says. They also need to “ensure travellers that they’re going to be staying in a healthy environment”.
The UNWTO recently selected HDC as a semi-finalist in the global “Healing Solutions for Tourism” challenge, which identified the most disruptive start-ups and entrepreneurs driving solutions to mitigate Covid-19’s damage to the sector.
“Tourism is a leading driver of economic growth, and re-establishing trust by being open and transparent with travellers is a critical factor in restarting tourism globally,” said Natalia Bayona, senior expert on innovation and digital transformation at the UNWTO.
“It is encouraging to see HDC stepping up to that challenge and offering a solution that will enable hotels to rebuild customer confidence and trust by being able to share vital attributes that affect travel decision making.”
Mr Amon, who previously worked as a pilot in his home country of Austria and elsewhere, came up with the idea for HDC after starting his own B2B hotel room wholesaler company in Munich, Germany. He identified that gaps in information, when passed on to travel agents and tour operators, were harming the reputations of hotels and affecting booking decisions.
There are up to seven resellers involved between the hotel and its guest, making it “impossible for them to make sure that every travel website that sells that hotel, that gets it through a third-party channel is displaying the correct information”, says Mr Amon. “With technology, it’s relatively easy to manage that.”
Meanwhile, Mr Czok, a German-American, was also living in the Munich area and working for a venture capital company. After meeting at a start-up event, they decided to join forces to start HDC and chose Dubai as their hub.
“Tourism was and is very important for Dubai as a city, so we thought it gives us the best opportunities,” Mr Amon says.
HDC secured financial support through the Intelak incubator programme in February 2019, led by the Emirates Group and Dubai’s Department of Tourism and Commerce Marketing, in Dubai Silicon Oasis. It was also part of Sharjah’s Sheraa accelerator programme last year.
After the public sector support, HDC raised its seed funding round in April, led by Amar Shubar, a partner at consultancy Management Partners, and four undisclosed angel investors.
“The unique part of Hotel Data Cloud is: one, it’s a very dynamic and experienced team,” Mr Shubar says. “The second is that [the start-up] had a fresh and innovative approach for a persistent issue in the industry, which is basically about data transparency, data ownership and proper management of hotel information.”
A February 2019 McKinsey-Google study found that the average accommodation purchase journey lasted 36 days and involved 45 touchpoints across several devices and websites.
HDC stores descriptions, details and pictures that are automatically distributed and freely accessible, so listings on booking channels are instantly updated.
The platform has three pricing models for the hotels: the free basic model, which includes basic property details and over 130 hotel attributes; the premium model for $2.70 per day, which includes longer descriptions, 50 images and over 600 attributes; and the enterprise model for $4.25 per day, which includes even longer descriptions, more images and an unlimited number of languages.
In terms of market coverage, HDC has the most subscribers from the US, followed by the UK, Spain and India. More than 130 properties have subscribed in the UAE, “so relative to the size of this market, we have a high percentage coverage”, says Mr Czok.
Virtually every major international hotel brand has properties listed with HDC, as well as smaller boutique hotels. Covid-19 has given HDC an “uplift” as travel companies are increasingly focusing on technology, Mr Czok says.
“Whereas it was a market where we had to source leads actively, we now are actually getting a lot of inbound requests from quite large companies”, including BCD Travel, which had sales of $27.5bn last year, he says.
HDC now looks to raise $1m in funding by October and add to its team of 10 employees, three of which are in the UAE, with the rest in tech development in Vietnam and office support in the Philippines.
In the meantime, it is developing an artificial intelligence and machine learning-based recommendation engine to help hotels showcase tailor-made offers specific to travellers’ requirements.
Mr Amon and Mr Czok are confident the travel industry will recover, and that HDC can play a role in easing travellers’ concerns.
“While there are fears and worries and consumers will be more selective about where to travel and when to travel, there is a certain itch to travel that has grown tremendously,” Mr Czok says. “People want to travel as soon as it is safe and it’s now the industry’s job to prove to them that it is safe to stay in a hotel, if you take necessary precautions.”