TRAVELSPICE – Hotel Booking 2.0
India’s first opaque model for hotel booking
Startup Name: TravelSpice
Domain: Hotel Booking / Travel
Founders: Ramu Kallepalli, Ankit Manglik, Prashant Mitta and Vijay Mohan
Investment: Seed Funds from friends and family
What if you as a customer get an option to decide what price you will pay to stay in a hotel? That too in a star hotel. Sounds cool, right? Now you can do that with TravelSpice.
At TravelSpice, the customer decides the price they want to pay for particular star rated hotel (3 star, 4 star or 5 star) in the given location on their date of journey. They pay the amount upfront and get confirmation on their stay on which hotel within an hour of payment.
How does TravelSpice work?
- Go to TravelSpice.com
- Enter the city in the “where do you want to go” box along with your travel dates, rooms required and click on “BID Now:”
- Select your preferred area, star category and then “Quote Your Deal” per night, and then click on Preview Offer.
- Preview your offer details and click on the “Buy My Hotel Now” button and make the payment; TravelSpice will look for a hotel to match your offer within 3 business hours and will confirm with you.
- Enjoy your stay.
TravelSpice also guarantees breakfast with all bookings at the lowest possible cost in the market. TravelSpice has developed an algorithm which decides minimum amount for bid based on day, season, place, star hotel, demand etc. If the user bids below the minimum amount they don’t accept the bid.
The user has the option to choose which all hotels can bid for them, but a minimum of 6 hotels has to be present for the bid. They allow users to choose any days of future, but the user can choose a maximum of 5 rooms for bid, with a maximum of 2 people per room. They have 94% of confirmation rate and we are working hard on clocking 100% confirmation rate.
TravelSpice chooses only the hotels which have at least 50 reviews in Trip Advisor with at least 3.5 average reviews.
The customers currently have a mobile-friendly website, but they are soon coming up with Mobile app for users. They are also building a Facebook bot which lets users book their hotels from the Facebook messenger. They are also building Unified Payment Interface which lets users make the payment through UPI gateway.
How does TravelSpice work for hotels?
- Once the user bids for a hotel in the given location. TravelSpice sends notifications to the hotels in that area.
- The hotel partners of TravelSpice will compete for the fully paid non-refundable customer.
- The hotel who bids the lowest cost gets the customer.
It’s a great deal for hotels because if they reduce the rate of their rooms in public forum their brand value will be impacted. But the same time, if the room is not booked for a night it is a waste forever. They just reduce the price without revealing the actual price to only to one customer who is fully paid and non-refundable.
Moreover, if the customer stays in the hotel, they don’t just sit in the room, they may come to the restaurant, eat/drink coffee. One-third of hotels revenue comes from food and beverages, just by giving a discount for the room, without lowering their brand value they are gaining the additional one-third revenue.
Other players in the market sell pay at hotel model. But on an average 15-20% who booked room do not show up and it is a huge loss for hotels as they have blocked the room and cannot lend that room to anyone else. But, in TravelSpice even if the customer doesn’t show up the money is paid to the hotels.
It’s a win for the customer as well because they get the best possible rate in the market. Also, TravelSpice promises that if a customer finds the same hotel for less price at any other platform, they would refund double the money back. They have 0% track record on that.
TravelSpice has listed more than 6000 hotels across 215 cities in India. They are also present in Kuala Lumpur, Bangkok, Dubai and Sri Lanka. They launched the beta version of the platform on December 19th, 2015 and clocked around 3000 room nights till date.
They have raised funds from friends and family to operate till date and they are looking forward to raising funds to scale up their expansion.
TravelSpice has an interesting revenue model; they don’t take a specific commission for each transaction instead they take the difference in the amount of user bid and hotel bid.
For example: If the user bids 8000 for a hotel and if the hotel accepts for 6500, they make 1500. The catch is that the hotel doesn’t know how much the user has bid and they always quote the lowest possible cost as they are competing with their fellow hoteliers. Thus, users get the value, hotels get customers and TravelSpice make money.
TravelSpice is not directly competing with rest of the hotels booking app like Trip Advisor, Make My Trip etc. because they follow a different model and their target audience is entirely different. Find My Stay, works on the similar model of TravelSpice but their process is different and it is time consuming. For example: If you want to book for Leela Palace, you put an offer to Leela and they put a counter offer. It goes back and forth for next 48 hours, and most of the time you may not get the room for your desired price.
TravelSpice was founded by
- Ramu Kallepalli, Co-Founder & Chief Executive Officer, he has 9 years of experience in travel domain and was running an offline holiday packages business before starting TravelSpice. He has done his MS engineering from Montana State University, Bozeman, MT and MBA (Finance, Marketing, and Strategy) from University of Chicago Booth School of Business (formerly Chicago GSB). He has also worked as Practice Manager in Oracle Corporation Consulting organization managing their Oracle ERP performance architecture group in Chicago.
- Ankit Manglik, Chief Financial Officer, he has over 18 years of experience in risk management, strategy, investor relations and internal audit experience. He has worked across different industry spectrum including manufacturing, telecom, IT services, call center, banks and financial services. At TravelSpice, Ankit handles finance strategy and investor relations. He is a Chartered Accountant and has worked with HP, PWC, ANZ and is an active volunteer at the Head Start Network Foundation. He has experience in starting his own e-commerce firm and later sold the business.
- Prashant Mitta, Co-Founder & Chief Operating Officer, he takes an active part in supplier relations and oversees day-to-day operations to support and add to the growth of travelspice.com. Prashant comes with over 17 years of experience in Leadership, Business Management, Marketing, Operational & Project Delivery experience with P & L responsibility in Information Technology & E-commerce space. He was running a technology consultant firm called Tech Inventio which was later merged to TravelSpice, that team serves as tech backbone for TravelSpice.
- Vijay Mohan, Chief Technology Officer, Vijay comes with 10 years of experience in executing multiple projects across various geographies while meeting business needs in a fast-paced, dynamic and globally expanding Startup and MNC environments. At TravelSpice Vijay manages the technology team and is instrumental in building products from inception to live production. Previously he served as Co-founder & Managing Director of Confession9.com – an apparel Manufacturing and online retail company and effectively managed 50+ employees, raised 0.5 million from the market.
Ramu shares that the biggest challenge he faced in his journey as an entrepreneur was,
“We know that we provide value for hotels and customer. But we need to scale and scale faster. India is a huge country with huge potential, but marketing our product and letting people know that we exist cost efficiently was our challenge. Bootstrapping a B2B model can be easy but B2C is difficult because you want to scale faster.”
Ramu shares that the biggest learning he had in his journey was,
“We had the biggest faith that our competitors don’t have. We have faith in our consumers, that if we provide value, they will pay upfront without knowing which hotel they are going to get and they will trust our brand. We are rewarded for that faith.”
Ramu’s tip for newbie entrepreneur,
“I believe that you have to be unique. It’s cliché but, it is so true. A lot of entrepreneurs have an idea like if I get 5% of $100 billion market, I can make $5 billion. But, if you are a me-too product or service, you will get 0. We have been on research to find something unique, and we found it, a lot of people say that I can also do the same thing, and can grab a small portion of the market. But, to be successful you have to do something unique.”