Mark Southby

Southby, who had arrived in the Cambodian capital city in January 2009 to work as a project consultant for one of the new mobile phone operators, had seen the rise in tourism and the lack of quality hotels in the city, and within a year, had opened three boutique hotels.

“With no previous experience in hotels, distribution for my three hotels was a steep learning curve. I very quickly became aware about the issues involved at selling our rooms at the right price to the right customers. I became frustrated at not being able to sell my hotel rooms direct to my customers at the price I wanted to, without repercussion from the major OTA’s.

“As we wanted to fill our rooms on a nightly basis, we were willing to discount the rooms but were not able to find a suitable way to be able to do this without impacting on our advance purchases. A regular occurrence for us was that if we did discount a room at the last minute, we would receive an email from that customer wanting to book a room in the future at that same discounted rate.

“We quickly realized that discounting through these major traditional channels was having a negative effect on our reputation and brand.”

At the same time, in his previous work with mobile operators and vendors, he became aware of the smartphone penetration among travellers. “It became very clear that travelers to the region were coming equipped with their mobile devices. Whilst running the hotels, this was reinforced by seeing firsthand the amount of people travelling with smartphones and tablets.”

And so the idea “to establish CheckInTonight for mobile as a marketplace for hotels to be able to sell their last minute inventory” was born.

Said Southby, “We hope to help our selected hotel partners in each location fill last minute rooms without impacting on their advance purchases. In an ideal world, the hotel would sell the majority of their rooms direct to customers, but on the rare occasion that they have an empty room, we would be used as the online market place to fill that un-sold inventory.

“For our customers that do not have brand loyalty, we will enable them to stay in quality hotels that they would not have considered previously, opening up new experiences for them at unbeatable rates.”

Since the launch of the CheckIn Tonight app on February 25, Southby said there’ve been more than 3,000 downloads – “well above expectations”. 

“This is a new concept in booking hotels in Asia so there is still work to be done in regards to product awareness. The only negative reviews that we have received are that we are not in enough locations yet. But we are working quickly to rectify this that with an aggressive plan to expand to all parts of the region. In fact, we are looking to launch into Ho Chi Minh City in the next couple of days.”

CheckInTonight works like this: It only lists the three best hotel deals in each location from 11am until midnight daily. During the other hours hotels are not viewable or bookable. Its rates are only available to customers that download the App. It is not visible to casual web surfers. Hotels are able to offer discounted rooms through its mobile-only channel without repercussion (on rate parity), said Southby.

“Because we only list the three best deals in each location daily, it is not predictable. Nobody knows until 11am on the same day what hotels will be listed. This unpredictability allows the hotels to offer steep discounts for their un-sold rooms for tonight.”

It receives a percentage commission on sales through the app. “If nothing sells then it does not cost the hotel anything. Our commission rate is extremely competitive and is one of the lowest in the region,” said Southby.

He believes the market in Asia is ready for a Hotel Tonight-like service. “Travelers to Asia are becoming more and more confident in finding a last minute deal; this is evidenced by the shrinking booking window.

“What we are finding is that travelers generally look to book the first few nights of their vacation but do not want to commit for the whole stay. They want the peace of mind that when they hop of the plane they have a hotel room for that night. After that a large percentage are then willing to either extend direct with the hotel, if they have availability, or to seek a last minute deal elsewhere.

“Without specifically knowing the Hotel Tonight figures, I believe around 50% come from the “Impulse “ bookers, people that actually don’t need a hotel for tonight but end up staying at a hotel due to the great deal.

“In Asia this is less common for a few different reasons, the cost of taxi’s, tuk tuks, motos etc negates the need to stay in town due to the large cost involved in the US and Europe. It is a very different market to what Hotel Tonight works in and our business model, whilst from the outside may seem similar, has some differences in order to cater to the Asian market.”

CheckInTonight is targeting three markets – traditional travelers from outside Asia; regional (or local) travelers; and business travelers.

“When looking at the travel cycle for tourists coming from the Western world, we are positioning ourselves as the app to have on your phone or tablet before leaving home. Sometimes the best laid plans just don’t go to plan and it is nice to have a backup plan if it all goes pear shaped.”

Given that it’s a new concept in Asia, Southby said it has been a learning curve. “We have had a couple of pivots along the way in how we get the inventory directly from the hotels. We believe we have now got his right and we are getting a good amount of inventory daily. The deals are getting better as the competition increases to be one of the featured hotels on the app daily.

“We compare the rates offered to CheckInTonight with other rates that are available online. The three best deals based on the percentage discounted are featured from 11am till midnight daily.

“We do not advocate price dumping from the hotels, we simply provide a platform for them to price the rooms at what fits with their yield management strategy. On some days if hotels predict a lot of un-sold rooms they are more motivated to discount. We’re finding that hotels will give us rates anywhere between 20% and 70% off the next best available rates. ”

Another challenge is of course the fragmentation of the Asian market and the different payment modes. For the moment, CheckInTonight accepts payments in US dollars only. Hotels enter their rates in their local currency, the company does the conversion and sells to its customers in USD.

“We have already started to develop the localization of the app in both language and currency. Whilst credit card penetration in the region is low, out target customers generally do not fit to that category.”

Southby noted that in Cambodia, most travel distribution is now done online, either directly through the hotel website or other OTAs. “There still exists a strong inbound agency model, but like most parts of the world this is declining.”

Southby said the mobile-only platform will work to its advantage.  “Unlike other major OTA’s that have apps as an extension of their website, we have not had those same constraints. The process of booking a last minute room has been optimized for mobile. From mobile optimized photos, personal reviews and speed of booking, it is the perfect match for last minute decisions.

“We are very optimistic that CheckInTonight will be well received. In a year from now, we would love to see 1 million downloads and over 600 hotel partners in the region.”