With the words “blockchain” and “ICO” being the latest buzzwords in tech startups, Singapore-based GOeureka is pitching itself as the new disruptor in hotel bookings. GOeureka, which aims to launch by the fourth quarter of this year, wants to “decentralise the hotel booking sector and deliver greater transparency by allowing hotels to directly connect with their customers”.
It plans to launch a new hotel booking platform by the fourth quarter of this year where hotels will not be charged commissions but consumers are charged a 5% transaction fee when paying by credit card or cryptocurrencies other than GO tokens (GOT). Consumers who pay with GOT incur no transaction fee.
Manrai Raj: “It is a tough industry to navigate. If you can do it in the right way, there is a way to disrupt it.”
CEO and co-founder Manraj Rai, who said he’s been involved in the cryptocurrency market since 2014, came up with the idea of GOeureka in mid-2017. The Malaysian entrepreneur, who has been involved in the hospitality sector for over a decade, said that in conversations with hotel owners, “they told me that although OTAs contribute a significant amount of room bookings, the big problem is that hotel chains pay out billions of dollars in commissions to OTAs on a yearly basis”.
According to Rai, Hilton paid out approximately $7-$8b in commissions to OTAs last year. “And look at their valuation – Marriott has a market cap of $34b and Priceline $93b. While Marriott is a brick and mortar business, Priceline is merely a middleman.”
This prompted him and his co-founders to think about a new model of distribution – a decentralised marketplace in which hotels can connect directly with customers without having to pay commissions. Obviously, someone has to pay and that’s where the transaction fee comes in for customers paying via credit card or cryptocurrencies other than its own token.
“I started trading cryptocurrency in 2014. At the end of last year, I saw it was becoming more prevalent,” said Rai. “Right now, there is no real utility for these coins. There are 1,600 coins in the market and only 800 are actively traded.
“People are holding coins because you are not able to spend them anywhere. So we thought why not let them spend on hotels?”
Rai added, “GO is introducing a patent-pending Re-Booking function for customers to obtain the best value for rooms. When the hotel rate drops, the Re-Booking feature will automatically detect and re-book an existing booking at the lower rate.”
The team, which is 19-strong spread across Singapore and Malaysia, is launching an ICO shortly and aims to raise US$150m in that initial offering. It is looking to raise cash in exchange for the GOT token it is creating. “We need the funds to market the platform,” said Rai, estimating they’d spend 65% of the funds raised on marketing.
“Priceline spends $3b on marketing and Marriott $300m,” he said in this TV interview.
The idea is to market first to the cryptocurrency community of which he estimates there to be “10-20 million” strong. “Adoption of blockchain and cryptocurrency is coming very fast. By next year, a lot of companies will be trialing it – AirAsia, Singapore Airlines.”
He is aware of the skepticism surrounding ICOs in the current over-hyped climate. “Seventy percent of ICOs are scams so you do have to be careful. Building credibility is key. That’s why we have key advisors such as Louise Daley, deputy CEO of AccorHotels Asia Pacific, and Maria Nakpil, formerly of Hilton.”
GOeureka certainly has ambitious plans. It wants to be a tech partner to hotels. It will offer white label solutions so that hotel brands are clearly visible on the GOeureka platform. GO wants to aggregate loyalty points so that consumers can see at a glance their entitlements across different loyalty programmes and enable an interoperable system where points earned at one hotel can be utilised at another.
“For consumers who subscribe to multiple loyalty programmes, GO’s solution for an interoperable loyalty programme could facilitate instant redemptions and exchange for multiple loyalty point currencies on a single platform,” Rai said. “Blockchain acts as an immutable and secure ledger of all transactions related to the issuance of GO credits, creating a transparent, auditable supply of loyalty points without the need for intermediaries.”
He is mindful it’s a big promise but claims to have strong support from hotels. It is also working with third party suppliers such as bed banks. Within a year of launch, they aim to have 50,000 hotels directly connected and another 600,000 via third party connectivity.
He is aware of the challenges ahead – the complexity of hotel distribution, the fragmentation of the hotel market, the near-impossibility of integration with fragmented hotel systems, the unique relationship between hotel brands and owners, the challenge of marketing a consumer brand in travel against the major OTAs. The laundry list goes on and on.
He is unfazed. “Yes, there is a lot of educating to be done. Hotels have been slow to adapt to technology but are becoming more aware of the need to change. Rate parity is becoming a real issue now with wholesale rates bleeding into the system,” he said.
“It is a tough industry to navigate. If you can do it in the right way, there is a way to disrupt it.”
