This year it looks like budget hotel networks are a major trend for the tech industry in Southeast Asia. Already close to half a dozen startups offering standardized accommodation options have sprouted up, and today another new entrant has emerged in Indonesia — with a slight twist.
Indonesia-based Tinggal is less than one month old, but today it announced that it has raised $1 million in funding. Particularly of interest is the fact that this financing has come from the investors and members of the executive team behind India-based Wudstay, a budget hotel network that launched in July 2015.
The premise for Tinggal is simple, Indonesia’s internal and overseas travel market is booming with particular demand around budget stays, but there’s a major disconnect between booking a place that looks nice in photos and then arriving there. Tinggal is taking the budget hotel model — pioneered by SoftBank-backed OYO Rooms — to add a guaranteed level of expectation for each stay. For example, all rooms booked via Tinggal include a range of expectations, both in terms of bed and room quality and additional items like free breakfast and WiFi.
Beyond catering to travelers, with rooms priced around $17, the company also includes an ‘elite’ option that goes to $60 per room per night.
The funding for Tinggal comes from VC firms Mangrove Capital and Simile Venture Partners and Nimbuzz CEO/angel investor Vikas Saxena — all three backed Wudstay last summer — and Wudstay CEO Prafulla Mathur.
Tinggal plans to cover Indonesia’s major cities over the next 12 months, and right now it has 35 properties across four cities. That’s considerably less than other rivals like RedDoorz, Nida Rooms, and Rocket Internet-backed Zen Rooms, but Saxena and Tinggal co-founder Arjun Chopra stressed the advantage of leaning on the experience and tech that Wudstay has developed.
“Tinggal is an independent company,” Saxena told TechCrunch in an interview. “But what’s quite obviously is that we’ve taken advantage of a strong technology backbone [via Wudstay] in India. A lot of early efforts [from rival companies in Indonesia] went into building the tech and understanding the market, we come with a level of that already to some degree.”
Chopra, who is Indian but spent significant time in Indonesia over the past decade via roles with PayPal and Intuit, said the plan is to increase Tinggal’s headcount from nine right now to 35 over the coming six months.
Its older rivals are either in multiple markets in Southeast Asia already or aiming to expand soon, while India’s market leader OYO Rooms entered the region recently, but Tinggal is taking a slower approach.
“As of now we’re just focusing in winning in Indonesia,” Chopra said. “Within this year, we hope to make Tinggal the winner in Indonesia — when that milestone happens, we’ll look at other markets.”
Wudstay hasn’t backed Tinggal in an official capacity, but with three common investors and investment from its CEO, there are clearly links. All parties said it is too early to speculate over a possible acquisition in the future, and Tinggal said it will be open to investment from other backers when it chooses to raise additional funding, which could be later this year.
Why didn’t Wudstay simply expand its service to Southeast Asia, rather than going to the hassle of backing a new company? Saxena said it doesn’t need the distraction of a new market which requires a different approach. He cited ZO Rooms — which recently shuttered and was bought by OYO Rooms — as an example of the pitfalls of doing too much too soon.
“Southeast Asia is an emerging market, but it is different to India,” he said. “Wudstay is very focused on India. We thought it would be better if we let the organic solution bloom. Lots of Indian companies have begun to think [they can enter Southeast Assia], but what works in India doesn’t always work there.”