Southeast Asia has always been popular with budget-conscious travelers, both for flights and accommodation. On the back of leisure and business travel boom in the region, the budget hotel sector, estimated by the industry to be worth USD 17 billion, will continue to grow, driven by the 350-million strong and growing middle class population.
This long-term outlook bodes well for the travel industry in the region. This includes hotel tech startups such as ZEN Rooms and RedDoorz, who address the market of regional budget travelers.
At the same time, the incumbents face competition from India’s hotel tech unicorn OYO, which is said to be raising funds at a USD 10 billion valuation. Backed by deep-pocketed investors like SoftBank and Airbnb, its persistently growing presence in Southeast Asia will have its impact on local players. Some analysts believe they’ll have to brace for lowering their room rates to match OYO’s.
Technology is an important aspect for the hotel sector when it comes to attracting digitally-and-mobile savvy millennial travelers, who search and plan their trips online. A 2016 survey by Topdeck Travel quoted by travel news site Tripzilla found that social media and peer-influence are top factors influencing millennials’ next travel destination.
However, many small and independent budget hotels have a harder time to cater to these tech-savvy travelers as they lack the money, brand trust, and marketing experience to stand out against larger hotel chains.
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