Home » Tourism: How Kenyan guest house from Syokimau metamorphosed into HotelOnline, targets profitability in 2023 and expansion in Africa

Tourism: How Kenyan guest house from Syokimau metamorphosed into HotelOnline, targets profitability in 2023 and expansion in Africa

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HotelOnline

A Kenyan travel technology company, HotelOnline, which transformed from a guest house is hoping to setup in other African countries as part of its expansion plan.

The company which started from Syokimau, a residential area in the west of Machakos County, Kenya, south of Nairobi and Jomo Kenyatta International Airport says it is on track to profitability in 2023.

HotelOnline, an African yield management company for hotels, involved in provision of hotels, lodges, and vacation rentals across Africa.

According to a report published on nation.africa, Håvar Bauck co-founder of HotelOnline shares insight on how the company started in Kenya.

Read the full text…
My business partner Endre and I were former college mates who by coincidence found ourselves living in the same neighbourhood in Nairobi a decade after graduating.

In 2013, I moved to Lagos, but whenever I was around, we would meet up and discuss business. He was running a guesthouse, while I was constantly travelling across Africa, so we both knew the travel and hospitality industry, but from different perspectives. We saw a big gap in the market, as there were no budget hotels next to JKIA then, yet it was a major aviation hub in Africa.

The nearest options, Panari and Ole Sereni, were too expensive for most Economy Class travelers, and it could take two hours in traffic to get there. We leased five budget apartments in Syokimau, put in some budget furniture, and marketed this online as a serviced airport apartment hotel. The result? We were fully booked from Day 1, and became the most-booked property on Booking.com in Nairobi in 2014. This is what people refer to as the “AirBnB business today”. In 2013, no one had even heard about it, and we had the first-mover advantage.

READ: Africa: New Owners of Kenya’s Top Hotel set to bring back the Legendary Nairobi Fairview to it’s Iconic Best

Then we saw the next big gap in the market: If two amateur hoteliers like us could succeed at the first attempt, we were clearly doing something right! The answer was: Online marketing! The international hospitality market was going online fast, but the trend hadn’t reached Africa yet. We had an online-only strategy, with Booking.com, Expedia, and other major online booking sites as our primary channels. We started building a business advising hotels on how to stand out online, attracting more business and revenue from all the available online marketing and distribution channels.

From the beginning, we never really cashed out. We reinvested everything. When we moved to yield management, we put every cent into expanding across Africa. In 2016, investors from Norway and Nigeria put in additional money. All these investors wanted us to keep accelerating, so the money always went into growth across Eastern and Western Africa. We eventually broke even in early 2020. Then Covid hit. Life can be quite ironic!

With Covid-19 behind us, and stronger operations than ever, we are on track to profitability in 2023. We are however considering investing further in accelerated growth and expansion. Our shareholders have always had an appetite for growth, and we are discussing with them how aggressively to expand going forward. We may also decide to raise some additional growth capital for this purpose.

I once invested in internet stocks during the dot-com boom in the early 2000s. Tech companies with flimsy business models were fetching fantastic valuations during the early days of the internet. It was a hype that ended with a dramatic crash and a global recession. Lesson learnt: When everybody is getting excited about a hype, stay away!

Landing an investment from Yanolja early last year has been the biggest business moment so far. Yanolja is a South Korean travel technology giant backed by Softbank and Booking.com, valued at $12 billion. With them as a key shareholder, we have a very strong partner on our journey.

I save through mutual funds. You get a much better return on investment than from the bank, and less risk than by investing in stocks. The few times I invest directly in the stock market, I stick to the “boring” shares with solid fundamentals and good dividends.

It may be a cliché, but it is also true: Follow your heart, but have a plan. Go for what you are passionate about, but make sure you are able to make money out of it. Life will throw unforeseen things at you, but if you are doing what you love, you will also have the stamina and energy to deal with it.

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